Question 1

The AMT exemption for a C corporation is $50,000,reduced by 50% of the amount by which AMTI exceeds $150,000.

Accepted Answer

A) True 
 B)False

Question 2

Robin,who is a head of household and age 42,provides you with the following information from his financial records for 2017.Robert itemizes deductions.
​
 
Calculate Robin's AMT for 2017.

Accepted Answer

A) $6,633. 
B) $13,332. 
C) $48,828. 
D) $54,428. 
A) $6,633. 
B) $13,332. 
C) $48,828. 
D) $54,428.

Question 3

Are the AMT rates for the individual taxpayer the same as those for a corporate taxpayer?

Accepted Answer

No,the rates are different.The

Question 4

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 5

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 6

Beulah,who is single,provides you with the following information from her financial records for 2017.Compute Beulah's AMTI.
​
​

Accepted Answer

A) $0 
B) $174,050 
C) $228,000 
D) $232,050 
E) None of the above 
A) $0 
B) $174,050 
C) $228,000 
D) $232,050 
E) None of the above

Question 7

The corporate AMT does not apply to "small" C corporations.

Accepted Answer

A) True 
 B)False

Question 8

Prior to the effect of tax credits,Eunice's regular income tax liability is $325,000 and her tentative minimum tax is $312,000.Eunice has general business credits available of $20,000.Calculate Eunice's tax liability after tax credits.

Accepted Answer

A) $0 
B) $305,000 
C) $312,000 
D) $325,000 
A) $0 
B) $305,000 
C) $312,000 
D) $325,000

Question 9

In May 2013,Swallow,Inc.,issues options to Karrie,a corporate officer,to purchase 100 shares of Swallow stock under an ISO plan.At the date the stock options are issued,the fair market value of the stock is $1,000 per share and the option price is $1,200 per share.The stock becomes freely transferable in 2014.Karrie exercises the options in November 2013 when the stock is selling for $1,500 per share.She sells the stock in December 2017 for $1,800 per share.
​
a.Determine the amount of the AMT adjustment for 2013.
b.Determine the amount of the AMT adjustment for 2014.
c.​Determine Karrie's recognized gain for regular income tax purposes and for AMT purposes on the sale of the stock.
d.Determine the amount of the AMT adjustment for 2017.

Accepted Answer

The answer of In May 2013,Swallow,Inc.,issues options to Karrie,a corporate...

Question 10

Cher sold undeveloped land that originally cost $150,000 for $225,000.There is a positive AMT adjustment of $75,000 associated with the sale of the land.

Accepted Answer

A) True 
 B)False

Question 11

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 12

If the taxpayer elects to capitalize and to amortize intangible drilling costs over a 3-year period for regular income tax purposes,there is no adjustment or preference for AMT purposes.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following can produce an AMT preference rather than an AMT adjustment?

Accepted Answer

A) Interest on private activity bonds issued in 2015. 
B) Percentage depletion. 
C) Incentive stock options (ISOs). 
D) Only a.and b. 
E) a.,b.,and c. 
A) Interest on private activity bonds issued in 2015. 
B) Percentage depletion. 
C) Incentive stock options (ISOs). 
D) Only a.and b. 
E) a.,b.,and c.

Question 14

If a gambling loss itemized deduction is permitted for regular income tax purposes,no AMT adjustment results.

Accepted Answer

A) True 
 B)False

Question 15

The AMT adjustment for mining exploration and development costs can be avoided if the taxpayer elects to deduct the expenditures in the year incurred for regular income tax purposes,rather than writing off the expenditures over a 10-year period for regular income tax purposes.

Accepted Answer

A) True 
 B)False

Question 16

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.In this situation,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.In this situation,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 17

​In the current tax year,for regular tax purposes,Avery reports $65,000 of income and $190,000 of deductions from passive activities.For AMT purposes,the passive activity income amount is unchanged,but deductions from passive activities total $150,000.
​
What is Avery's suspended passive loss for regular tax and for AMT purposes?
​

Accepted Answer

A) ​$0; $0. 
B) ​$(40,000); $(40,000). 
C) ​$(125,000); $(85,000). 
D) ​$(190,000); $(150,000). 
A) ​$0; $0. 
B) ​$(40,000); $(40,000). 
C) ​$(125,000); $(85,000). 
D) ​$(190,000); $(150,000).

Question 18

​Which of the following statements describing the alternative minimum tax (AMT) is most correct?

Accepted Answer

A) Generally,those taxpayers most concerned about being in AMT are low income taxpayers who elect the standard deduction. 
B) The AMT was enacted in an attempt to limit the ability of taxpayers to engage in questionable tax planning activities.
The goal of the AMT 
C) The goal of the AMT is to try and ensure that all taxpayers with economic income pay at least some income tax. 
D) Exemption amounts are higher for regular tax purposes than for AMT purposes. 
E) a.and d.are correct 
A) Generally,those taxpayers most concerned about being in AMT are low income taxpayers who elect the standard deduction. 
B) The AMT was enacted in an attempt to limit the ability of taxpayers to engage in questionable tax planning activities.
The goal of the AMT 
C) The goal of the AMT is to try and ensure that all taxpayers with economic income pay at least some income tax. 
D) Exemption amounts are higher for regular tax purposes than for AMT purposes. 
E) a.and d.are correct

Question 19

The phaseout of the AMT exemption amount for a taxpayer filing as a head of household both begins and ends at a higher income level than it does for a single taxpayer.

Accepted Answer

A) True 
 B)False

Question 20

Under what circumstances are C corporations exempt from the AMT?

Accepted Answer

Small corporations are exempt from the A

Exam 15: Alternative Minimum Tax

The AMT exemption for a C corporation is $50,000,reduced by 50% of the amount by which AMTI exceeds $150,000.

Robin,who is a head of household and age 42,provides you with the following information from his financial records for 2017.Robert itemizes deductions. ​ Calculate Robin's AMT for 2017.

Are the AMT rates for the individual taxpayer the same as those for a corporate taxpayer?

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.

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.

Beulah,who is single,provides you with the following information from her financial records for 2017.Compute Beulah's AMTI. ​ ​

The corporate AMT does not apply to "small" C corporations.

Prior to the effect of tax credits,Eunice's regular income tax liability is $325,000 and her tentative minimum tax is $312,000.Eunice has general business credits available of $20,000.Calculate Eunice's tax liability after tax credits.

Cher sold undeveloped land that originally cost $150,000 for $225,000.There is a positive AMT adjustment of $75,000 associated with the sale of the land.

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.

If the taxpayer elects to capitalize and to amortize intangible drilling costs over a 3-year period for regular income tax purposes,there is no adjustment or preference for AMT purposes.

Which of the following can produce an AMT preference rather than an AMT adjustment?

If a gambling loss itemized deduction is permitted for regular income tax purposes,no AMT adjustment results.

The AMT adjustment for mining exploration and development costs can be avoided if the taxpayer elects to deduct the expenditures in the year incurred for regular income tax purposes,rather than writing off the expenditures over a 10-year period for regular income tax purposes.

Which of the following statements is correct?

​Which of the following statements describing the alternative minimum tax (AMT) is most correct?

The phaseout of the AMT exemption amount for a taxpayer filing as a head of household both begins and ends at a higher income level than it does for a single taxpayer.

Under what circumstances are C corporations exempt from the AMT?

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

Property Transactions, capital Gains and Losses, sec1231, and 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 Reorganization

Partnerships

S Corporations

Exempt Entities

Multistate Corporate Taxation

Taxation of International Transactions

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Income Taxation of Trusts and Estates

Filters

Robin,who is a head of household and age 42,provides you with the following information from his financial records for 2017.Robert itemizes deductions. Calculate Robin's AMT for 2017.

Beulah,who is single,provides you with the following information from her financial records for 2017.Compute Beulah's AMTI.

Which of the following statements describing the alternative minimum tax (AMT) is most correct?