Foggy Corporation has regular taxable income of $1,200,000.It has $250,000 of interest income on private activity bonds and $100,000 of interest on City of New Orleans bonds.How much is Foggy's preadjustment AMTI?

Question

Quizplus · Accepted Answer

To calculate preadjustment AMTI, we need to add back certain deductions and exclusions to the regular taxable income. Private activity bond interest is a tax preference item and needs to be added back. Therefore, preadjustment AMTI = regular taxable income + private activity bond interest income = $1,200,000 + $250,000 = $1,450,000. The interest income on City of New Orleans bonds is already tax-exempt and does not need to be added back. Therefore, the correct answer is C, $1,450,000.

Foggy Corporation Has Regular Taxable Income of $1,200,000