Ashly is able to reduce her regular income tax liability from $47,000 to $43,500 as the result of the alternative tax on net capital gain.Ashly's tentative AMT is $51,000.
A)Ashly's tax liability is reduced by $3,500 as the result of the alternative tax calculation on net capital gain.
B)Ashly's AMT is increased by $3,500 as the result of the alternative tax calculation on net capital gain.
C)Ashly's tax liability is $43,500.
D)Ashly's tax liability is $47,000.
E)None of the above.

Question

Quizplus · Accepted Answer

The alternative tax on net capital gain reduces Ashly's regular income tax liability by $3,500 ($47,000 - $43,500). This means that her tax liability is reduced to $43,500. The tentative AMT of $51,000 is irrelevant to determining her actual tax liability, as the alternative tax calculation has already been taken into account. Therefore, choices B, C, and D are incorrect.

Ashly Is Able to Reduce Her Regular Income Tax Liability