Sand Corporation,a calendar year taxpayer,has alternative minimum taxable income [before adjustment for adjusted current earnings (ACE)] of $750,000 for 2011.If Sand's (ACE)is $975,000,its tentative minimum tax for 2011 is:

Question

Quizplus · Accepted Answer

To calculate the tentative minimum tax, we need to subtract the ACE from the regular taxable income and apply a 20% tax rate to the difference.

Regular taxable income = $750,000 
ACE = $975,000

Adjusted taxable income = $750,000 - $975,000 = -$225,000 (negative because ACE is greater than regular taxable income)

Tentative minimum tax = 20% x -$225,000 = -$45,000 (also negative because adjusted taxable income is negative)

However, the AMT can never be less than 0, so the tentative minimum tax for Sand Corporation is $0.

Therefore, the correct answer is B) $183,750, which is not an option.

Sand Corporation,a Calendar Year Taxpayer,has Alternative Minimum Taxable Income [Before