Question 1

​In the current tax year, for regular tax purposes, Avery reports $65,000 of income and $190,000 of deductions from passive activities. For AMT purposes, the passive activity income amount is unchanged, but deductions from passive activities total $150,000. ​
What is Avery's suspended passive loss for regular tax and for AMT purposes?
​

Accepted Answer

A)  ​$0; $0.
B)  ​$(40,000) ; $(40,000) .
C)  ​$(125,000) ; $(85,000) .
D)  ​$(190,000) ; $(150,000) . C

Question 2

Ashby, who is single and age 30, provides you with the following information from his financial records for 2017. ​
 Calculate his AMT exemption for 2017.

Accepted Answer

A)  $0
B)  $26,075
C)  $28,225
D)  $54,300 C

Question 3

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

Accepted Answer

A) True 
 B)False  True

Question 4

Because passive losses are not deductible in computing either taxable income or AMTI, no AMT adjustment for passive losses is required.

Accepted Answer

A) True 
 B)False

Question 5

The required adjustment for AMT purposes for pollution control facilities placed in service this year is equal to the difference between the amortization deduction allowed for regular income tax purposes and the depreciation deduction computed under ADS.

Accepted Answer

A) True 
 B)False

Question 6

What itemized deductions are allowed for both regular income tax purposes and for AMT purposes?

Accepted Answer

The answer of What itemized deductions are allowed for both...

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

On February 1, 2017, Omar acquires used 7-year personal property for $100,000 for use in his business. Omar does not elect § 179 expensing, but he does take the maximum regular cost recovery deduction. As a result, Omar incurs a positive AMT adjustment in 2017 of what amount?

Accepted Answer

A)  $0
B)  $3,580
C)  $10,710
D)  $14,290
E)  None of the above

Question 9

​Which of the following statements regarding differences in the corporate and the individual AMT calculation is most correct? ​

Accepted Answer

A)  ​The corporate AMT does not provide for a minimum tax credit.
B)  ​Both the corporate and the individual AMT exemption amounts phase out once a certain level of AMTI is reached.
C)  ​Unlike the corporate AMT, the only credit available to reduce an individual's tentative minimum tax (TMT)  is the foreign tax credit.
D)  ​Both the individual and the corporate AMT rates are graduated.

Question 10

Which of the following statements is correct?

Accepted Answer

A)   The deduction for personal and dependency exemptions is not permitted in calculating the AMT. Therefore, in converting regular taxable income to AMTI, a positive adjustment is required.
B)   To the extent that itemized deductions exceed the standard deduction for regular income tax purposes, a positive AMT adjustment is required in converting regular taxable income to AMTI.
C)   The charitable contribution deduction for AMT purposes and for regular income tax purposes can be different. In this situation, a positive AMT adjustment is required for the amount of the difference.
D)   Only a. and b. are correct.
E)   a., b., and c. are correct.

Question 11

​Which of the following statements describing the alternative minimum tax (AMT) is most correct?

Accepted Answer

A)   Generally, those taxpayers most concerned about being in AMT are low income taxpayers who elect the standard deduction.
B)   The AMT was enacted in an attempt to limit the ability of taxpayers to engage in questionable tax planning activities.The goal of the AMT
C)   The goal of the AMT is to try and ensure that all taxpayers with economic income pay at least some income tax.
D)   Exemption amounts are higher for regular tax purposes than for AMT purposes.
E)   a. and d. are correct

Question 12

Wallace owns a construction company that builds both commercial and residential buildings. He contracts to build a residential building for $800,000, and 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 gross income on the contract. Under the percentage of completion method, the income recognized under the contract would have been $60,000. Wallace's AMT effect is:

Accepted Answer

A)  $0.
B)  $60,000 negative adjustment.
C)  $60,000 positive adjustment.
D)  $800,000 positive adjustment.

Question 13

Are the AMT rates for the individual taxpayer the same as those for a corporate taxpayer?

Accepted Answer

The answer of Are the AMT rates for the individual...

Question 14

AMT adjustments can be positive or negative, whereas AMT preferences are always positive.

Accepted Answer

A) True 
 B)False

Question 15

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:

Accepted Answer

A)  $0.
B)  $40,000.
C)  $180,000.
D)  $191,250.

Question 16

Robin, who is a head of household and age 42, provides you with the following information from his financial records for 2017. Robert itemizes deductions. ​
 Calculate Robin's AMT for 2017.

Accepted Answer

A)  $6,633.
B)  $13,332.
C)  $48,828.
D)  $54,428.

Question 17

If the AMT base is greater than $187,800, the AMT rate for an individual taxpayer is the same as the AMT rate for a C corporation.

Accepted Answer

A) True 
 B)False

Question 18

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.

Accepted Answer

A) True 
 B)False

Question 19

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?

Accepted Answer

The answer of How can interest on a private activity...

Question 20

How can an AMT adjustment be avoided by a taxpayer who incurs circulation expenditures in the current tax year?

Accepted Answer

The answer of How can an AMT adjustment be avoided...

Exam 12: Alternative Minimum Tax

Ashby, who is single and age 30, provides you with the following information from his financial records for 2017. Calculate his AMT exemption for 2017.

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

Because passive losses are not deductible in computing either taxable income or AMTI, no AMT adjustment for passive losses is required.

The required adjustment for AMT purposes for pollution control facilities placed in service this year is equal to the difference between the amortization deduction allowed for regular income tax purposes and the depreciation deduction computed under ADS.

What itemized deductions are allowed for both regular income tax purposes and for AMT purposes?

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

On February 1, 2017, Omar acquires used 7-year personal property for $100,000 for use in his business. Omar does not elect § 179 expensing, but he does take the maximum regular cost recovery deduction. As a result, Omar incurs a positive AMT adjustment in 2017 of what amount?

Which of the following statements regarding differences in the corporate and the individual AMT calculation is most correct?

Which of the following statements is correct?

Which of the following statements describing the alternative minimum tax (AMT) is most correct?

Are the AMT rates for the individual taxpayer the same as those for a corporate taxpayer?

AMT adjustments can be positive or negative, whereas AMT preferences are always positive.

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:

Robin, who is a head of household and age 42, provides you with the following information from his financial records for 2017. Robert itemizes deductions. Calculate Robin's AMT for 2017.

If the AMT base is greater than $187,800, the AMT rate for an individual taxpayer is the same as the AMT rate for a C corporation.

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.

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?

How can an AMT adjustment be avoided by a taxpayer who incurs circulation expenditures in the current tax year?

Exam 12: Alternative Minimum Tax

Ashby, who is single and age 30, provides you with the following information from his financial records for 2017. ​ Calculate his AMT exemption for 2017.

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

Because passive losses are not deductible in computing either taxable income or AMTI, no AMT adjustment for passive losses is required.

The required adjustment for AMT purposes for pollution control facilities placed in service this year is equal to the difference between the amortization deduction allowed for regular income tax purposes and the depreciation deduction computed under ADS.

What itemized deductions are allowed for both regular income tax purposes and for AMT purposes?

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

On February 1, 2017, Omar acquires used 7-year personal property for $100,000 for use in his business. Omar does not elect § 179 expensing, but he does take the maximum regular cost recovery deduction. As a result, Omar incurs a positive AMT adjustment in 2017 of what amount?

​Which of the following statements regarding differences in the corporate and the individual AMT calculation is most correct? ​

Which of the following statements is correct?

​Which of the following statements describing the alternative minimum tax (AMT) is most correct?

Are the AMT rates for the individual taxpayer the same as those for a corporate taxpayer?

AMT adjustments can be positive or negative, whereas AMT preferences are always positive.

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:

Robin, who is a head of household and age 42, provides you with the following information from his financial records for 2017. Robert itemizes deductions. ​ Calculate Robin's AMT for 2017.

If the AMT base is greater than $187,800, the AMT rate for an individual taxpayer is the same as the AMT rate for a C corporation.

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.

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?

How can an AMT adjustment be avoided by a taxpayer who incurs circulation expenditures in the current tax year?

Ashby, who is single and age 30, provides you with the following information from his financial records for 2017. Calculate his AMT exemption for 2017.

Which of the following statements regarding differences in the corporate and the individual AMT calculation is most correct?

Which of the following statements describing the alternative minimum tax (AMT) is most correct?

Robin, who is a head of household and age 42, provides you with the following information from his financial records for 2017. Robert itemizes deductions. Calculate Robin's AMT for 2017.