Mr. and Mrs. Reid reported $435,700 ordinary taxable income for regular tax purposes and had $58,200 positive AMT adjustments and preferences. Compute their tentative minimum tax.

Question

Quizplus · Accepted Answer

To compute the tentative minimum tax, we need to follow these steps:

1. Calculate the alternative minimum taxable income (AMTI):
   AMTI = Regular taxable income + Positive AMT adjustments and preferences
        = $435,700 + $58,200
        = $493,900

2. Apply the AMT rate of 26% to AMTI up to $197,900 (for married filing jointly):
   AMT on first $197,900 = $197,900 x 26% = $51,514

3. Apply the AMT rate of 28% to AMTI over $197,900:
   AMT on remaining $296,000 = $296,000 x 28% = $82,880

4. Add the AMT from steps 2 and 3 to get the tentative minimum tax:
   Tentative minimum tax = $51,514 + $82,880
                        = $134,566

Therefore, the answer is B.

Mr and Mrs