Sand Corporation, a calendar year taxpayer, has alternative minimum taxable income [before adjustment for adjusted current earnings (ACE)] of $750,000 for 2012.If Sand's (ACE) is $975,000, its tentative minimum tax for 2012 is:
A)$150,000.
B)$183,750.
C)$195,000.
D)$225,000.
E)None of the above.

Question

Quizplus · Accepted Answer

The tentative minimum tax is calculated by taking the alternative minimum taxable income and adding 75% of the excess of ACE over the alternative minimum taxable income. Here, the excess is $225,000 ($975,000 - $750,000). 75% of $225,000 is $168,750. Adding this to the original $750,000 gives $918,750. The tentative minimum tax is 20% of this amount, which is $183,750.

Sand Corporation, a Calendar Year Taxpayer, Has Alternative Minimum Taxable