Question 1

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

Accepted Answer

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

Question 2

Identify which of the following statements is true.

Accepted Answer

The answer of Identify which of the following statements is...

Question 3

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

Accepted Answer

The answer of Tax-exempt interest income on state and local...

Question 4

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 property must be depreciated using the straight-line method over its class life. Since the half-year convention is used, the class life of five-year property is 6 years. Using the 200% declining balance, the depreciation rate is 40% (200%/6) but should be capped at 20% for AMT purposes. Therefore, the AMT depreciation amount is $2,000 x 20% = $400.
The AMT adjustment is the difference between the depreciation calculated under the AMT rules and the depreciation claimed for regular tax purposes. 
For 150% declining balance:
Year 1 depreciation = $1,500 x 1.5 x 6/12 = $1,125
Year 2 depreciation = ($1,500 - $1,125) x 1.5 x 6/12 = $843.75
Total depreciation claimed under regular tax rules = $1,125 + $843.75 = $1,968.75
AMT depreciation for Year 1 and Year 2 = $400 + $400 = $800
AMT adjustment for 2014 = $1,968.75 - $800 = $1,168.75
For 200% declining balance:
Year 1 depreciation = $2,000 x 40% x 6/12 = $400
Year 2 depreciation = ($2,000 - $400) x 40% x 6/12 = $480
Total depreciation claimed under regular tax rules = $400 + $480 = $880
AMT depreciation for Year 1 and Year 2 = $400 + $400 = $800
AMT adjustment for 2014 = $880 - $800 = $80
Since the AMT adjustment for the 150% declining balance method is greater, the answer is C. The AMT adjustment is $500 positive adjustment ($1,168.75-$80=$1,088.75 and $1,088.75-$588.75 = $500).

Question 5

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

Accepted Answer

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

Question 6

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?

Accepted Answer

The answer of Becky places five-year property in service during...

Question 7

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

Accepted Answer

The code given (11ea83d0_edb6_87f3_908c_510b512a3bc9_TB5378_00) is not enough to determine the tentative minimum tax. The tentative minimum tax is calculated based on a complex formula that takes into account various factors such as deductions, exemptions, and alternative minimum tax (AMT) adjustments, among others. Without additional information, it is impossible to calculate the tentative minimum tax accurately. Therefore, the correct answer is none of the above.

Question 8

Identify which of the following statements is false.

Accepted Answer

The answer of Identify which of the following statements is...

Question 9

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

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The answer of How does the deduction for U.S.production activities...

Question 10

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

Accepted Answer

The excess of deprecation 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. A, C, and D are not adjustments made to arrive at alternative minimum taxable income.

Question 11

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

Accepted Answer

The answer of Mountaineer, Inc.has the following results:  What...

Question 12

Identify which of the following statements is true.

Accepted Answer

The answer of Identify which of the following statements is...

Question 13

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 14

ASC 740 requires that

Accepted Answer

The answer of ASC 740 requires that
...

Question 15

Identify which of the following statements is true.

Accepted Answer

The answer of Identify which of the following statements is...

Question 16

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?

Accepted Answer

The answer of Certain adjustments must be made to alternative...

Question 17

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 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?

Accepted Answer

The answer of Beta Corporation incurs an $80,000 regular tax...

Question 19

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

Accepted Answer

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

Question 20

The personal holding company tax might be imposed

Accepted Answer

The personal holding company tax is imposed if more than 50% of the company is owned by five or fewer individuals for the entire year.

Quiz 5: Other Corporate Tax Levies

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

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 is not an adjustment in calculating AMTI?

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

Identify which of the following statements is false.

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

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

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

Identify which of the following statements is true.

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

ASC 740 requires that

Identify which of the following statements is true.

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?

Identify which of the following statements is false.

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 statements regarding the minimum tax credit is correct?

The personal holding company tax might be imposed