Question 1

Becky places five-year property in service during June 2014 using the half-year convention.Depreciation is $1,500 under the 150% declining balance method and $2,000 under 200% declining balance.Becky uses the 150% declining balance method for regular income tax purposes.What is the amount of Becky's AMT adjustment?

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Question 2

Identify which of the following statements is true.

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Question 3

Identify which of the following statements is true.

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Question 4

Tax-exempt interest income on state and local municipal bonds that are not a private activity is

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Question 5

Which of the following statements about the alternative minimum tax depreciation rules is correct?

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The answer of Which of the following statements about the...

Question 6

Certain adjustments must be made to alternative minimum taxable income (AMTI)to arrive at adjusted current earnings (ACE).Which one of the following adjustments increases AMTI to arrive at ACE?

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Question 7

Which of the following statements regarding the minimum tax credit is correct?

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The answer of Which of the following statements regarding the...

Question 8

Identify which of the following statements is false.

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Question 9

Identify which of the following statements is false.

Accepted Answer

Adjusted current earnings (ACE) is not the same as E&P. E&P (Earnings and Profits) is a measure of taxable income used for determining dividend distributions, while ACE is a tax calculation used for alternative minimum tax purposes.

Question 10

Identify which of the following statements is true.

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Question 11

Becky places five-year property in service during June 2014 using the half-year convention.Depreciation is $1,500 under the 150% declining balance method and $2,000 under 200% declining balance.Becky uses the 200% declining balance method for regular income tax purposes.What is the amount of Becky's AMT adjustment?

Accepted Answer

Under AMT rules, the depreciation is calculated using straight-line method, using the mid-month convention, for all property and not just the real property. Using the half-year convention, for 5-year property, the regular MACRS depreciation would be 20% for the first year.
150% declining balance method rate for 5-year property = 1.5 x 20% = 30%
Depreciation in year 1 = 30% x $100,000 (cost of the property) = $30,000
200% declining balance method rate for 5-year property = 2 x 20% = 40%
Depreciation in year 1 = 40% x $100,000 (cost of the property) = $40,000

For AMT purposes, depreciation in year 1 = 20% x $100,000 x 6/12 = $10,000
AMT adjustment for 150% declining balance method = $30,000 - $10,000 = $20,000
AMT adjustment for 200% declining balance method = $40,000 - $10,000 = $30,000

The correct answer is C because the difference between the 150% and 200% declining balance methods is $10,000, which would result in a positive adjustment of $500 ($10,000 x 5%) to reach the AMT depreciation of $10,000.

Question 12

How does the deduction for U.S.production activities affect AMTI?

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Question 13

The personal holding company tax might be imposed

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The personal holding company tax is imposed on corporations if more than 50% of the company is owned by five or fewer individuals for the entire year. Option A is incorrect because the tax is only imposed on corporations, not partnerships. Option B is incorrect because the tax is not based solely on income from rentals, but on ownership structure. Option D is incorrect because small business investment companies licensed by the Small Business Administration are not subject to this tax.

Question 14

ASC 740 requires that

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...

Question 15

Mountaineer,Inc.has the following results:  What is the amount of the tentative minimum tax?

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Question 16

Mountaineer,Inc.has the following results:  What is the amount of the alternative minimum tax?

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Question 17

Foster Corporation has gross income for regular tax purposes of $100,000,which includes a net Sec.1231 gain of $10,000 and a net capital gain of $10,000.Ordinary gross income for personal holding company purposes is

Accepted Answer

To determine the ordinary gross income for personal holding company purposes, we need to subtract the following items from the gross income for regular tax purposes:

1. All items of gross income that are not included in personal holding company income calculation (e.g. tax-exempt interest, certain dividends received, etc.)
2. Deductions directly connected with such gross income.

Since we do not have any information about these items, we can only make an assumption that there are no items that are not included in personal holding company income calculation and that the deductions are equal to zero. Therefore, to calculate the ordinary gross income for personal holding company purpose, we need to subtract the net capital gain of $10,000 from the gross income for regular tax purposes:

$100,000 - $10,000 = $90,000.

However, a net Sec. 1231 gain is included in personal holding company income. Therefore, we need to add this amount back to the result:

$90,000 + $10,000 = $100,000

Finally, personal holding company income is reduced by the dividends paid deduction, which is equal to 20% of the personal holding company taxable income. Since we do not have any information about the dividends paid, we cannot determine the personal holding company taxable income or the dividends paid deduction. Therefore, the ordinary gross income for personal holding company purposes equals $100,000.

However, this assumes that there are no items of gross income that are not included in personal holding company income calculation and no deductions directly connected with such gross income. If there are such items or deductions, the result may be different.

Question 18

Beta Corporation incurs an $80,000 regular tax liability and a $20,000 AMT liability.Assuming no restrictions on Beta's ability to use the minimum tax credit,what journal entry would be necessary to record tax expense?

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Question 19

Which of the following items are adjustments made to arrive at alternative minimum taxable income?

Accepted Answer

Excess depreciation claimed on personalty acquired in the current year for taxable income purposes over that claimed for alternative minimum tax purposes is an adjustment made to arrive at alternative minimum taxable income. The other options are not adjustments made to arrive at alternative minimum taxable income.

Question 20

Which of the following is not an adjustment in calculating AMTI?

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The answer of Which of the following is not an...

Quiz 9: Other Corporate Tax Levies

Identify which of the following statements is true.

Identify which of the following statements is true.

Tax-exempt interest income on state and local municipal bonds that are not a private activity is

Which of the following statements about the alternative minimum tax depreciation rules is correct?

Certain adjustments must be made to alternative minimum taxable income (AMTI) to arrive at adjusted current earnings (ACE) .Which one of the following adjustments increases AMTI to arrive at ACE?

Which of the following statements regarding the minimum tax credit is correct?

Identify which of the following statements is false.

Identify which of the following statements is false.

Identify which of the following statements is true.

How does the deduction for U.S.production activities affect AMTI?

The personal holding company tax might be imposed

ASC 740 requires that

Mountaineer,Inc.has the following results: What is the amount of the tentative minimum tax?

Mountaineer,Inc.has the following results: What is the amount of the alternative minimum tax?

Foster Corporation has gross income for regular tax purposes of $100,000,which includes a net Sec.1231 gain of $10,000 and a net capital gain of $10,000.Ordinary gross income for personal holding company purposes is

Beta Corporation incurs an $80,000 regular tax liability and a $20,000 AMT liability.Assuming no restrictions on Beta's ability to use the minimum tax credit,what journal entry would be necessary to record tax expense?

Which of the following items are adjustments made to arrive at alternative minimum taxable income?

Which of the following is not an adjustment in calculating AMTI?