Exam 15: Alternative Minimum Tax

Tamara operates a natural gas sole proprietorship that incurred $68,000 of intangible drilling costs (IDC) in the current year.Her sole proprietorship's net natural gas income for the year is $72,000. What is the sole proprietorship's current year IDC preference? ​

Ashby,who is single and age 30,provides you with the following information from his financial records for 2017. ​ Calculate his AMT exemption for 2017.

Do AMT adjustments and AMT preferences increase or decrease AMTI?

​Which of the following regular taxable income amounts does not potentially create an adjustment or preference in both the individual and the corporate AMT calculations? ​

What tax rates apply in calculating the TMT for an individual taxpayer?

​In 2017,Liam's filing status is married filing separately.For regular tax purposes,he claims a dependency exemption for himself and three personal exemptions ($16,200 in total).Liam does not itemize deductions; his regular taxable income is $56,000. What is Liam's 2017 AMT base?

Use the following data to calculate Jolene's AMTI in 2017.Jolene itemizes deductions.

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.

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.

Prior to the effect of the tax credits,Justin's regular income tax liability is $200,000.and his tentative minimum tax is $195,000.Justin reports the following credits. ​ Calculate Justin's tax liability after credits.

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

Bianca and David report the following for 2017. ​ a.Calculate Bianca and David's AMT if they qualify for the adoption expense credit of $11,000. b.Calculate Bianca and David's AMT if they qualify for the adoption expense credit of $13,190.

Interest income on private activity bonds issued before 2009 and after 2010,reduced by expenses incurred in carrying the bonds,is a preference item that is included in computing AMTI.

Crimson,Inc.,provides you with the following information. ​ Calculate Crimson's AMT for 2017.

In 2017,Blake incurs $270,000 of mining exploration expenditures,and deducts the entire amount for regular income tax purposes.Which of the following statements is correct?

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.As a result,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).

What itemized deductions are allowed for both regular income tax purposes and for AMT purposes?

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

Use the following selected data to calculate Devon's taxable income prior to any personal exemption taken.Devon itemizes deductions.

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?