Question 1

Which of the following items will be a deduction from unadjusted AMTI in arriving at ACE?

Accepted Answer

A) Federal income tax. 
B) 80% dividends received deduction. 
C) Penalties and fines. 
D) Premiums paid on key employee insurance. 
E) None of the above. 
A) Federal income tax. 
B) 80% dividends received deduction. 
C) Penalties and fines. 
D) Premiums paid on key employee insurance. 
E) None of the above. D

Question 2

The accumulated earnings credit is always the greater of the minimum credit of $250,000 or the current E & P for the year needed to meet the reasonable needs of the business.

Accepted Answer

A) True 
 B)False  False

Question 3

In the case of an individual, modified AGI is substituted for taxable income in the DPAD formula.

Accepted Answer

A) True 
 B)False  True

Question 4

The accumulated earnings credit for a personal service corporation is the greater of $150,000 or the current E & P for the year needed to meet the reasonable needs of the business.

Accepted Answer

A) True 
 B)False

Question 5

Intangible drilling costs are a tax preference item only for integrated oil companies.

Accepted Answer

A) True 
 B)False

Question 6

The AMT rate for corporations is the same as for individuals.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following would not be a positive tax preference item in 2016?

Accepted Answer

A) Accelerated depreciation on real property in excess of straight-line. 
B) Intangible drilling costs. 
C) Alternative minimum tax NOL deduction. 
D) Percentage depletion in excess of adjusted basis. 
E) None of the above. 
A) Accelerated depreciation on real property in excess of straight-line. 
B) Intangible drilling costs. 
C) Alternative minimum tax NOL deduction. 
D) Percentage depletion in excess of adjusted basis. 
E) None of the above.

Question 8

Which of the following has no effect in arriving at ACE?

Accepted Answer

A) Tax-exempt income (net of expenses). 
B) Excess charitable contributions. 
C) Key employee insurance proceeds. 
D) Deferred gain on installment sales. 
E) Premiums paid on key employee insurance. 
A) Tax-exempt income (net of expenses). 
B) Excess charitable contributions. 
C) Key employee insurance proceeds. 
D) Deferred gain on installment sales. 
E) Premiums paid on key employee insurance.

Question 9

Nickel Corporation, a calendar year corporation formed in 2014, has average gross receipts of $5.7 million, $4.2 million, and $4.8 million in 2014, 2015, and 2016, respectively. In 2016, Nickel is:

Accepted Answer

A) Not subject to the corporate income tax. 
B) A small corporation with respect to the AMT. 
C) Not subject to the AMT. 
D) Subject to the AMT. 
E) None of the above. 
A) Not subject to the corporate income tax. 
B) A small corporation with respect to the AMT. 
C) Not subject to the AMT. 
D) Subject to the AMT. 
E) None of the above.

Question 10

If QPAI cannot be used in any one year due to the TI limitation, it can be carried over for 3 years.

Accepted Answer

A) True 
 B)False

Question 11

If mining exploration and development costs are capitalized and written off over 10 years, no adjustment is necessary for AMT purposes.

Accepted Answer

A) True 
 B)False

Question 12

​ In the case of a sole proprietor, modified AGI is substituted for taxable income in the DPAD formula.

Accepted Answer

A) True 
 B)False

Question 13

During 2016, Red Corporation (a calendar year taxpayer) has $4,000,000 of taxable income and the following transactions: ? $\begin{array}{ll}
\text { AMTI (not including adjusted current earnings) } & \$ 5,000,000 \
\text { Adjusted current eamings } & 8,000,000
\end{array}$
 Red Corporation's alternative minimum tax (AMT) for 2016 is:

Accepted Answer

A) $1,360,000. 
B) $700,000. 
C) $500,000. 
D) $90,000. 
E) None of the above. 
A) $1,360,000. 
B) $700,000. 
C) $500,000. 
D) $90,000. 
E) None of the above.

Question 14

Harvey, a real estate developer, pays Abe, a general contractor, to construct an office building. Abe has no DPGR since he does not own the property.

Accepted Answer

A) True 
 B)False

Question 15

In a sole proprietorship situation, a DPAD would be a:

Accepted Answer

A) Deduction from AGI. 
B) Deduction for AGI. 
C) Possible deduction from and deduction for. 
D) Not deductible. 
E) All of the above. 
A) Deduction from AGI. 
B) Deduction for AGI. 
C) Possible deduction from and deduction for. 
D) Not deductible. 
E) All of the above.

Question 16

Rose, Inc., an S corporation, has taxable income of $14 million in 2016. Assume there are two shareholders, each in the 35% tax bracket. What is the maximum total DPAD tax savings for the S corporation shareholders?

Accepted Answer

A) None 
B) $168,000 
C) $285,600 
D) $441,000 
E) None of the above 
A) None 
B) $168,000 
C) $285,600 
D) $441,000 
E) None of the above

Question 17

Jackson, Inc., has the following items related to the AMT. $$\begin{array} { l l } 
\text { Alternative minimum tax base } & \$ 9,850,290 \
\text { Regul ar tax } & 1,120,152 \
\text { Foreign AMT tax credit } & 123,000 \
\text { Cost of goods sold } & 2,000,000
\end{array}$$ The corporation's AMT, if any, is:

Accepted Answer

A) $0. 
B) $709,906. 
C) $726,906. 
D) $1,847,058. 
E) None of the above. 
A) $0. 
B) $709,906. 
C) $726,906. 
D) $1,847,058. 
E) None of the above.

Question 18

The W-2 wages limitation as to the DPAD encourages the use of independent contractors.

Accepted Answer

A) True 
 B)False

Question 19

Once a small corporation for AMT purposes, always a small corporation.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following items will be an addition to AMTI in arriving at ACE?

Accepted Answer

A) Tax-exempt income. 
B) Federal income tax. 
C) Excess capital loss. 
D) Excess charitable contributions. 
E) None of the above. 
A) Tax-exempt income. 
B) Federal income tax. 
C) Excess capital loss. 
D) Excess charitable contributions. 
E) None of the above.

Which of the following items will be a deduction from unadjusted AMTI in arriving at ACE?

The accumulated earnings credit is always the greater of the minimum credit of $250,000 or the current E & P for the year needed to meet the reasonable needs of the business.

In the case of an individual, modified AGI is substituted for taxable income in the DPAD formula.

The accumulated earnings credit for a personal service corporation is the greater of $150,000 or the current E & P for the year needed to meet the reasonable needs of the business.

Intangible drilling costs are a tax preference item only for integrated oil companies.

The AMT rate for corporations is the same as for individuals.

Which of the following would not be a positive tax preference item in 2016?

Which of the following has no effect in arriving at ACE?

Nickel Corporation, a calendar year corporation formed in 2014, has average gross receipts of $5.7 million, $4.2 million, and $4.8 million in 2014, 2015, and 2016, respectively. In 2016, Nickel is:

If QPAI cannot be used in any one year due to the TI limitation, it can be carried over for 3 years.

If mining exploration and development costs are capitalized and written off over 10 years, no adjustment is necessary for AMT purposes.

In the case of a sole proprietor, modified AGI is substituted for taxable income in the DPAD formula.

During 2016, Red Corporation (a calendar year taxpayer) has $4,000,000 of taxable income and the following transactions: ? AMTI (not including adjusted current earnings) \ 5,000,000 Adjusted current eamings 8,000,000 Red Corporation's alternative minimum tax (AMT) for 2016 is:

Harvey, a real estate developer, pays Abe, a general contractor, to construct an office building. Abe has no DPGR since he does not own the property.

In a sole proprietorship situation, a DPAD would be a:

Rose, Inc., an S corporation, has taxable income of $14 million in 2016. Assume there are two shareholders, each in the 35% tax bracket. What is the maximum total DPAD tax savings for the S corporation shareholders?

Jackson, Inc., has the following items related to the AMT. Alternative minimum tax base \ 9,850,290 Regul ar tax 1,120,152 Foreign AMT tax credit 123,000 Cost of goods sold 2,000,000 The corporation's AMT, if any, is:

The W-2 wages limitation as to the DPAD encourages the use of independent contractors.

Once a small corporation for AMT purposes, always a small corporation.

Which of the following items will be an addition to AMTI in arriving at ACE?

Understanding and Working With the Federal Tax Law

Corporations Introduction and Operating Rules

Corporations Organization and Capital Structure

Corporations Earnings Profits and Dividend Distributions

Corporations Redemptions and Liquidations

Corporations Reorganizations

Consolidated Tax Returns

Taxation of International Transactions

Partnerships Formation Operation and Basis

Partnerships Distributions Transfer of Interests and Terminations

S Corporations

Comparative Forms of Doing Business

Taxes on the Financial Statements

Exempt Entities

Multi-State Corporate Taxations

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Family Tax Planning

Income Taxation of Trusts and Estates

Filters

Exam 3: Corporations Special Situations

Which of the following items will be a deduction from unadjusted AMTI in arriving at ACE?

The accumulated earnings credit is always the greater of the minimum credit of $250,000 or the current E & P for the year needed to meet the reasonable needs of the business.

In the case of an individual, modified AGI is substituted for taxable income in the DPAD formula.

The accumulated earnings credit for a personal service corporation is the greater of $150,000 or the current E & P for the year needed to meet the reasonable needs of the business.

Intangible drilling costs are a tax preference item only for integrated oil companies.

The AMT rate for corporations is the same as for individuals.

Which of the following would not be a positive tax preference item in 2016?

Which of the following has no effect in arriving at ACE?

Nickel Corporation, a calendar year corporation formed in 2014, has average gross receipts of $5.7 million, $4.2 million, and $4.8 million in 2014, 2015, and 2016, respectively. In 2016, Nickel is:

If QPAI cannot be used in any one year due to the TI limitation, it can be carried over for 3 years.

If mining exploration and development costs are capitalized and written off over 10 years, no adjustment is necessary for AMT purposes.

​ In the case of a sole proprietor, modified AGI is substituted for taxable income in the DPAD formula.

During 2016, Red Corporation (a calendar year taxpayer) has $4,000,000 of taxable income and the following transactions: ? AMTI (not including adjusted current earnings) \ 5,000,000 Adjusted current eamings 8,000,000 Red Corporation's alternative minimum tax (AMT) for 2016 is:

Harvey, a real estate developer, pays Abe, a general contractor, to construct an office building. Abe has no DPGR since he does not own the property.

In a sole proprietorship situation, a DPAD would be a:

Rose, Inc., an S corporation, has taxable income of $14 million in 2016. Assume there are two shareholders, each in the 35% tax bracket. What is the maximum total DPAD tax savings for the S corporation shareholders?

Jackson, Inc., has the following items related to the AMT. Alternative minimum tax base \ 9,850,290 Regul ar tax 1,120,152 Foreign AMT tax credit 123,000 Cost of goods sold 2,000,000 The corporation's AMT, if any, is:

The W-2 wages limitation as to the DPAD encourages the use of independent contractors.

Once a small corporation for AMT purposes, always a small corporation.

Which of the following items will be an addition to AMTI in arriving at ACE?

Understanding and Working With the Federal Tax Law

Corporations Introduction and Operating Rules

Corporations Organization and Capital Structure

Corporations Earnings Profits and Dividend Distributions

Corporations Redemptions and Liquidations

Corporations Reorganizations

Consolidated Tax Returns

Taxation of International Transactions

Partnerships Formation Operation and Basis

Partnerships Distributions Transfer of Interests and Terminations

S Corporations

Comparative Forms of Doing Business

Taxes on the Financial Statements

Exempt Entities

Multi-State Corporate Taxations

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Family Tax Planning

Income Taxation of Trusts and Estates

Filters

In the case of a sole proprietor, modified AGI is substituted for taxable income in the DPAD formula.