Pocahontas, Inc. had the following results for its first two years of operation: $$\begin{array} { l r r }
\text { Regular tax liability } & \$ 231,200 & \$ 130,000 \
\text { Tentative minimum tax } & \$ 158,000 & \$ 150,000
\end{array}$$ Which of the following statements is true?

Question

Pocahontas, Inc. had the following results for its first two years of operation: $$\begin{array} { l r r } 
\text { Regular tax liability } & \$ 231,200 & \$ 130,000 \
\text { Tentative minimum tax } & \$ 158,000 & \$ 150,000
\end{array}$$ Which of the following statements is true?

Quizplus · Accepted Answer

In this case, Pocahontas, Inc. has a tentative minimum tax that is greater than its regular tax liability for both years. This suggests that it is subject to the alternative minimum tax (AMT) for both years. However, the amount of the AMT liability is not provided.

If Pocahontas, Inc. had an AMT liability for both years, it may be entitled to claim an AMT credit in the following years. Since the regular tax liability was lower than the tentative minimum tax for both years, it is likely that the company has an AMT credit that can be carried forward to future years (i.e., a credit carryover).

Choice A is incorrect because there is not enough information to suggest that Pocahontas, Inc. is entitled to an AMT credit carryback to 2015. Choice C is incorrect because the company did not have regular tax liability in excess of the tentative minimum tax in 2015, which means that it likely did not pay any AMT for that year. Choice D is incorrect because there is no indication that Pocahontas, Inc. had an AMT credit in 2015 that can be carried back to 2014.

Pocahontas, Inc Which of the Following Statements Is True? A) There Is

Pocahontas, Inc Which of the Following Statements Is True?
A) There Is