Question 1

C corporations are subject to a positive AMT adjustment equal to 75% of the excess of ACE over AMTI before the ACE adjustment.

Accepted Answer

A) True 
 B)False

Question 2

The AMT does not apply to qualifying "small corporations."

Accepted Answer

A) True 
 B)False

Question 3

Marvin, the vice president of Lavender, Inc., exercises stock options for 100 shares of stock in March 2012. The stock options are incentive stock options (ISOs). Their exercise price is $20 and the fair market value on the date of exercise is $28. The options were granted in March 2009 and all restrictions on the free transferability had lapsed by the exercise date.

Accepted Answer

A) If Marvin sells the stock in December 2012 for $3,000, his AMT adjustment in 2012 is a positive adjustment of $800. 
B) If Marvin sells the stock in December 2013 for $3,000, his AMT adjustment in 2013 is $0. 
C) If Marvin sells the stock in December 2012 for $3,000, his AMT adjustment in 2012 is a negative adjustment of $800. 
D) If Marvin sells the stock in December 2013 for $3,000, his AMT adjustment in 2013 is a negative adjustment of $1,000. 
E) None of the above. 
A) If Marvin sells the stock in December 2012 for $3,000, his AMT adjustment in 2012 is a positive adjustment of $800. 
B) If Marvin sells the stock in December 2013 for $3,000, his AMT adjustment in 2013 is $0. 
C) If Marvin sells the stock in December 2012 for $3,000, his AMT adjustment in 2012 is a negative adjustment of $800. 
D) If Marvin sells the stock in December 2013 for $3,000, his AMT adjustment in 2013 is a negative adjustment of $1,000. 
E) None of the above.

Question 4

Sage, Inc., has the following gross receipts and taxable income:
   Is Sage, Inc., subject to the AMT in 2012?

Accepted Answer

Sage, Inc.is not subject to the AMT in 2

Question 5

The AMT exemption for a C corporation is $40,000 reduced by 35% of the amount by which AMTI exceeds $150,000.

Accepted Answer

A) True 
 B)False

Question 6

The C corporation AMT rate can be higher than the individual AMT rates.

Accepted Answer

A) True 
 B)False

Question 7

Miriam, who is a head of household and age 36, provides you with the following information from her financial records for 2012.   Calculate her AMTI for 2012.

Accepted Answer

A) $0. 
B) $171,300. 
C) $195,925. 
D) $218,000. 
E) None of the above. 
A) $0. 
B) $171,300. 
C) $195,925. 
D) $218,000. 
E) None of the above.

Question 8

If the regular income tax deduction for medical expenses is $0, under certain circumstances the AMT deduction for medical expenses can be greater than $0.

Accepted Answer

A) True 
 B)False

Question 9

What is the relationship between the regular income tax liability and the tentative AMT?

Accepted Answer

If the tentative AMT exceeds t

Question 10

Durell owns a construction company that builds residential housing.The company is eligible to use the completed contract method for regular income tax purposes.What can Durell do to minimize his AMT?

Accepted Answer

The use of the completed contract method

Question 11

In 2012, Ben exercised an incentive stock option (ISO), acquiring stock with a fair market value of $190,000 for $170,000.His AMT basis for the stock is $170,000, his regular income tax basis for the stock is $170,000, and his AMT adjustment is $0 ($170,000 - $170,000).

Accepted Answer

A) True 
 B)False

Question 12

Why is there no AMT adjustment for charitable contributions?

Accepted Answer

The charitable contribution de

Question 13

Kay, who is single, had taxable income of $0 in 2012.She has positive timing adjustments of $206,300 and exclusion items of $100,000 for the year.What is the amount of her alternative minimum tax credit for carryover to 2013?

Accepted Answer

A) $80,500. 
B) $68,861. 
C) $20,930. 
D) $13,403. 
E) None of the above. 
A) $80,500. 
B) $68,861. 
C) $20,930. 
D) $13,403. 
E) None of the above.

Question 14

Akeem, who does not itemize, incurred a net operating loss (NOL) of $50,000 in 2012.His deductions in 2012 included AMT tax preference items of $20,000, and he had no AMT adjustments.Assuming the NOL is not carried back, what is Akeem's ATNOLD carryover to 2013?

Accepted Answer

A) $50,000. 
B) $30,000. 
C) $20,000. 
D) $40,000. 
E) None of the above. 
A) $50,000. 
B) $30,000. 
C) $20,000. 
D) $40,000. 
E) None of the above.

Question 15

For individual taxpayers, the AMT credit is applicable for the AMT that results from timing differences, but it is not available for the AMT that results from the adjustment for itemized deductions or exclusion preferences.

Accepted Answer

A) True 
 B)False

Question 16

Danica owned a car that she used exclusively for business.The car was purchased in 2010 and sold in 2012 for a recognized gain of $9,000.However, the sale resulted in no AMT.Why?

Accepted Answer

The car is classified as personalty used

Question 17

Kerri, who had AGI of $120,000, itemized her deductions in the current year.She incurred unreimbursed employee business expenses of $8,500.Kerri must make a positive AMT adjustment of $2,400 in computing AMT.

Accepted Answer

A) True 
 B)False

Question 18

Why is there a need for a second tax system called the alternative minimum tax?

Accepted Answer

The AMT was enacted as a backup to the r

Question 19

The sale of business property might result in an AMT adjustment.

Accepted Answer

A) True 
 B)False

Question 20

AGI is used as the base for application of percentage limitations (i.e., 20%, 30%, 50%) that apply to the charitable contribution deduction for regular income tax purposes. Modified AGI is used as the base for application of percentage limitations that apply to the charitable contribution deduction for AMT purposes.

Accepted Answer

A) True 
 B)False

Exam 15: Alternative Minimum Tax

C corporations are subject to a positive AMT adjustment equal to 75% of the excess of ACE over AMTI before the ACE adjustment.

The AMT does not apply to qualifying "small corporations."

Sage, Inc., has the following gross receipts and taxable income: Is Sage, Inc., subject to the AMT in 2012?

The AMT exemption for a C corporation is $40,000 reduced by 35% of the amount by which AMTI exceeds $150,000.

The C corporation AMT rate can be higher than the individual AMT rates.

Miriam, who is a head of household and age 36, provides you with the following information from her financial records for 2012. Calculate her AMTI for 2012.

If the regular income tax deduction for medical expenses is $0, under certain circumstances the AMT deduction for medical expenses can be greater than $0.

What is the relationship between the regular income tax liability and the tentative AMT?

Durell owns a construction company that builds residential housing.The company is eligible to use the completed contract method for regular income tax purposes.What can Durell do to minimize his AMT?

In 2012, Ben exercised an incentive stock option (ISO), acquiring stock with a fair market value of $190,000 for $170,000.His AMT basis for the stock is $170,000, his regular income tax basis for the stock is $170,000, and his AMT adjustment is $0 ($170,000 - $170,000).

Why is there no AMT adjustment for charitable contributions?

Kay, who is single, had taxable income of $0 in 2012.She has positive timing adjustments of $206,300 and exclusion items of $100,000 for the year.What is the amount of her alternative minimum tax credit for carryover to 2013?

Akeem, who does not itemize, incurred a net operating loss (NOL) of $50,000 in 2012.His deductions in 2012 included AMT tax preference items of $20,000, and he had no AMT adjustments.Assuming the NOL is not carried back, what is Akeem's ATNOLD carryover to 2013?

For individual taxpayers, the AMT credit is applicable for the AMT that results from timing differences, but it is not available for the AMT that results from the adjustment for itemized deductions or exclusion preferences.

Danica owned a car that she used exclusively for business.The car was purchased in 2010 and sold in 2012 for a recognized gain of $9,000.However, the sale resulted in no AMT.Why?

Kerri, who had AGI of $120,000, itemized her deductions in the current year.She incurred unreimbursed employee business expenses of $8,500.Kerri must make a positive AMT adjustment of $2,400 in computing AMT.

Why is there a need for a second tax system called the alternative minimum tax?

The sale of business property might result in an AMT adjustment.

An Introduction to Taxation and Understanding the Federal Tax Law

Working With the Tax Law

Computing the Tax

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Tax Credits and Payments

Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 1

Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 2

Property Transactions: Capital Gains and Losses, 1231, Recapture Provisions

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Corporations: Distributions in Complete Liquidation and an Overview of Reorganizations

Partnerships

S: Corporations

Exempt Entities

Multistate Corporate Taxation

Taxation of International Transactions

Tax Practice and Ethics

Income Taxation of Trusts and Estates

Filters