Question 1

Julia's tentative AMT is $94,000. Her regular income tax liability is $72,000. Julia's AMT is $22,000.

Accepted Answer

A) True 
 B)False

Question 2

Jackson sells qualifying small business stock for $125,000 (adjusted basis of $105,000) in 2012. In calculating gross income for regular income tax purposes, he excludes all of his realized gain of $20,000.The $20,000 exclusion is a tax preference in calculating Jackson's AMTI.

Accepted Answer

A) True 
 B)False

Question 3

After personal property is fully depreciated for both regular income tax purposes and AMT purposes, the positive and negative adjustments that have been made for AMT purposes will net to zero.

Accepted Answer

A) True 
 B)False

Question 4

Sand, Inc., has AMTI of $200,000. Calculate the amount of the AMT exemption if:

Accepted Answer

The answer of Sand, Inc., has AMTI of $200,000. Calculate...

Question 5

If the AMT base is greater than $175,000, the AMT rate for an individual taxpayer is the same as the AMT rate for a C corporation.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following statements is correct?

Accepted Answer

A) If the tentative AMT is $10,000 and the regular income tax liability is $12,000, the AMT is $2,000. 
B) If the tentative AMT is $12,000 and the regular income tax liability is $10,000, the AMT is $12,000. 
C) If the tentative AMT is $10,000 and the regular income tax liability is $12,000, the AMT is a negative $2,000. 
D) If the tentative AMT is $12,000, and the regular income tax liability is $10,000, the AMT is $2,000. 
E) None of the above. 
A) If the tentative AMT is $10,000 and the regular income tax liability is $12,000, the AMT is $2,000. 
B) If the tentative AMT is $12,000 and the regular income tax liability is $10,000, the AMT is $12,000. 
C) If the tentative AMT is $10,000 and the regular income tax liability is $12,000, the AMT is a negative $2,000. 
D) If the tentative AMT is $12,000, and the regular income tax liability is $10,000, the AMT is $2,000. 
E) None of the above.

Question 7

Business tax credits reduce the AMT and the regular income tax in the same way.

Accepted Answer

A) True 
 B)False

Question 8

Interest on a home equity loan may be deductible for AMT purposes.

Accepted Answer

A) True 
 B)False

Question 9

The deduction for charitable contributions in calculating the regular income tax can differ from that in calculating the AMT because the percentage limitations (20%, 30%, and 50%) may be applied to a different base amount.

Accepted Answer

A) True 
 B)False

Question 10

Nell has a personal casualty loss deduction of $14,500 for regular income tax purposes. The deduction would have been $26,600, but it had to be reduced by $100 and by $12,000 (10% ´ $120,000 AGI). For AMT purposes, the casualty loss deduction is $26,600.

Accepted Answer

A) True 
 B)False

Question 11

In 2012, Amber had a $100,000 loss on a passive activity.None of the loss is attributable to AMT adjustments or preferences.She has no other passive activities.Which of the following statements is correct?

Accepted Answer

A) In 2012, Amber can deduct $100,000 for regular income tax purposes and for AMT purposes. 
B) Amber will have a $100,000 tax preference in 2012 as a result of the passive activity. 
C) For regular income tax purposes, none of the loss is allowed in 2012. 
D) In 2012, Amber will have a positive adjustment of $25,000 as a result of the passive loss. 
E) None of the above. 
A) In 2012, Amber can deduct $100,000 for regular income tax purposes and for AMT purposes. 
B) Amber will have a $100,000 tax preference in 2012 as a result of the passive activity. 
C) For regular income tax purposes, none of the loss is allowed in 2012. 
D) In 2012, Amber will have a positive adjustment of $25,000 as a result of the passive loss. 
E) None of the above.

Question 12

Which of the following statements is correct?

Accepted Answer

A) The deduction for personal and dependency exemptions is not permitted in calculating the AMT.Therefore, in converting regular taxable income to AMTI, a positive adjustment is required. 
B) To the extent that itemized deductions exceed the standard deduction for regular income tax purposes, a positive AMT adjustment is required in converting regular taxable income to AMTI. 
C) The charitable contribution deduction for AMT purposes and for regular income tax purposes can be different. If this occurs, a positive AMT adjustment is required for the amount of the difference. 
D) Only a.and b.are correct. 
E) a., b., and c.are correct. 
A) The deduction for personal and dependency exemptions is not permitted in calculating the AMT.Therefore, in converting regular taxable income to AMTI, a positive adjustment is required. 
B) To the extent that itemized deductions exceed the standard deduction for regular income tax purposes, a positive AMT adjustment is required in converting regular taxable income to AMTI. 
C) The charitable contribution deduction for AMT purposes and for regular income tax purposes can be different. If this occurs, a positive AMT adjustment is required for the amount of the difference. 
D) Only a.and b.are correct. 
E) a., b., and c.are correct.

Question 13

The required adjustment for AMT purposes for pollution control facilities placed in service in 2012 is equal to the difference between the amortization deduction allowed for regular income tax purposes and the depreciation deduction computed under ADS.

Accepted Answer

A) True 
 B)False

Question 14

Identify an AMT adjustment that applies for the individual taxpayer that does not apply for the corporate taxpayer and identify an AMT adjustment that applies for the corporate taxpayer that does not apply for the individual taxpayer.

Accepted Answer

Among the AMT adjustments that apply for

Question 15

Evan is a contractor who constructs both commercial and residential buildings. Even though some of the contracts could qualify for the use of the completed contract method, Evan decides to use the percentage of the completion method for all of his contracts. Therefore, no AMT adjustment is required.

Accepted Answer

A) True 
 B)False

Question 16

Kaya is in the 33% marginal tax bracket.She has a net capital gain of $90,000 on the sale of land which is eligible for the alternative tax on net capital gain in calculating the regular income tax.Discuss the tax rate that applies to the $90,000 net capital gain in calculating the tentative AMT for Kaya.

Accepted Answer

The alternative tax rate on net capital

Question 17

Mitch, who is single and has no dependents, had AGI of $100,000 in 2012.His potential itemized deductions were as follows:   What is the amount of Mitch's AMT adjustment for itemized deductions for 2012?

Accepted Answer

A) $14,800. 
B) $16,800. 
C) $19,300. 
D) $25,800. 
E) None of the above. 
A) $14,800. 
B) $16,800. 
C) $19,300. 
D) $25,800. 
E) None of the above.

Question 18

Ashly is able to reduce her regular income tax liability from $47,000 to $43,500 as the result of the alternative tax on net capital gain.Ashly's tentative AMT is $51,000.

Accepted Answer

A) Ashly's tax liability is reduced by $3,500 as the result of the alternative tax calculation on net capital gain. 
B) Ashly's AMT is increased by $3,500 as the result of the alternative tax calculation on net capital gain. 
C) Ashly's tax liability is $43,500. 
D) Ashly's tax liability is $47,000. 
E) None of the above. 
A) Ashly's tax liability is reduced by $3,500 as the result of the alternative tax calculation on net capital gain. 
B) Ashly's AMT is increased by $3,500 as the result of the alternative tax calculation on net capital gain. 
C) Ashly's tax liability is $43,500. 
D) Ashly's tax liability is $47,000. 
E) None of the above.

Question 19

The deduction for personal and dependency exemptions is allowed for regular income tax purposes, but is disallowed for AMT purposes. This results in a positive AMT adjustment.

Accepted Answer

A) True 
 B)False

Question 20

How can interest on a private activity bond issued in 2008 result in both an AMT adjustment that decreases AMTI and an AMT preference that increases AMTI?

Accepted Answer

The interest on a private activity bond

Exam 15: Alternative Minimum Tax

Julia's tentative AMT is $94,000. Her regular income tax liability is $72,000. Julia's AMT is $22,000.

Jackson sells qualifying small business stock for $125,000 (adjusted basis of $105,000) in 2012. In calculating gross income for regular income tax purposes, he excludes all of his realized gain of $20,000.The $20,000 exclusion is a tax preference in calculating Jackson's AMTI.

After personal property is fully depreciated for both regular income tax purposes and AMT purposes, the positive and negative adjustments that have been made for AMT purposes will net to zero.

Sand, Inc., has AMTI of $200,000. Calculate the amount of the AMT exemption if:

If the AMT base is greater than $175,000, the AMT rate for an individual taxpayer is the same as the AMT rate for a C corporation.

Which of the following statements is correct?

Business tax credits reduce the AMT and the regular income tax in the same way.

Interest on a home equity loan may be deductible for AMT purposes.

The deduction for charitable contributions in calculating the regular income tax can differ from that in calculating the AMT because the percentage limitations (20%, 30%, and 50%) may be applied to a different base amount.

Nell has a personal casualty loss deduction of $14,500 for regular income tax purposes. The deduction would have been $26,600, but it had to be reduced by $100 and by $12,000 (10% ´ $120,000 AGI). For AMT purposes, the casualty loss deduction is $26,600.

In 2012, Amber had a $100,000 loss on a passive activity.None of the loss is attributable to AMT adjustments or preferences.She has no other passive activities.Which of the following statements is correct?

Which of the following statements is correct?

The required adjustment for AMT purposes for pollution control facilities placed in service in 2012 is equal to the difference between the amortization deduction allowed for regular income tax purposes and the depreciation deduction computed under ADS.

Identify an AMT adjustment that applies for the individual taxpayer that does not apply for the corporate taxpayer and identify an AMT adjustment that applies for the corporate taxpayer that does not apply for the individual taxpayer.

Mitch, who is single and has no dependents, had AGI of $100,000 in 2012.His potential itemized deductions were as follows: What is the amount of Mitch's AMT adjustment for itemized deductions for 2012?

Ashly is able to reduce her regular income tax liability from $47,000 to $43,500 as the result of the alternative tax on net capital gain.Ashly's tentative AMT is $51,000.

The deduction for personal and dependency exemptions is allowed for regular income tax purposes, but is disallowed for AMT purposes. This results in a positive AMT adjustment.

How can interest on a private activity bond issued in 2008 result in both an AMT adjustment that decreases AMTI and an AMT preference that increases AMTI?

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