Question 1

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.

Accepted Answer

A) True 
 B)False

Question 2

Prior to the effect of the tax credits,Justin's regular income tax liability is $200,000 and his tentative minimum tax is $195,000.Justin reports the following credits. Child tax credit $1,000 Adoption expenses credit 5,000 ​ Calculate Justin's tax liability after credits.

Accepted Answer

A) $190,000 
B) $194,000 
C) $195,000 
D) $200,000 
E) None of the above

Question 3

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,the AMT is $2,000. 
B) If the tentative minimum tax is $12,000 and the regular income tax liability is $10,000,the AMT is $12,000. 
C) If the tentative minimum tax is $10,000 and the regular income tax liability is $12,000,the AMT is a negative $2,000. 
D) If the tentative minimum tax is $12,000,and the regular income tax liability is $10,000,the AMT is $2,000. 
E) None of the above.

Question 4

Certain adjustments apply in calculating the corporate AMT that do not apply in calculating the noncorporate AMT and certain adjustments apply in calculating the noncorporate AMT that do not apply in calculating the corporate AMT.

Accepted Answer

A) True 
 B)False

Question 5

The corporate AMT no longer applies.

Accepted Answer

A) True 
 B)False

Question 6

All of a C corporation's AMT is available for carryover as a minimum tax credit regardless of whether the adjustments and preferences originate from timing differences or AMT preferences.

Accepted Answer

A) True 
 B)False

Question 7

The AMT exemption for a corporation with $225,000 of AMTI is $18,750.

Accepted Answer

A) True 
 B)False

Question 8

Vicki owns and operates a news agency (as a sole proprietorship).During 2015,she incurred expenses of $24,000 to increase circulation of newspapers and magazines that her agency distributes.For regular income tax purposes,she elected to expense the $24,000 in 2015.In addition,Vicki incurred $15,000 in circulation expenditures in 2016 and again elected expense treatment.What AMT adjustments will be required in 2015 and 2016 as a result of the circulation expenditures?

Accepted Answer

A) $16,000 positive in 2015,$2,000 positive in 2016. 
B) $16,000 negative in 2015,$2,000 positive in 2016. 
C) $16,000 negative in 2015,$10,000 positive in 2016. 
D) $16,000 positive in 2015,$10,000 positive in 2016. 
E) None of the above.

Question 9

Ashley can reduce her regular income tax liability from $47,000 to $43,500 as the result of the alternative tax on net capital gain.Ashley's tentative minimum tax is $51,000.

Accepted Answer

A) Ashley's tax liability is reduced by $3,500 as the result of the alternative tax calculation on net capital gain. 
B) Ashley's AMT is increased by $3,500 as the result of the alternative tax calculation on net capital gain. 
C) Ashley's tax liability is $43,500. 
D) Ashley's tax liability is $47,000. 
E) None of the above.

Question 10

Jackson sells qualifying small business stock for $125,000 (adjusted basis of $105,000) in 2014.In calculating gross income for regular income tax purposes,he excludes all of his realized gain of $20,000.The $20,000 exclusion is a tax preference in calculating Jackson's AMTI.

Accepted Answer

A) True 
 B)False

Question 11

Kay had percentage depletion of $119,000 for the current year for regular income tax purposes.Cost depletion was $60,000.Her basis in the property was $90,000 at the beginning of the current year.Kay must treat the percentage depletion deducted in excess of cost depletion,or $59,000,as a tax preference in computing AMTI.

Accepted Answer

A) True 
 B)False

Question 12

The AMT exemption for a C corporation is $50,000 reduced by 25% of the amount by which AMTI exceeds $150,000.

Accepted Answer

A) True 
 B)False

Question 13

Interest income on private activity bonds issued before 2009 and after 2010,reduced by expenses incurred in carrying the bonds,is a tax preference item that is included in computing AMTI.

Accepted Answer

A) True 
 B)False

Question 14

Beula,who is a head of household and age 40,provides you with the following information from her financial records for 2015. ​ Regular income tax liability $ 35,776 AMT positive adjustments 33,000 AMT preferences 25,000 Taxable income 170,000 ​ Calculate her AMTI for 2015.

Accepted Answer

A) $0 
B) $171,300 
C) $201,600 
D) $228,000 
E) None of the above

Question 15

Ashby,who is single and age 30,provides you with the following information from his financial records for 2015. Regular income tax liability $ 47,228 AMT positive adjustments 40,000 AMT preferences 20,000 Taxable income 195,000 ​ Calculate his AMT exemption for 2015.

Accepted Answer

A) $0 
B) $17,000 
C) $26,800 
D) $53,600 
E) None of the above

Question 16

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) $57,892. 
C) $61,600. 
D) $77,000. 
E) None of the above.

Question 17

Dale owns and operates Dale's Emporium as a sole proprietorship.On January 30,1998,Dale's Emporium acquired a warehouse for $100,000.For regular income tax purposes in 2015,depreciation was deducted under MACRS using a rate of 2.564%.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. 
E) None of the above.

Question 18

If the taxpayer elects to capitalize intangible drilling costs and to amortize them over a 3-year period for regular income tax purposes,there is no adjustment or preference for AMT purposes.

Accepted Answer

A) True 
 B)False

Question 19

Prior to the effect of tax credits,Eunice's regular income tax liability is $325,000 and her tentative minimum tax is $312,000.Eunice has general business credits available of $20,000.Calculate Eunice's tax liability after tax credits.

Accepted Answer

A) $0 
B) $305,000 
C) $312,000 
D) $325,000 
E) None of the above

Question 20

C corporations are subject to a positive AMT adjustment equal to 75% of the excess of ACE over AMTI before the ACE adjustment.

Accepted Answer

A) True 
 B)False

Exam 15: Alternative Minimum Tax

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.

Prior to the effect of the tax credits,Justin's regular income tax liability is $200,000 and his tentative minimum tax is $195,000.Justin reports the following credits. Child tax credit $1,000 Adoption expenses credit 5,000 Calculate Justin's tax liability after credits.

Which of the following statements is correct?

Certain adjustments apply in calculating the corporate AMT that do not apply in calculating the noncorporate AMT and certain adjustments apply in calculating the noncorporate AMT that do not apply in calculating the corporate AMT.

The corporate AMT no longer applies.

All of a C corporation's AMT is available for carryover as a minimum tax credit regardless of whether the adjustments and preferences originate from timing differences or AMT preferences.

The AMT exemption for a corporation with $225,000 of AMTI is $18,750.

Ashley can reduce her regular income tax liability from $47,000 to $43,500 as the result of the alternative tax on net capital gain.Ashley's tentative minimum tax is $51,000.

Jackson sells qualifying small business stock for $125,000 (adjusted basis of $105,000) in 2014.In calculating gross income for regular income tax purposes,he excludes all of his realized gain of $20,000.The $20,000 exclusion is a tax preference in calculating Jackson's AMTI.

The AMT exemption for a C corporation is $50,000 reduced by 25% of the amount by which AMTI exceeds $150,000.

Interest income on private activity bonds issued before 2009 and after 2010,reduced by expenses incurred in carrying the bonds,is a tax preference item that is included in computing AMTI.

Beula,who is a head of household and age 40,provides you with the following information from her financial records for 2015. Regular income tax liability $ 35,776 AMT positive adjustments 33,000 AMT preferences 25,000 Taxable income 170,000 Calculate her AMTI for 2015.

Ashby,who is single and age 30,provides you with the following information from his financial records for 2015. Regular income tax liability $ 47,228 AMT positive adjustments 40,000 AMT preferences 20,000 Taxable income 195,000 Calculate his AMT exemption for 2015.

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:

If the taxpayer elects to capitalize intangible drilling costs and to amortize them over a 3-year period for regular income tax purposes,there is no adjustment or preference for AMT purposes.

Prior to the effect of tax credits,Eunice's regular income tax liability is $325,000 and her tentative minimum tax is $312,000.Eunice has general business credits available of $20,000.Calculate Eunice's tax liability after tax credits.

C corporations are subject to a positive AMT adjustment equal to 75% of the excess of ACE over AMTI before the ACE adjustment.

Exam 15: Alternative Minimum Tax

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.

Prior to the effect of the tax credits,Justin's regular income tax liability is $200,000 and his tentative minimum tax is $195,000.Justin reports the following credits. Child tax credit $1,000 Adoption expenses credit 5,000 ​ Calculate Justin's tax liability after credits.

Which of the following statements is correct?

Certain adjustments apply in calculating the corporate AMT that do not apply in calculating the noncorporate AMT and certain adjustments apply in calculating the noncorporate AMT that do not apply in calculating the corporate AMT.

The corporate AMT no longer applies.

All of a C corporation's AMT is available for carryover as a minimum tax credit regardless of whether the adjustments and preferences originate from timing differences or AMT preferences.

The AMT exemption for a corporation with $225,000 of AMTI is $18,750.

Ashley can reduce her regular income tax liability from $47,000 to $43,500 as the result of the alternative tax on net capital gain.Ashley's tentative minimum tax is $51,000.

Jackson sells qualifying small business stock for $125,000 (adjusted basis of $105,000) in 2014.In calculating gross income for regular income tax purposes,he excludes all of his realized gain of $20,000.The $20,000 exclusion is a tax preference in calculating Jackson's AMTI.

The AMT exemption for a C corporation is $50,000 reduced by 25% of the amount by which AMTI exceeds $150,000.

Interest income on private activity bonds issued before 2009 and after 2010,reduced by expenses incurred in carrying the bonds,is a tax preference item that is included in computing AMTI.

Beula,who is a head of household and age 40,provides you with the following information from her financial records for 2015. ​ Regular income tax liability $ 35,776 AMT positive adjustments 33,000 AMT preferences 25,000 Taxable income 170,000 ​ Calculate her AMTI for 2015.

Ashby,who is single and age 30,provides you with the following information from his financial records for 2015. Regular income tax liability $ 47,228 AMT positive adjustments 40,000 AMT preferences 20,000 Taxable income 195,000 ​ Calculate his AMT exemption for 2015.

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:

If the taxpayer elects to capitalize intangible drilling costs and to amortize them over a 3-year period for regular income tax purposes,there is no adjustment or preference for AMT purposes.

Prior to the effect of tax credits,Eunice's regular income tax liability is $325,000 and her tentative minimum tax is $312,000.Eunice has general business credits available of $20,000.Calculate Eunice's tax liability after tax credits.

C corporations are subject to a positive AMT adjustment equal to 75% of the excess of ACE over AMTI before the ACE adjustment.

Prior to the effect of the tax credits,Justin's regular income tax liability is $200,000 and his tentative minimum tax is $195,000.Justin reports the following credits. Child tax credit $1,000 Adoption expenses credit 5,000 Calculate Justin's tax liability after credits.

Beula,who is a head of household and age 40,provides you with the following information from her financial records for 2015. Regular income tax liability $ 35,776 AMT positive adjustments 33,000 AMT preferences 25,000 Taxable income 170,000 Calculate her AMTI for 2015.

Ashby,who is single and age 30,provides you with the following information from his financial records for 2015. Regular income tax liability $ 47,228 AMT positive adjustments 40,000 AMT preferences 20,000 Taxable income 195,000 Calculate his AMT exemption for 2015.