Exam 15: Alternative Minimum Tax

​A,B and C are each single,report wage income of $135,000,and take the standard deduction.The following additional information is provided about each taxpayer. A: Resides in New York.$45,000 interest income from Treasury bonds. B: Resides in Nevada.$45,000 capital gain from the sale of stock. C: Resides in Florida.$45,000 interest income from private-activity municipal bonds. All else being equal and taking into consideration the principles underlying the AMT,which of these taxpayers has the highest likelihood of being subject to the AMT in the current tax year? ​ ​

C corporations are not required to make AMT adjustments for depreciation.

​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 holds an alternative minimum tax credit of $6,200 from 2013. What is Brenda's total 2017 Federal income tax liability?

In 2017,Linda incurs circulation expenses of $240,000 which she deducts in calculating taxable income. a.Calculate Linda's AMT adjustment for circulation expenses for 2017, 2018, 2019, and 2020. b.Advise Linda on how she could reduce or eliminate the AMT adjustment in 2017.​

Sand Corporation,a calendar year C corporation,reports alternative minimum taxable income of $900,000 for 2017.Sand's tentative minimum tax for 2017 is:

When qualified residence interest exceeds qualified housing interest,the positive adjustment required in calculating AMT is a timing adjustment.That is,in the future,there will be an offsetting negative adjustment.Comment on the validity of this statement.

How can interest on a private activity bond issued in 2013 result in both an AMT adjustment that decreases AMTI and an AMT preference that increases AMTI?

What is the relationship between the regular income tax liability and the TMT?

Vinny's AGI is $250,000.He contributed $200,000 in cash to the Boy Scouts,a public charity.What is Vinny's charitable contribution deduction for AMT purposes?

Darin,who is age 30,records itemized deductions in calculating 2017 taxable income as follows. ​ a.​Calculate Darin's itemized deductions for AMT purposes using the direct method. b.Calculate Darin's itemized deductions for AMT purposes using the indirect method.

The net capital gain included in an individual taxpayer's AMT base is eligible for the lower tax rate on net capital gain.This favorable alternative rate applies both in calculating the regular income tax and the AMT.

Joel placed real property in service in 2017 that cost $900,000 and used MACRS depreciation for regular income tax purposes.He is required to make a positive adjustment for AMT purposes in 2017 for the excess of depreciation calculated for regular income tax purposes over the depreciation calculated for AMT purposes.

The sale of business property could result in an AMT adjustment.

Akeem,who does not itemize,incurred a net operating loss (NOL) of $50,000 in 2016.His deductions in 2016 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 2017?

For individual taxpayers,the AMT credit is applicable for the AMT that results from timing differences,but it is not available for the AMT that results from the adjustment for itemized deductions or exclusion preferences.

Andrea,who is single,is entitled to a personal exemption deduction in calculating her 2017 taxable income.She has no dependency exemptions.What is the amount of the AMT adjustment in calculating AMTI?

Caroline and Clint are married,have no dependents,and file a joint return in 2017.Use the following information to calculate their Federal income tax liability. ​

If Abby's alternative minimum taxable income exceeds her regular taxable income,she will incur an alternative minimum tax.

Arlene,who is single,reports taxable income for 2017 of $112,000.Calculate her alternative minimum tax,if any,given the following additional information. ​

Marvin,the vice president of Lavender,Inc.,exercises stock options for 100 shares of stock in March 2017.The stock options are incentive stock options (ISOs).Their exercise price is $20 and the fair market value on the date of exercise is $28.The options were granted in March 2013 and all restrictions on the free transferability had lapsed by the exercise date.