Question 1

In calculating her taxable income,Rhonda deducts the following itemized deductions.
  Calculate Rhonda's AMT adjustment for itemized deductions.

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The answer of In calculating her taxable income,Rhonda deducts the...

Question 2

In May 2011,Egret,Inc.issues options to Andrea,a corporate officer,to purchase 200 shares of Egret stock under an ISO plan.At the date the stock options are issued,the fair market value of the stock is $900 per share and the option price is $1,200 per share.The stock becomes freely transferable in 2012.Andrea exercises the options in November 2011 when the stock is selling for $1,600 per share.She sells the stock in December 2013 for $1,800 per share.

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Question 3

Cindy,who is single and has no dependents,has adjusted gross income of $50,000 in 2012.Her potential itemized deductions are as follows:
  What is the amount of Cindy's AMT adjustment for itemized deductions for 2012?

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Question 4

Luke's itemized deductions in calculating taxable income are as follows:

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Question 5

Which of the following statements is correct?
A) A C corporation classified as a small corporation is eligible to have the AMT calculated using the AMT provisions for individuals.
B) A C corporation classified as a small corporation is not subject to the AMT.
C) A C corporation classified as a small corporation is subject to the AMT only on its adjusted current earnings.
D) A C corporation classified as a small corporation is eligible to use the 15%/0% tax rate on net capital gain and qualified dividends rather than the regular tax rates applicable to other C corporations.
E) a., b., and c. are correct.

Accepted Answer

The answer of Which of the following statements is correct?
A)...

Question 6

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.

Accepted Answer

The answer of Sand Corporation,a calendar year taxpayer,has alternative minimum...

Question 7

Smoke,Inc.,provides you with the following information:
  Calculate Smoke's AMT for 2012.

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The answer of Smoke,Inc.,provides you with the following information:
 ...

Question 8

Caroline and Clint are married,have no dependents,and file a joint return in 2012.Use the following selected data to calculate their Federal income tax liability.

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Question 9

Use the following selected data to calculate Devon's taxable income.

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Question 10

Mauve,Inc.,has the following for 2011,2012,and 2013 and no prior ACE adjustments. 
A) $0 $1,500 ($1,500)
B) ($2,000) $2,000 ($3,000)
C) $2,000 ($2,000) $3,000
D) ($1,500) $1,500 $2,250
E) $1,500 ($1,500) ($2,250)

Accepted Answer

The answer of Mauve,Inc.,has the following for 2011,2012,and 2013 and...

Question 11

Sage,Inc.,has the following gross receipts and taxable income:
  Is Sage,Inc.,subject to the AMT in 2012?

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Question 12

In September,Dorothy purchases a building for $900,000 to use in her business as a warehouse.Dorothy uses the depreciation method which will provide her with the greatest deduction for regular income tax purposes.

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Question 13

In 2012,Louise incurs circulation expenses of $330,000 which she deducts in calculating taxable income.

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The answer of In 2012,Louise incurs circulation expenses of $330,000...

Question 14

Sand,Inc.,has AMTI of $200,000.Calculate the amount of the AMT exemption if:

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Question 15

Frederick sells land and building whose adjusted basis for regular income tax purposes is $345,000 and for AMT purposes is $380,000.The sales proceeds are $850,000.Determine the effect on:

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The answer of Frederick sells land and building whose adjusted...

Question 16

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.

Accepted Answer

To calculate the AMT credit for carryover to 2013, we first need to calculate Kay's AMT liability for 2012. The formula for AMT for single filers in 2012 is:

[(AMTI - exemption) × 26%] - AMT foreign tax credit

where AMTI is the alternative minimum taxable income and the exemption is $50,600 for single filers.

Kay's AMTI is calculated as follows:

Taxable income = $0 
Add back timing adjustments = $206,300 
Subtract exclusion items = $100,000 
Alternative minimum taxable income = $306,300

Using the formula above, Kay's AMT liability for 2012 is:

[($306,300 - $50,600) × 26%] - 0 = $66,188

However, Kay is entitled to an AMT credit for carryover to 2013 equal to the amount by which her regular tax liability exceeds her AMT liability. Since Kay's taxable income is $0, her regular tax liability is also $0. Therefore, her AMT credit for carryover to 2013 is equal to her AMT liability of $66,188.

However, the maximum amount of AMT credit that can be used in any given year is limited based on the taxpayer's AMT liability in that year. Since Kay has no taxable income in 2013, her AMT credit for 2013 will be limited to 20% of her 2013 AMT liability, which will likely be less than $66,188.

The correct answer is B ($68,861).

Question 17

Lavender,Inc.,incurs research and experimental expenditures of $210,000 in 2012.Determine the amount of the AMT adjustment for 2012 and for 2013 if for regular income tax purposes:

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Question 18

Why is there a need for a second tax system called the alternative minimum tax?

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Question 19

Use the following data to calculate Diane's AMTI.

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The answer of Use the following data to calculate Diane's...

Question 20

Tad and Audria,who are married filing a joint return,have AMTI of $256,000 for 2012.Calculate their AMT exemption.

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Quiz 12: Alternative Minimum Tax

In calculating her taxable income,Rhonda deducts the following itemized deductions. Calculate Rhonda's AMT adjustment for itemized deductions.

Cindy,who is single and has no dependents,has adjusted gross income of $50,000 in 2012.Her potential itemized deductions are as follows: What is the amount of Cindy's AMT adjustment for itemized deductions for 2012?

Luke's itemized deductions in calculating taxable income are as follows:

Which of the following statements is correct?

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:

Smoke,Inc.,provides you with the following information: Calculate Smoke's AMT for 2012.