Exam 15: Alternative Minimum Tax

Celia and Amos,who are married filing jointly,have one dependent and do not itemize deductions.They have taxable income of $82,000 and tax preferences of $53,000 in 2010.What is their AMT base for 2010?

Lavender,Inc. ,incurs research and experimental expenditures of $210,000 in 2010.Determine the amount of the AMT adjustment for 2010 and for 2011 if for regular income tax purposes:

Why is there no AMT adjustment for charitable contributions?

If all long-term contracts are accounted for under the percentage of completion method for regular income tax purposes,no adjustment is required for AMT purposes.

AMT adjustments can be both positive and negative in calculating AMTI,whereas AMT tax preferences can be only positive.

How can interest on a private activity bond issued in 2008 result in both an AMT adjustment that decreases AMTI and an AMT preference that increases AMTI?

What is the purpose of the AMT exemption amount? What is the maximum amount for each filing status for an individual taxpayer and for a corporate taxpayer?

During its first year of operations,Sherry's business incurred circulation expenditures of $90,000.Since the income of the business is small,Sherry decides to capitalize the expenditures and to amortize them over 3 years for regular income tax purposes.The AMT adjustment for circulation expenditures for the first year of operations is:

Calculate the AMT exemption for 2010 if the taxpayer's AMTI is $210,000 and the filing status is:

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

Nonrefundable personal credits are permitted to offset the AMT.

Wallace owns a construction company that builds both commercial and residential buildings.He contracts to build a residential building for $800,000 for which he is eligible to use the completed contract method of accounting.In the current year for regular income tax purposes,Wallace does not recognize any income on the contract.Under the percentage of complete method,the income recognized under the contract would have been $60,000.Wallace's AMT adjustment is:

On January 3,1997,White Corporation acquired an office building for $100,000 and claimed MACRS depreciation of 2.461%.The Alternative Depreciation System rate for the first recovery year is 2.396%.What was White's AMT adjustment (or preference)for depreciation with respect to the office building in 1997?

In 2010,Ray incurs $60,000 of mining exploration expenditures,and deducts the entire amount for regular income tax purposes.Which of the following statements is incorrect?

Mabel is in the 28% marginal tax bracket.She has a net capital gain of $75,000 on the sale of land which is eligible for the alternative tax on net capital gain in calculating the regular income tax.Discuss the tax rate that applies to the $75,000 net capital gain in calculating the tentative AMT.

Which of the following normally produces positive AMT adjustments?

The deduction for charitable contributions in calculating the regular income tax is not the same as that in calculating the AMT.

Akeem,who does not itemize,incurred a net operating loss (NOL)of $50,000 in 2010.His deductions in 2010 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 2011?

Smoke,Inc. ,provides you with the following information: Calculate Smoke's AMT for 2010.

If the tentative AMT is less than the regular income tax,the AMT will be zero.