Tanver Corporation, a calendar year corporation, has alternative minimum taxable income of $7 million in 2014 (before adjustment for adjusted current earnings). If Tanver's adjusted current earnings is $16 million, its tentative minimum tax for 2014 is:

Question

Quizplus · Accepted Answer

The tentative minimum tax is calculated as 20% of the excess of alternative minimum taxable income over the exemption amount, which is $40,000 for corporations with alternative minimum taxable income of $150,000 or less (and is reduced by 25% for corporations with alternative minimum taxable income between $150,000 and $1,000,000). 
In this case, the exemption amount is $40,000 reduced by 25% of the excess of alternative minimum taxable income of $7 million over $150,000, which is $40,000 - 25% x $6,850,000 = $1,662,500. 
Therefore, the tentative minimum tax is 20% x ($7 million - $1,662,500 - $16 million) = $2,750,000.

Tanver Corporation, a Calendar Year Corporation, Has Alternative Minimum Taxable