Agnes is able to reduce her regular income tax liability from $40,000 to $36,000 as the result of the alternative tax on net capital gain.Agnes' tentative AMT is $50,000.
A)Agnes' tax liability is reduced by $4,000 as the result of the alternative tax calculation on net capital gain.
B)Agnes' AMT is increased by $4,000 as the result of the alternative tax calculation on net capital gain.
C)Agnes' tax liability is $46,000.
D)Agnes' tax liability is $54,000.
E)None of the above.

Question

Quizplus · Accepted Answer

The alternative tax on net capital gain reduces Agnes' regular income tax liability from $40,000 to $36,000. Therefore, the reduction in tax liability is $4,000. It does not affect the tentative AMT, which remains at $50,000. Therefore, option A is correct.

Agnes Is Able to Reduce Her Regular Income Tax Liability