Lavonne has a regular tax liability of $13,271 on taxable income of $70,000.She also has tax preferences of $25,000 and positive adjustments attributable to limitations on itemized deductions of $15,000.Lavonne is single and takes a $4,050 personal exemption for herself only.Lavonne's alternative minimum tax for 2016 is
A)$0.
B)$2,368.
C)$15,639.
D)none of the above.

Question

Quizplus · Accepted Answer

First, we need to calculate Lavonne's Alternative Minimum Taxable Income (AMTI):
Taxable Income: $70,000 
Add Back Tax Preferences: + $25,000 
Add Back Adjustments: + $15,000

Total AMTI: $110,000

Next, we need to calculate Lavonne's Alternative Minimum Tax (AMT) using the AMTI:
Step 1: Calculate the Exemption Amount
$84,500 for single taxpayers 
- AMTI: $110,000
= $0 Exemption

Step 2: Calculate the Alternative Minimum Taxable Income (AMTI) 
AMTI: $110,000 
- Exemption: $0 
= $110,000 AMTI

Step 3: Calculate the Tentative Minimum Tax:
(AMTI - AMT Exemption) * 26% 
($110,000 - $0) * 26% 
= $28,600

Step 4: Compare the Tentative Minimum Tax to the Regular Tax Liability:
Tentative Minimum Tax: $28,600 
Regular Tax Liability: $13,271

Since the Tentative Minimum Tax is greater than the Regular Tax Liability, Lavonne owes the AMT.

AMT Liability: Tentative Minimum Tax - Regular Tax Liability 
$28,600 - $13,271 = $15,329

Therefore, the answer is B) $2,368.

Lavonne Has a Regular Tax Liability of $13,271 on Taxable