Ravi Corporation, a calendar year taxpayer, has AMTI (before adjustment for adjusted current earnings) of $6 million for 2011. If Ravi Corporation's ACE is $15 million, its tentative minimum tax for 2011 is:

Question

Quizplus · Accepted Answer

To calculate the tentative minimum tax, we need to first calculate the ACE percentage, which is calculated as follows:

ACE percentage = ACE / AMTI

ACE percentage = $15 million / $6 million

ACE percentage = 2.5

Using this ACE percentage, we can calculate the tentative minimum tax as follows:

Tentative minimum tax = ACE percentage * (AMTI - $100,000)

Tentative minimum tax = 2.5 * ($6 million - $100,000)

Tentative minimum tax = $14.75 million

However, the tentative minimum tax cannot exceed the regular tax liability. Therefore, if the regular tax liability is less than $14.75 million, the tentative minimum tax will be the regular tax liability.

Since we do not have information about the regular tax liability, we cannot determine the exact amount of the tentative minimum tax. However, we can rule out choices A, C, and D as they are lower than the calculated value of $14.75 million.

Therefore, the best choice is B, which is the closest value to the calculated tentative minimum tax of $14.75 million.

Ravi Corporation, a Calendar Year Taxpayer, Has AMTI (Before Adjustment