Question 1

The deduction for personal and dependency exemptions usually is allowed for regular income tax purposes,but is disallowed for AMT purposes.

Accepted Answer

A) True 
 B)False

Question 2

Cindy,who is single and has no dependents,has adjusted gross income of $50,000 in 2010.Her potential itemized deductions are as follows:
   What is the amount of Cindy's AMT adjustment for itemized deductions for 2010?

Accepted Answer

Cindy's adjustments

Question 3

The AMT does not apply to qualifying "small corporations."

Accepted Answer

A) True 
 B)False

Question 4

The C corporation AMT rate is higher than the individual AMT rates.

Accepted Answer

A) True 
 B)False

Question 5

If the taxpayer elects to capitalize intangible drilling costs and to amortize them over a 10-year period for regular income tax purposes,there is no adjustment or preference for AMT purposes.

Accepted Answer

A) True 
 B)False

Question 6

In 2010,Glenda had a $97,000 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 2010,Glenda can deduct $97,000 for regular income tax purposes and for AMT purposes. 
B) Glenda will have a $97,000 tax preference in 2010 as a result of the passive activity. 
C) For regular income tax purposes,none of the loss is allowed in 2010. 
D) In 2010,Glenda will have a positive adjustment of $25,000 as a result of the passive loss. 
E) None of the above. 
A) In 2010,Glenda can deduct $97,000 for regular income tax purposes and for AMT purposes. 
B) Glenda will have a $97,000 tax preference in 2010 as a result of the passive activity. 
C) For regular income tax purposes,none of the loss is allowed in 2010. 
D) In 2010,Glenda will have a positive adjustment of $25,000 as a result of the passive loss. 
E) None of the above.

Question 7

The purpose of the AMT is to replace the regular income tax.

Accepted Answer

A) True 
 B)False

Question 8

What is the relationship between the regular income tax liability and the tentative AMT?

Accepted Answer

If the tentative AMT exceeds t

Question 9

Keosha acquires 10-year personal property to use in her business in 2010 and takes the maximum cost recovery deduction for regular income tax purposes.As a result of this,Keosha will have a positive AMT adjustment in 2010.

Accepted Answer

A) True 
 B)False

Question 10

After personal property is fully depreciated for both regular income tax purposes and AMT purposes,the positive and negative adjustments that have been made for AMT purposes will net to zero.

Accepted Answer

A) True 
 B)False

Question 11

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.

Accepted Answer

This AMT adjustment

Question 12

Which of the following can produce an AMT preference rather than an AMT adjustment?

Accepted Answer

A) Circulation expenditures. 
B) Research and experimental expenditures. 
C) Percentage depletion. 
D) Incentive stock options (ISOs). 
E) None of the above. 
A) Circulation expenditures. 
B) Research and experimental expenditures. 
C) Percentage depletion. 
D) Incentive stock options (ISOs). 
E) None of the above.

Question 13

In 2010,Daniel exercised an incentive stock option (ISO),acquiring stock with a fair market value of $210,000 for $165,000.His AMT basis for the stock is $210,000,his regular income tax basis for the stock is $165,000,and his AMT adjustment is $45,000 ($210,000 - $165,000).

Accepted Answer

A) True 
 B)False

Question 14

Which of the following itemized deductions will be the same amount for the regular income tax and the AMT?

Accepted Answer

A) Real property taxes. 
B) Medical expenses. 
C) Charitable contributions. 
D) State income taxes. 
E) None of the above. 
A) Real property taxes. 
B) Medical expenses. 
C) Charitable contributions. 
D) State income taxes. 
E) None of the above.

Question 15

Income from some long-term contracts can be reported using the completed contract method for regular income tax purposes,but the percentage of completion method is required for AMT purposes for all long-term contracts.

Accepted Answer

A) True 
 B)False

Question 16

For the ACE adjustment,discuss the relationship between ACE and unadjusted AMTI.

Accepted Answer

A positive AMT adjustment occurs if the

Question 17

Mitch,who is single and has no dependents,had AGI of $100,000 in 2010.His potential itemized deductions were as follows:   What is the amount of Mitch's AMT adjustment for itemized deductions for 2010?

Accepted Answer

A) $14,800. 
B) $16,800. 
C) $19,300. 
D) $25,800. 
E) None of the above. 
A) $14,800. 
B) $16,800. 
C) $19,300. 
D) $25,800. 
E) None of the above.

Question 18

The net capital gain included in an individual taxpayer's AMT base is eligible for the alternative tax rate on net capital gain.

Accepted Answer

A) True 
 B)False

Question 19

Green Corporation,a calendar year taxpayer,has alternative minimum taxable income [before adjustment for adjusted current earnings (ACE)] of $600,000 for 2010.If Green's (ACE)is $1,500,000,its tentative minimum tax for 2010 is:

Accepted Answer

A) $1,275,000. 
B) $1,500,000. 
C) $255,000. 
D) $242,000. 
E) None of the above. 
A) $1,275,000. 
B) $1,500,000. 
C) $255,000. 
D) $242,000. 
E) None of the above.

Question 20

For regular income tax purposes,Yolanda,who is single,is in the 35% tax bracket.Her AMT base is $220,000.Her tentative AMT is:

Accepted Answer

A) $57,200. 
B) $58,100. 
C) $61,600. 
D) $77,000. 
E) None of the above. 
A) $57,200. 
B) $58,100. 
C) $61,600. 
D) $77,000. 
E) None of the above.

Exam 15: Alternative Minimum Tax

The deduction for personal and dependency exemptions usually is allowed for regular income tax purposes,but is disallowed for AMT purposes.

Cindy,who is single and has no dependents,has adjusted gross income of $50,000 in 2010.Her potential itemized deductions are as follows: What is the amount of Cindy's AMT adjustment for itemized deductions for 2010?

The AMT does not apply to qualifying "small corporations."

The C corporation AMT rate is higher than the individual AMT rates.

If the taxpayer elects to capitalize intangible drilling costs and to amortize them over a 10-year period for regular income tax purposes,there is no adjustment or preference for AMT purposes.

In 2010,Glenda had a $97,000 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?

The purpose of the AMT is to replace the regular income tax.

What is the relationship between the regular income tax liability and the tentative AMT?

Keosha acquires 10-year personal property to use in her business in 2010 and takes the maximum cost recovery deduction for regular income tax purposes.As a result of this,Keosha will have a positive AMT adjustment in 2010.

After personal property is fully depreciated for both regular income tax purposes and AMT purposes,the positive and negative adjustments that have been made for AMT purposes will net to zero.

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.

Which of the following can produce an AMT preference rather than an AMT adjustment?

In 2010,Daniel exercised an incentive stock option (ISO),acquiring stock with a fair market value of $210,000 for $165,000.His AMT basis for the stock is $210,000,his regular income tax basis for the stock is $165,000,and his AMT adjustment is $45,000 ($210,000 - $165,000).

Which of the following itemized deductions will be the same amount for the regular income tax and the AMT?

Income from some long-term contracts can be reported using the completed contract method for regular income tax purposes,but the percentage of completion method is required for AMT purposes for all long-term contracts.

For the ACE adjustment,discuss the relationship between ACE and unadjusted AMTI.

Mitch,who is single and has no dependents,had AGI of $100,000 in 2010.His potential itemized deductions were as follows: What is the amount of Mitch's AMT adjustment for itemized deductions for 2010?

The net capital gain included in an individual taxpayer's AMT base is eligible for the alternative tax rate on net capital gain.

Green Corporation,a calendar year taxpayer,has alternative minimum taxable income [before adjustment for adjusted current earnings (ACE)] of $600,000 for 2010.If Green's (ACE)is $1,500,000,its tentative minimum tax for 2010 is:

For regular income tax purposes,Yolanda,who is single,is in the 35% tax bracket.Her AMT base is $220,000.Her tentative AMT is:

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

Part 1--Property Transactions: Determination of Gain or Loss,basis Considerations,and Nontaxable Exchanges

Part 2--Property Transactions: Determination of Gain or Loss,basis Considerations,and Nontaxable Exchanges

Property Transactions: Capital Gains and Losses,1231,and Recapure Provisions

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Distributions in Complete Liquidation and an Overview of Reorganizations

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