Mr. and Mrs. Luang reported $1,417,900 ordinary taxable income for regular tax purposes and had $139,100 positive AMT adjustments and preferences. Compute their tentative minimum tax.

Question

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The tentative minimum tax is computed by applying a flat rate of 26% to the alternative minimum taxable income (AMTI) in excess of the exemption amount. The exemption amount for married taxpayers filing a joint return in 2020 is $113,400.

First, we need to calculate the AMTI:
$1,417,900 (ordinary taxable income)
+ $139,100 (positive AMT adjustments and preferences)
= $1,557,000 (AMTI)

Next, we subtract the exemption amount:
$1,557,000 - $113,400 = $1,443,600

Finally, we multiply the excess AMTI by the flat rate:
$1,443,600 x 0.26 = $375,016

The tentative minimum tax is rounded up to the nearest $100:
$375,100

Therefore, the best choice is B) $432,002.

Mr and Mrs