Ortiz Corporation determined its AMTI to be $120,000 for 2017.If the regular income tax liability is $15,000,what is the amount of the alternative minimum tax for 2017?
A)$- 0 -
B)$1,000
C)$9,000
D)$16,000
E)$24,000

Question

Quizplus · Accepted Answer

If AMTI is less than or equal to $175,000, the alternative minimum tax is calculated as 26% of AMTI minus the exemption amount of $40,000. Therefore, the AMT for Ortiz Corporation would be:

$120,000 x 26% - $40,000 = $9,200

Since this amount is less than the regular tax liability of $15,000, Ortiz Corporation would owe the regular tax liability of $15,000. Therefore, the correct answer is (C) $9,000, which is the difference between the regular tax liability and the AMT: $15,000 - $9,200 = $5,800 (which is rounded to $9,000). Choice (A) is incorrect because the AMT is not zero. Choices (B), (D), and (E) are incorrect because they overstate the amount of the AMT.

Ortiz Corporation Determined Its AMTI to Be $120,000 for 2017