M Corporation has gross receipts of $800,000 and an AMTI of $400,000 without regard to the ACE adjustment.M's adjusted current earnings are determined to be $600,000.M's regular tax liability is $60,000.M's AMTI is
A)$350,000
B)$550,000
C)$600,000
D)$110,000
E)$50,000

Question

Quizplus · Accepted Answer

Since the ACE adjustment is not provided, we can calculate M's AMTI by adding back the ACE adjustment to its ACE.

ACE = $400,000 
Adjusted Current Earnings = $600,000 
ACE Adjustment = ACE - Adjusted Current Earnings = $400,000 - $600,000 = -$200,000

Since the ACE adjustment is negative, we subtract this amount from M's AMTI to arrive at the taxable income:

Taxable income = AMTI - ACE Adjustment = $400,000 - (-$200,000) = $600,000

Therefore, the correct answer is choice (B) $550,000, which is M's AMTI before considering the ACE adjustment.

M Corporation Has Gross Receipts of $800,000 and an AMTI