Question 1

Calico,Inc. ,has AMTI of $235,000.Calculate the amount of the AMT exemption if:

Accepted Answer

The answer of Calico,Inc. ,has AMTI of $235,000.Calculate the amount...

Question 2

The exercise of an incentive stock option (ISO)increases both the AMTI and regular taxable income in the year of exercise.

Accepted Answer

A) True 
 B)False

Question 3

Sage,Inc. ,has the following gross receipts and taxable income:
  Is Sage,Inc. ,subject to the AMT in 2010?

Accepted Answer

The answer of Sage,Inc. ,has the following gross receipts and...

Question 4

If a taxpayer has tentative AMT of $60,000 and AMT of $15,000,what is the regular income tax liability?

Accepted Answer

A) $0. 
B) $15,000. 
C) $45,000. 
D) $75,000. 
E) None of the above.

Question 5

Losses associated with a passive activity owned by an individual are not deductible against active income or portfolio income in computing either the regular income tax or the AMT.

Accepted Answer

A) True 
 B)False

Question 6

Use the following data to calculate Melba's AMTI.

Accepted Answer

The answer of Use the following data to calculate Melba's...

Question 7

For AMT purposes,taxpayers must capitalize and amortize research and experimental expenditures over a 10-year period.

Accepted Answer

A) True 
 B)False

Question 8

The required adjustment for AMT purposes for pollution control facilities placed in service in 2010 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 9

Tyson sells land and building whose adjusted basis for regular income tax purposes is $300,000 and for AMT purposes is $390,000.The sales proceeds are $650,000.Determine the effect on:

Accepted Answer

The answer of Tyson sells land and building whose adjusted...

Question 10

If circulation expenditures are amortized over a ten-year period for regular income tax purposes,there will be no AMT adjustment.

Accepted Answer

A) True 
 B)False

Question 11

Prior to the effect of tax credits,Eunice's regular income tax liability is $200,000 and her tentative AMT is $190,000.Eunice has general business credits available of $12,500.Calculate Eunice's tax liability after tax credits.

Accepted Answer

A) $200,000. 
B) $190,000. 
C) $187,500. 
D) $177,500. 
E) None of the above.

Question 12

Interest income on private activity bonds issued before 2009,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 13

In determining the amount of the AMT adjustments,discuss the difference in the treatment of a building placed in service after 1986 and before January 1,1999 and a building placed in service after December 31,1998.

Accepted Answer

The answer of In determining the amount of the AMT...

Question 14

Why is there a need for a second tax system called the alternative minimum tax?

Accepted Answer

The answer of Why is there a need for a...

Question 15

If Faye's standard deduction exceeds her itemized deductions,there will be no AMT adjustment.

Accepted Answer

A) True 
 B)False

Question 16

Miriam,who is single and age 36,provides you with the following information from her financial records for 2010.  Calculate her AMTI for 2010.

Accepted Answer

A) $93,501. 
B) $178,800. 
C) $206,925. 
D) $225,000. 
E) None of the above.

Question 17

If a taxpayer deducts the standard deduction in calculating regular taxable income,what effect does this have in calculating AMTI?

Accepted Answer

The answer of If a taxpayer deducts the standard deduction...

Question 18

Tad is a vice-president of Ruby Corporation.In 2010,he acquired 1,000 shares of Ruby Corporation stock under the corporation's incentive stock option (ISO)plan for an option price of $43 per share.At the date of exercise in 2010,the fair market value of the stock was $65 per share.The stock became freely transferable in 2011.Tad sold the 1,000 shares for $69 per share in 2012.Which of the following statements is incorrect?

Accepted Answer

A) Acquisition of the stock in 2010 had no effect on Tad's taxable income,but increased AMTI by $22,000 in 2010. 
B) Tad's regular income tax basis for the stock is $43,000 and his AMT basis is $65,000 in 2011. 
C) Tad must report a positive AMT adjustment of $22,000 in 2011. 
D) Tad will have a negative AMT adjustment of $22,000 in 2012. 
E) All of the above are correct.

Question 19

Ted,who is single,owns a personal residence in the city.He also owns a condo near the ocean.He uses the condo as a vacation home.In March 2010,he borrowed $50,000 on a home equity loan and used the proceeds to acquire a luxury automobile.During 2010,he paid the following amounts of interest:  What amount,if any,must Ted recognize as an AMT adjustment in 2010?

Accepted Answer

A) $0. 
B) $4,800. 
C) $6,200. 
D) $11,000. 
E) None of the above.

Question 20

If the AMT base is not greater than $175,000,the AMT rate for an individual taxpayer is the same as the AMT rate for a C corporation.

Accepted Answer

A) True 
 B)False

Exam 15: Alternative Minimum Tax

Calico,Inc. ,has AMTI of $235,000.Calculate the amount of the AMT exemption if:

The exercise of an incentive stock option (ISO)increases both the AMTI and regular taxable income in the year of exercise.

Sage,Inc. ,has the following gross receipts and taxable income: Is Sage,Inc. ,subject to the AMT in 2010?

If a taxpayer has tentative AMT of $60,000 and AMT of $15,000,what is the regular income tax liability?

Losses associated with a passive activity owned by an individual are not deductible against active income or portfolio income in computing either the regular income tax or the AMT.

Use the following data to calculate Melba's AMTI.

For AMT purposes,taxpayers must capitalize and amortize research and experimental expenditures over a 10-year period.

The required adjustment for AMT purposes for pollution control facilities placed in service in 2010 is equal to the difference between the amortization deduction allowed for regular income tax purposes and the depreciation deduction computed under ADS.

Tyson sells land and building whose adjusted basis for regular income tax purposes is $300,000 and for AMT purposes is $390,000.The sales proceeds are $650,000.Determine the effect on:

If circulation expenditures are amortized over a ten-year period for regular income tax purposes,there will be no AMT adjustment.

Prior to the effect of tax credits,Eunice's regular income tax liability is $200,000 and her tentative AMT is $190,000.Eunice has general business credits available of $12,500.Calculate Eunice's tax liability after tax credits.

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

In determining the amount of the AMT adjustments,discuss the difference in the treatment of a building placed in service after 1986 and before January 1,1999 and a building placed in service after December 31,1998.

Why is there a need for a second tax system called the alternative minimum tax?

If Faye's standard deduction exceeds her itemized deductions,there will be no AMT adjustment.

Miriam,who is single and age 36,provides you with the following information from her financial records for 2010. Calculate her AMTI for 2010.

If a taxpayer deducts the standard deduction in calculating regular taxable income,what effect does this have in calculating AMTI?

If the AMT base is not greater than $175,000,the AMT rate for an individual taxpayer is the same as the AMT rate for a C corporation.