Exam 13: At-Riskpassive Activity Loss Rules and the Individual Alternative Minimum Tax

Generally,the gains and losses recognized for regular tax purposes are the same amount as the gains and losses recognized for AMT purposes.

Jon is in the car rental business.Most of his customers rent cars on a daily basis.Jon's car rental business is considered a passive activity since rental activities are always treated as passive activities.

Which of the following itemized deductions is not allowed for AMT?

Which of the following decreases a taxpayer's at-risk amount?

Sarah is single with no dependents.During 2016,Sarah has $86,000 of taxable income.She has $14,000 of positive AMT adjustments and $24,000 of tax preferences.Sarah does not itemize her deductions but takes the standard deduction.Calculate Sarah's AMTI.

Adjustments to AMTI can be either positive or negative.

Every taxpayer who calculates depreciation on his or her tax return will have a depreciation adjustment for AMT purposes.

Cory sells his entire interest in a rental property in which he actively participated at a gain of $12,000.The activity has a current year loss of $4,800 and $16,000 in prior year suspended losses.During the year,Cory has $80,000 in salary.What is Cory's AGI for the year?

For AMT purposes,a taxpayer must use which method to report proceeds from long-term contracts?

Which of the following is a passive activity?

How much,in rental losses,can an individual earning a salary of $125,000 per year offset against salary if he or she owns at least 10% of a rental activity and actively participates in the rental activity?

For AMT purposes,the standard deduction and personal exemptions are:

If a taxpayer disposes of a passive activity in a taxable transaction,suspended passive losses from past years can be used to offset salary and portfolio income.

Joshua purchased business furniture and fixtures 7-year property)for $40,000 in May 2013.On July 15,2016,Joshua sold the furniture and fixtures for $30,000.During his years of ownership,he had taken $27,504 of depreciation for regular tax purposes.AMT depreciation for that period was $17,276.What is the 2016 AMT adjustment required as a result of the sale of the assets?

Claudia invested $50,000 cash in the C&S General Partnership and received a 20% interest.The partnership borrowed $200,000 of full recourse debt from a local bank.Assuming that Claudia is personally liable for $40,000 if the partnership defaults on the loan,what is Claudia's at-risk amount before considering any partnership income or loss?

Denise's AGI is $145,000 before considering her single rental property.During the year,Denise had a rental loss of $13,000.What is Denise's AGI after considering the rental loss?

Rene owns four small businesses.Rene spends the following number of hours this year working in those businesses: Business A,105 hours; Business B,130 hours; Business C,120 hours; Business D,99 hours.Which of the following statements is correct?

Terence and Alfred each invested $10,000 cash in T&A General Partnership and each received a 50% interest in the partnership.The partnership borrowed $100,000 in full recourse debt. a.Assume that the $100,000 was borrowed from a bank.What are the amounts Terence and Alfred have at-risk with respect to their partnership interests? b.Assume that the $100,000 was borrowed from Alfred.What are the amounts Terence and Alfred have at-risk with respect to their partnership interests?

The passive activity loss rules require income/loss items to be separated into two categories: active income/loss and passive income/loss.

Jonathan is married,files a joint return,and has one child.During 2016,Jonathan has $85,000 of taxable income.He has $20,000 of positive AMT adjustments and $28,000 of tax preferences.Since Jonathan rents his home pays no mortgage interest)and lives in Florida has no state income tax),he does not itemize his deductions but takes the standard deduction.Calculate Jonathan's AMTI before exclusion amount).