Urban Corporation receives tax-exempt income from Denver municipal bonds. All the proceeds from the bonds were used to fund public projects. In computing adjusted current earnings in its AMT computation, Urban must add back the interest income from its municipal bonds.
Only tax-exempt interest from a private activity bond is an adjustment in computing adjusted current earnings in the AMT computation.

Question

Quizplus · Accepted Answer

Interest income from municipal bonds used for public projects is not added back in the AMT computation for adjusted current earnings, as it is not considered a private activity bond.

Urban Corporation Receives Tax-Exempt Income from Denver Municipal Bonds