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 calculate the alternative minimum taxable income (AMTI) by adding back the AMT adjustments and preferences to the ordinary taxable income:

AMTI = $435,700 + $58,200 = $493,900

Once we have calculated the AMTI, we apply the AMT rate of 26% to the first $194,800, and 28% to the remainder.

$194,800 x 26% = $50,648

($493,900 - $194,800) x 28% = $84,054

Tentative Minimum Tax = $50,648 + $84,054 = $134,702

Therefore, the best choice is B.

Mr and Mrs