During 2008,Brown Corporation (a calendar year taxpayer)has $4,000,000 of taxable income and the following transactions:

Brown Corporation's alternative minimum tax (AMT)for 2008 is:

Question

During 2008,Brown Corporation (a calendar year taxpayer)has $4,000,000 of taxable income and the following transactions:

Brown Corporation's alternative minimum tax (AMT)for 2008 is:

Quizplus · Accepted Answer

The positive adjustment for ACE is $2,250,000 [$8,000,000 ACE - $5,000,000 AMTI (not including ACE)= $3,000,000 F1F1F1S1F1F1F10 75% = $2,250,000].Thus,AMTI becomes $7,250,000 ($5,000,000 + $2,250,000).
Since no exemption is allowed when AMTI is $310,000 or more,the AMT base becomes $7,250,000.Multiplying $7,250,000 by the 20% rate yields a tentative minimum tax of $1,450,000.Deducting the regular corporate income tax of $1,360,000 (34% F1F1F1S1F1F1F10 $4,000,000)results in AMT of $90,000.

During 2008,Brown Corporation (A Calendar Year Taxpayer)has $4,000,000 of Taxable