Loraine Manufacturing, Inc. reported the following for the current tax year: What is Loraine Manufacturing's alternative minimum taxable income before any AMT exemption?

Question

Loraine Manufacturing, Inc. reported the following for the current tax year:  What is Loraine Manufacturing's alternative minimum taxable income before any AMT exemption?

Quizplus · Accepted Answer

Loraine Manufacturing's alternative minimum taxable income can be calculated by adding back certain tax preferences and adjustments to their regular taxable income. Therefore, starting with their regular taxable income of $97,000, we add back $25,000 for depreciation adjustments, $2,000 for the adjustment for the spread on incentive stock options, and $6,000 for tax-exempt interest on private activity bonds. This gives us an AMT taxable income of $130,000, which is the answer choice C.