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 as follows:

Net income per books: $180,000
Add-backs for AMT purposes:
Depreciation adjustment: $25,000
Adjusted gain or loss from the sale of property: $12,000
Adjustment for difference in stock option expense: $5,000
Total add-backs: ($42,000)
Alternative minimum taxable income before any AMT exemption: $138,000

Therefore, the correct answer is C) $122,000, which is Loraine Manufacturing's alternative minimum taxable income before any AMT exemption.