Ortiz Corporation determined its AMTI to be $120,000 for 2016.If the regular income tax liability is $15,000,what is the amount of the alternative minimum tax for 2016?
A)$- 0 -
B)$1,000
C)$9,000
D)$16,000
E)$24,000

Question

Quizplus · Accepted Answer

To calculate the alternative minimum tax (AMT), we need to compare the regular income tax liability with the tentative minimum tax. The tentative minimum tax is calculated by applying a 20% tax rate to the alternative minimum taxable income (AMTI), which is $120,000 for Ortiz Corporation.

Tentative minimum tax = 20% x $120,000 = $24,000

Since the regular income tax liability of Ortiz Corporation is lower than the tentative minimum tax, the AMT is the difference between the two:

AMT = $24,000 - $15,000 = $9,000

Therefore, the answer is choice C, $9,000.

Ortiz Corporation Determined Its AMTI to Be $120,000 for 2016