Question 1

Unless circulation expenditures are amortized over a three-year period for regular income tax purposes,there will be an AMT adjustment.

Accepted Answer

A) True 
 B)False  True

Question 2

What is the purpose of the AMT exemption amount? What is the maximum amount for each filing status for an individual taxpayer and for a corporate taxpayer?

Accepted Answer

The AMT exemption amount can be thought of as a materiality provision.As such,it enables a taxpayer with a small amount of positive AMT adjustments and tax preferences to avoid being subject to the AMT.
For individual taxpayers,the maximum exemption amounts for 2014 are as follows:
 $\begin{array}{lr}
\text { Married filing jointly } & \$ 82,100 \
\text { Single } & 52,800 \
\text { Married filing separately } & 41,500
\end{array}$ For corporate taxpayers,the maximum exemption amount is $40,000.

Question 3

In the current tax year,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  False

Question 4

A taxpayer has a passive activity loss for the current tax year for regular income tax purposes and for AMT purposes.Is it possible that the passive activity losses will be the same amount?

Accepted Answer

The passive activity loss for

Question 5

If a taxpayer deducts the standard deduction in calculating regular taxable income,what effect does this have in calculating AMTI?

Accepted Answer

In converting regula

Question 6

Lilly is single and has no taxable income for 2014.She has positive timing adjustments of $600,000 and AMT exclusions of $200,000.
a.Calculate Lilly's tentative AMT.
b.Calculate Lilly's AMT credit carryover to 2015.

Accepted Answer

f.Taxable income $ -0-
AMT adjustments a

Question 7

Use the following selected data to calculate Devon's taxable income.

Accepted Answer

AMTI $290,000
Plus: Negative A

Question 8

Madge's tentative AMT is $112,000.Her regular income tax liability is $99,000.Madge's AMT is $13,000.

Accepted Answer

A) True 
 B)False

Question 9

Because passive losses are not deductible in computing either taxable income or AMTI,no adjustment for passive losses is required for AMT purposes.

Accepted Answer

A) True 
 B)False

Question 10

If a gambling loss itemized deduction is permitted for regular income tax purposes,there will be no AMT adjustment associated with the gambling loss.

Accepted Answer

A) True 
 B)False

Question 11

Sand Corporation,a calendar year taxpayer,has alternative minimum taxable income [before adjustment for adjusted current earnings (ACE)] of $900,000 for 2014.If Sand's (ACE)is $975,000,its tentative minimum tax for 2014 is:

Accepted Answer

A) $0. 
B) $56,250. 
C) $180,000. 
D) $191,250. 
E) None of these. 
A) $0. 
B) $56,250. 
C) $180,000. 
D) $191,250. 
E) None of these.

Question 12

Prior to the effect of tax credits,Clarence's regular income tax liability is $200,000 and his tentative AMT is
$180,000.Clarence has nonrefundable business tax credits of $35,000.His tax liability is $165,000.

Accepted Answer

A) True 
 B)False

Question 13

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 these. 
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 these.

Question 14

Beige,Inc. ,has AMTI of $200,000.Calculate the amount of the AMT exemption if:
a.Beige is a small corporation for AMT purposes.
b.Beige is not a small corporation for AMT purposes.

Accepted Answer

h.If Beige is a small corporat

Question 15

Akeem,who does not itemize,incurred a net operating loss (NOL)of $50,000 in 2013.His deductions in 2013 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 2014?

Accepted Answer

A) $50,000 
B) $30,000 
C) $20,000 
D) $40,000 
E) None of these 
A) $50,000 
B) $30,000 
C) $20,000 
D) $40,000 
E) None of these

Question 16

Celia and Christian,who are married filing jointly,have one dependent and do not itemize deductions.They have taxable income of $82,000 and tax preferences of $53,000 in 2014.What is their AMT base for 2014?
a.$0
b.$77,838
c.$94,450
d.$150,250
e.None of these

Accepted Answer

The answer of Celia and Christian,who are married filing jointly,have...

Question 17

In 2014,Glenn had a $108,000 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 2014,Glenn can deduct $108,000 for regular income tax purposes and for AMT purposes. 
B) Glenn will have a $108,000 tax preference in 2014 as a result of the passive activity. 
C) For regular income tax purposes,none of the loss is allowed in 2014. 
D) In 2014,Glenn will have a positive adjustment of $25,000 as a result of the passive loss. 
E) None of these. 
A) In 2014,Glenn can deduct $108,000 for regular income tax purposes and for AMT purposes. 
B) Glenn will have a $108,000 tax preference in 2014 as a result of the passive activity. 
C) For regular income tax purposes,none of the loss is allowed in 2014. 
D) In 2014,Glenn will have a positive adjustment of $25,000 as a result of the passive loss. 
E) None of these.

Question 18

In deciding to enact the alternative minimum tax,Congress was concerned about the inequity that resulted when taxpayers with substantial economic incomes could avoid paying regular income tax.

Accepted Answer

A) True 
 B)False

Question 19

In calculating her 2014 taxable income,Rhonda,who is age 45,deducts the following itemized deductions.
   Calculate Rhonda's AMT adjustment for itemized deductions.

Accepted Answer

Rhonda's allowed itemized dedu

Question 20

In calculating the AMT using the indirect method,do AMT adjustments and AMT tax preferences increase or decrease AMTI?

Accepted Answer

AMT adjustments can be both po

Unless circulation expenditures are amortized over a three-year period for regular income tax purposes,there will be an AMT adjustment.

What is the purpose of the AMT exemption amount? What is the maximum amount for each filing status for an individual taxpayer and for a corporate taxpayer?

In the current tax year,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).

A taxpayer has a passive activity loss for the current tax year for regular income tax purposes and for AMT purposes.Is it possible that the passive activity losses will be the same amount?

If a taxpayer deducts the standard deduction in calculating regular taxable income,what effect does this have in calculating AMTI?

Lilly is single and has no taxable income for 2014.She has positive timing adjustments of $600,000 and AMT exclusions of $200,000. a.Calculate Lilly's tentative AMT. b.Calculate Lilly's AMT credit carryover to 2015.

Use the following selected data to calculate Devon's taxable income.

Madge's tentative AMT is $112,000.Her regular income tax liability is $99,000.Madge's AMT is $13,000.

Because passive losses are not deductible in computing either taxable income or AMTI,no adjustment for passive losses is required for AMT purposes.

If a gambling loss itemized deduction is permitted for regular income tax purposes,there will be no AMT adjustment associated with the gambling loss.

Sand Corporation,a calendar year taxpayer,has alternative minimum taxable income [before adjustment for adjusted current earnings (ACE)] of $900,000 for 2014.If Sand's (ACE)is $975,000,its tentative minimum tax for 2014 is:

Prior to the effect of tax credits,Clarence's regular income tax liability is $200,000 and his tentative AMT is $180,000.Clarence has nonrefundable business tax credits of $35,000.His tax liability is $165,000.

Which of the following statements is correct?

Beige,Inc. ,has AMTI of $200,000.Calculate the amount of the AMT exemption if: a.Beige is a small corporation for AMT purposes. b.Beige is not a small corporation for AMT purposes.

Akeem,who does not itemize,incurred a net operating loss (NOL)of $50,000 in 2013.His deductions in 2013 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 2014?

Celia and Christian,who are married filing jointly,have one dependent and do not itemize deductions.They have taxable income of $82,000 and tax preferences of $53,000 in 2014.What is their AMT base for 2014? a.$0 b.$77,838 c.$94,450 d.$150,250 e.None of these

In 2014,Glenn had a $108,000 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?

In deciding to enact the alternative minimum tax,Congress was concerned about the inequity that resulted when taxpayers with substantial economic incomes could avoid paying regular income tax.

In calculating her 2014 taxable income,Rhonda,who is age 45,deducts the following itemized deductions. Calculate Rhonda's AMT adjustment for itemized deductions.

In calculating the AMT using the indirect method,do AMT adjustments and AMT tax preferences increase or decrease AMTI?

An Introduction to Taxation and Understanding the Federal Tax Law

Working With the Tax Law

Tax Formula and Tax Determination;an Overview of Property Transactions

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 Payment Procedures

Property Transactions: Determination of Gain or Loss and Basis Considerations

Property Transactions: Nontaxable Exchanges

Property Transactions: Capital Gains and Losses

Property Transactions: 1231 and Recapture Provisions

Accounting Periods and Methods

Deferred Compensation

Corporations and Partnerships

Filters

Exam 12: Alternative Minimum Tax

Unless circulation expenditures are amortized over a three-year period for regular income tax purposes,there will be an AMT adjustment.

What is the purpose of the AMT exemption amount? What is the maximum amount for each filing status for an individual taxpayer and for a corporate taxpayer?

In the current tax year,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).

A taxpayer has a passive activity loss for the current tax year for regular income tax purposes and for AMT purposes.Is it possible that the passive activity losses will be the same amount?

If a taxpayer deducts the standard deduction in calculating regular taxable income,what effect does this have in calculating AMTI?

Lilly is single and has no taxable income for 2014.She has positive timing adjustments of $600,000 and AMT exclusions of $200,000. a.Calculate Lilly's tentative AMT. b.Calculate Lilly's AMT credit carryover to 2015.

Use the following selected data to calculate Devon's taxable income.

Madge's tentative AMT is $112,000.Her regular income tax liability is $99,000.Madge's AMT is $13,000.

Because passive losses are not deductible in computing either taxable income or AMTI,no adjustment for passive losses is required for AMT purposes.

If a gambling loss itemized deduction is permitted for regular income tax purposes,there will be no AMT adjustment associated with the gambling loss.

Sand Corporation,a calendar year taxpayer,has alternative minimum taxable income [before adjustment for adjusted current earnings (ACE)] of $900,000 for 2014.If Sand's (ACE)is $975,000,its tentative minimum tax for 2014 is:

Prior to the effect of tax credits,Clarence's regular income tax liability is $200,000 and his tentative AMT is $180,000.Clarence has nonrefundable business tax credits of $35,000.His tax liability is $165,000.

Which of the following statements is correct?

Beige,Inc. ,has AMTI of $200,000.Calculate the amount of the AMT exemption if: a.Beige is a small corporation for AMT purposes. b.Beige is not a small corporation for AMT purposes.

Akeem,who does not itemize,incurred a net operating loss (NOL)of $50,000 in 2013.His deductions in 2013 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 2014?

Celia and Christian,who are married filing jointly,have one dependent and do not itemize deductions.They have taxable income of $82,000 and tax preferences of $53,000 in 2014.What is their AMT base for 2014? a.$0 b.$77,838 c.$94,450 d.$150,250 e.None of these

In 2014,Glenn had a $108,000 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?

In deciding to enact the alternative minimum tax,Congress was concerned about the inequity that resulted when taxpayers with substantial economic incomes could avoid paying regular income tax.

In calculating her 2014 taxable income,Rhonda,who is age 45,deducts the following itemized deductions. Calculate Rhonda's AMT adjustment for itemized deductions.

In calculating the AMT using the indirect method,do AMT adjustments and AMT tax preferences increase or decrease AMTI?

An Introduction to Taxation and Understanding the Federal Tax Law

Working With the Tax Law

Tax Formula and Tax Determination;an Overview of Property Transactions

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 Payment Procedures

Property Transactions: Determination of Gain or Loss and Basis Considerations

Property Transactions: Nontaxable Exchanges

Property Transactions: Capital Gains and Losses

Property Transactions: 1231 and Recapture Provisions

Accounting Periods and Methods

Deferred Compensation

Corporations and Partnerships

Filters