Tanver Corporation,a calendar year corporation,has alternative minimum taxable income of $7 million in 2012 (before adjustment for adjusted current earnings).If Tanver's adjusted current earnings is $16 million,its tentative minimum tax for 2012 is:

Question

Quizplus · Accepted Answer

To calculate the tentative minimum tax for a corporation, we need to compare its alternative minimum taxable income (AMTI) with its adjusted current earnings (ACE) and use the higher amount as the base for the calculation. 
In this case, Tanver's ACE of $16 million is higher than its AMTI of $7 million, so we will use ACE as the base. 
The tentative minimum tax is then calculated as 20% of ACE, minus any regular tax liability that exceeds the tentative minimum tax. 
So, the tentative minimum tax for Tanver Corporation in 2012 is: 
$16 million x 20% = $3.2 million 
Since the tentative minimum tax of $3.2 million is higher than any regular tax liability, we can conclude that Choice B ($2,750,000) is the correct answer.

Tanver Corporation,a Calendar Year Corporation,has Alternative Minimum Taxable Income of $7