Question 1

AMT adjustments can be positive or negative,whereas AMT preferences are always positive.

Accepted Answer

A) True 
 B)False

Question 2

The recognized gain for regular income tax purposes and the recognized gain for AMT purposes on the sale of stock acquired with an incentive stock option (ISO) are always the same,because the adjusted basis is the same.

Accepted Answer

A) True 
 B)False

Question 3

Eula owns a mineral property that had a basis of $23,000 at the beginning of the year.Cost depletion is $19,000.The property qualifies for a 15% depletion rate.Gross income from the property was $200,000,and net income before the percentage depletion deduction was $50,000.What is Eula's AMT preference for excess depletion,if she maximized her regular-tax depletion deduction?

Accepted Answer

A) $15,000 
B) $23,000 
C) $25,000 
D) $2,000 
A) $15,000 
B) $23,000 
C) $25,000 
D) $2,000

Question 4

Cindy,who is single and age 48,has no dependents and has adjusted gross income of $50,000 in 2017.Her potential itemized deductions are as follows.
​
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What are Cindy's AMT adjustments for itemized deductions for 2017?

Accepted Answer

Cindy's adjustments

Question 5

Since most tax preferences are merely timing differences,they eventually will reverse and net to zero.

Accepted Answer

A) True 
 B)False

Question 6

Interest on a home equity loan cannot be deducted for AMT purposes.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Dale owns and operates Dale's Emporium as a sole proprietorship.On January 30,2003,Dale's Emporium acquired a warehouse for $100,000.For regular income tax purposes in 2017,depreciation was deducted under MACRS using a 2.564% rate.Determine the AMT adjustment for depreciation and indicate whether it is positive or negative.

Accepted Answer

A) $64 negative adjustment. 
B) $64 positive adjustment. 
C) No adjustment is required because Dale's Emporium used the Alternative Depreciation System (ADS) to compute depreciation on the property for AMT purposes. 
D) No adjustment is required because Dale's Emporium used MACRS to compute the depreciation of the property for regular income tax purposes. 
A) $64 negative adjustment. 
B) $64 positive adjustment. 
C) No adjustment is required because Dale's Emporium used the Alternative Depreciation System (ADS) to compute depreciation on the property for AMT purposes. 
D) No adjustment is required because Dale's Emporium used MACRS to compute the depreciation of the property for regular income tax purposes.

Question 9

Which of the following statements is correct?

Accepted Answer

A) If the tentative minimum tax is $10,000 and the regular income tax liability is $12,000, AMT is $2,000. 
B) If the tentative minimum tax is $12,000 and the regular income tax liability is $10,000, AMT is $12,000. 
C) If the tentative minimum tax is $10,000 and the regular income tax liability is $12,000, AMT is a negative $2,000. 
D) If the tentative minimum tax is $12,000, and the regular income tax liability is $10,000, AMT is $2,000. 
A) If the tentative minimum tax is $10,000 and the regular income tax liability is $12,000, AMT is $2,000. 
B) If the tentative minimum tax is $12,000 and the regular income tax liability is $10,000, AMT is $12,000. 
C) If the tentative minimum tax is $10,000 and the regular income tax liability is $12,000, AMT is a negative $2,000. 
D) If the tentative minimum tax is $12,000, and the regular income tax liability is $10,000, AMT is $2,000.

Question 10

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

Question 11

Discuss the tax year in which an AMT adjustment is first required for an incentive stock option (ISO).

Accepted Answer

For regular income tax purposes,no incom

Question 12

​In 2017,Brenda has calculated her regular tax liability to be $32,500 and her tentative minimum tax (TMT) to be $36,300.Additionally,Brenda has an adoption expense credit (personal,nonrefundable credit) of $6,200. ​What is Brenda's total 2017 Federal income tax liability?

Accepted Answer

A) ​$26,300. 
B) ​$30,100. 
C) ​$32,500. 
D) ​$36,300. 
A) ​$26,300. 
B) ​$30,100. 
C) ​$32,500. 
D) ​$36,300.

Question 13

Which of the following statements is incorrect?

Accepted Answer

A) AMTI calculated under the direct and indirect methods produces the same amount. 
B) AMTI calculated under the direct and the indirect methods produces different amounts. 
C) The tax forms use the direct method to calculate the AMT. 
D) Only b.and c.are incorrect. 
E) a.,b.,and c.are incorrect. 
A) AMTI calculated under the direct and indirect methods produces the same amount. 
B) AMTI calculated under the direct and the indirect methods produces different amounts. 
C) The tax forms use the direct method to calculate the AMT. 
D) Only b.and c.are incorrect. 
E) a.,b.,and c.are incorrect.

Question 14

What is the relationship between taxable income and AMTI?

Accepted Answer

The indirect method,rather than the dire

Question 15

The AMT adjustment for research and experimental expenditures can be avoided if the taxpayer capitalizes the expenditures and amortizes them over a 10-year period for regular tax purposes.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

In 2017,Glenn recorded 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 2017, Glenn can deduct $108,000 for regular income tax purposes and for AMT purposes. 
B) Glenn reports a $108,000 tax preference in 2017 as a result of the passive activity. 
C) For regular income tax purposes, none of the passive activity loss is allowed in 2017. 
D) In 2017, Glenn reports a positive adjustment of $25,000 as a result of the passive activity loss. 
A) In 2017, Glenn can deduct $108,000 for regular income tax purposes and for AMT purposes. 
B) Glenn reports a $108,000 tax preference in 2017 as a result of the passive activity. 
C) For regular income tax purposes, none of the passive activity loss is allowed in 2017. 
D) In 2017, Glenn reports a positive adjustment of $25,000 as a result of the passive activity loss.

Question 18

Why is there no AMT adjustment for charitable contributions?

Accepted Answer

The charitable contribution deduction fo

Question 19

Which of the following statements is correct?

Accepted Answer

A) If the tentative minimum tax exceeds the regular income tax liability,AMT is $0. 
B) The AMT exemption amount decreases as AMTI increases. 
C) The highest AMT tax rate for individuals is 26%. 
D) Only a.and c.are correct. 
E) a.,b.,and c.are correct. 
A) If the tentative minimum tax exceeds the regular income tax liability,AMT is $0. 
B) The AMT exemption amount decreases as AMTI increases. 
C) The highest AMT tax rate for individuals is 26%. 
D) Only a.and c.are correct. 
E) a.,b.,and c.are correct.

Question 20

Mitch,who is single and age 46 and has no dependents,had AGI of $100,000 this year.His potential itemized deductions were as follows.
​
​
 
What is the amount of Mitch's AMT adjustment for itemized deductions for 2017?

Accepted Answer

A) $10,000. 
B) $12,300. 
C) $16,300. 
D) $34,300. 
A) $10,000. 
B) $12,300. 
C) $16,300. 
D) $34,300.

Exam 15: Alternative Minimum Tax

AMT adjustments can be positive or negative,whereas AMT preferences are always positive.

The recognized gain for regular income tax purposes and the recognized gain for AMT purposes on the sale of stock acquired with an incentive stock option (ISO) are always the same,because the adjusted basis is the same.

Cindy,who is single and age 48,has no dependents and has adjusted gross income of $50,000 in 2017.Her potential itemized deductions are as follows. ​ ​ What are Cindy's AMT adjustments for itemized deductions for 2017?

Since most tax preferences are merely timing differences,they eventually will reverse and net to zero.

Interest on a home equity loan cannot be deducted for AMT purposes.

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

Which of the following statements is correct?

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

Discuss the tax year in which an AMT adjustment is first required for an incentive stock option (ISO).

​In 2017,Brenda has calculated her regular tax liability to be $32,500 and her tentative minimum tax (TMT) to be $36,300.Additionally,Brenda has an adoption expense credit (personal,nonrefundable credit) of $6,200. ​What is Brenda's total 2017 Federal income tax liability?

Which of the following statements is incorrect?

What is the relationship between taxable income and AMTI?

The AMT adjustment for research and experimental expenditures can be avoided if the taxpayer capitalizes the expenditures and amortizes them over a 10-year period for regular tax purposes.

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

In 2017,Glenn recorded 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?

Why is there no AMT adjustment for charitable contributions?

Which of the following statements is correct?

Mitch,who is single and age 46 and has no dependents,had AGI of $100,000 this year.His potential itemized deductions were as follows. ​ ​ What is the amount of Mitch's AMT adjustment for itemized deductions for 2017?

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

Cindy,who is single and age 48,has no dependents and has adjusted gross income of $50,000 in 2017.Her potential itemized deductions are as follows. What are Cindy's AMT adjustments for itemized deductions for 2017?

In 2017,Brenda has calculated her regular tax liability to be $32,500 and her tentative minimum tax (TMT) to be $36,300.Additionally,Brenda has an adoption expense credit (personal,nonrefundable credit) of $6,200. What is Brenda's total 2017 Federal income tax liability?

Mitch,who is single and age 46 and has no dependents,had AGI of $100,000 this year.His potential itemized deductions were as follows. What is the amount of Mitch's AMT adjustment for itemized deductions for 2017?