Ashley can reduce her regular income tax liability from $47,000 to $43,500 as the result of the alternative tax on net capital gain.Ashley's tentative minimum tax is $51,000.
A)Ashley's tax liability is reduced by $3,500 as the result of the alternative tax calculation on net capital gain.
B)Ashley's AMT is increased by $3,500 as the result of the alternative tax calculation on net capital gain.
C)Ashley's tax liability is $43,500.
D)Ashley's tax liability is $47,000.
E)None of the above.

Question

Quizplus · Accepted Answer

The alternative tax calculation on net capital gain reduces Ashley's regular income tax liability from $47,000 to $43,500, which is a $3,500 reduction in taxes. Therefore, option A is correct. Option B is incorrect because the AMT is already determined to be $51,000 and cannot be increased by the alternative tax calculation. Option C is incorrect because the $43,500 is the reduced tax liability, not the total tax liability. Option D is incorrect because the $47,000 is the original tax liability, not the reduced tax liability.

Ashley Can Reduce Her Regular Income Tax Liability from $47,000