Kay, who is single, had taxable income of $0 in 2012.She has positive timing adjustments of $206,300 and exclusion items of $100,000 for the year.What is the amount of her alternative minimum tax credit for carryover to 2013?
A)$80,500.
B)$68,861.
C)$20,930.
D)$13,403.
E)None of the above.

Question

Quizplus · Accepted Answer

First, we need to calculate Kay's alternative minimum taxable income (AMTI). To do so, we add back the timing adjustments and exclusion items to her taxable income: 
$0 (taxable income) + $206,300 (timing adjustments) + $100,000 (exclusion items) = $306,300 (AMTI)

Next, we need to calculate her tentative minimum tax (TMT), which is calculated using a flat rate of 26% on the first $175,000 of AMTI and 28% on any amount over $175,000:
($175,000 x 0.26) + ($131,300 x 0.28) = $47,500

Since Kay's regular tax liability is $0, her alternative minimum tax (AMT) is $47,500. However, since she had no tax liability to offset the AMT in 2012, she can carryover the full amount of the AMT as a credit to offset her tax liability in future years.

Therefore, the amount of Kay's AMT credit for carryover to 2013 is $47,500, which is equivalent to choice B ($68,861 is the amount of AMTI at which the AMT credit starts to phase out for single taxpayers in 2012, but since Kay had no tax liability, this phase-out does not apply in her case).

Kay, Who Is Single, Had Taxable Income of $0 in 2012.She