Mountaineer,Inc.has the following results: $$\begin{array} { | l | r | }
\hline \text { Regular corporate tax liability } & \$ 400,000 \
\hline \text { Taxable income } & 2,000,000 \
\hline \text { Preferences } & 500,000 \
\hline \text { Adjustments } & ( 200,000 \
\hline
\end{array}$$ What is the amount of the alternative minimum tax?

Question

Mountaineer,Inc.has the following results: $$\begin{array} { | l | r | } 
\hline \text { Regular corporate tax liability } & \$ 400,000 \
\hline \text { Taxable income } & 2,000,000 \
\hline \text { Preferences } & 500,000 \
\hline \text { Adjustments } & ( 200,000 \
\hline
\end{array}$$ What is the amount of the alternative minimum tax?

Quizplus · Accepted Answer

The alternative minimum tax (AMT) is a parallel tax system that ensures that corporations pay a minimum amount of tax, even if they are able to reduce their regular tax liability through the use of deductions and credits. The AMT is calculated by adding back certain preferences and adjustments to the regular taxable income. In this case, the preferences are $500,000 and the adjustments are ($200,000). This results in an AMT taxable income of $2,300,000. The AMT rate is 20%, so the AMT liability is $460,000. However, the AMT liability is limited to the regular tax liability, which is $400,000. Therefore, the AMT liability is $0.

Mountaineer,Inc What Is the Amount of the Alternative Minimum Tax? A)$0

Mountaineer,Inc What Is the Amount of the Alternative Minimum Tax?
A)$0