Question 1

The standard deduction is allowed for regular income tax purposes but is disallowed for AMT purposes.This results in a positive AMT adjustment.

Accepted Answer

A) True 
 B)False

Question 2

In the current tax year for regular tax purposes, Avery reports $65,000 of income and $190,000 of deductions from passive activities.For AMT purposes, the passive activity income amount is unchanged, but deductions from passive activities total $150,000. What is Avery's suspended passive loss for regular tax and for AMT purposes?

Accepted Answer

A) $0; $0. 
B) $(40,000); $(40,000). 
C) $(125,000); $(85,000). 
D) $(190,000); $(150,000). 
A) $0; $0. 
B) $(40,000); $(40,000). 
C) $(125,000); $(85,000). 
D) $(190,000); $(150,000).

Question 3

Which of the following statements is correct?

Accepted Answer

A) If the tentative minimum tax is $100,000 and the regular income tax liability is $120,000, AMT is $20,000. 
B) If the tentative minimum tax is $120,000 and the regular income tax liability is $100,000, AMT is $120,000. 
C) If the tentative minimum tax is $100,000 and the regular income tax liability is $120,000, AMT is a negative $20,000. 
D) If the tentative minimum tax is $120,000 and the regular income tax liability is $100,000, AMT is $20,000. 
A) If the tentative minimum tax is $100,000 and the regular income tax liability is $120,000, AMT is $20,000. 
B) If the tentative minimum tax is $120,000 and the regular income tax liability is $100,000, AMT is $120,000. 
C) If the tentative minimum tax is $100,000 and the regular income tax liability is $120,000, AMT is a negative $20,000. 
D) If the tentative minimum tax is $120,000 and the regular income tax liability is $100,000, AMT is $20,000.

Question 4

Eula owns a mineral property that had a basis of $23,000 at the beginning of the year.Cost depletion is $19,000.The property qualifies for a 15% depletion rate.Gross income from the property was $200,000, and net income before the percentage depletion deduction was $50,000.What is Eula's AMT preference for excess depletion if she maximized her regular tax depletion deduction?

Accepted Answer

A) $15,000 
B) $23,000 
C) $25,000 
D) $2,000 
A) $15,000 
B) $23,000 
C) $25,000 
D) $2,000

Question 5

Celia and Christian, who are married filing jointly, have one dependent and do not itemize deductions.They report taxable income of $492,000 and tax preferences of $53,000 in 2019.What is their AMT base for 2019?

Accepted Answer

A) $0. 
B) $492,000. 
C) $457,700. 
D) $569,400. 
A) $0. 
B) $492,000. 
C) $457,700. 
D) $569,400.

Question 6

After personal property is fully depreciated for both regular income tax purposes and AMT purposes, no AMT
adjustment will be required as a result of the sale of the property.

Accepted Answer

A) True 
 B)False

Question 7

Gunter, who is divorced, provides you with the following financial information for the current year.Calculate Gunter's AMTI. $\begin{array}{lr}
\text { Salary } && \$ 460,000 \
\text { Gain on sale of land held nine months } && 50,000\
\text { (regular income tax basis is } \$ 14,000 \text { less than AMT basis) }\
\text { Traditional IRA contribution } && 5,000\
\text { Itemized deductions: }\
\text { Charitable contributions } & \$ 13,000 \
\text { Home mortgage interest on his principal residence } & 14,000
\end{array}$
  $\begin{array}{ccc}
\text { State income taxes } & \underline{18,000} & (45,000) \
\text { Private activity municipal bond interest } && 25,000
\end{array}$

Accepted Answer

The answer of Gunter, who is divorced, provides you with...

Question 8

Frederick sells equipment whose adjusted basis for regular income tax purposes is $345,000 and for AMT purposes is $380,000 (the equipment was ineligible for full expensing).The sales proceeds are $850,000.Determine the effect on:
a.Taxable income.
b.AMTI.

Accepted Answer

a.
  The recognized gain using the regul

Question 9

Cindy, who is single and age 48, has no dependents and has adjusted gross income of $150,000 in 2019.Her potential itemized deductions are as follows. $$\begin{array} { l r } 
\text { Medical expenses (before percentage limitation) } & \$ 10,000 \
\text { State income taxes } & 2,500 \
\text { Real estate taxes } & 4,000 \
\text { Mortgage (qualified housing and qualified residence) interest } & 5,500 \
\text { Unreimbursed employee expenses } & 2,600
\end{array}$$ What are Cindy's AMT adjustments for itemized deductions for 2019?

Accepted Answer

Cindy's adjustments for itemized deducti

Question 10

Bianca and David report the following for 2019. $\begin{array}{lr}
\text { Regular income tax before credits } & \$ 132,000 \
\text { Tentative minimum tax before credits } & 145,000
\end{array}$ 
a.Calculate Bianca and David's AMT if they qualify for the adoption expense credit of $11,000.
b.Calculate Bianca and David's AMT if they qualify for the adoption expense credit of $13,570.

Accepted Answer

a.In addition to the foreign tax credit,

Question 11

Madge's tentative minimum tax (TMT) is $112,000.Her regular income tax liability is $99,000.Madge's AMT is
$13,000.

Accepted Answer

A) True 
 B)False

Question 12

What tax rates apply in calculating the TMT for an individual taxpayer?

Accepted Answer

For an individual taxpayer, in

Question 13

Which of the following would not cause an individual taxpayer's AMTI to increase in the current year?

Accepted Answer

A) Investing in private-activity municipal bonds. 
B) Paying real estate taxes due in January of the next year in the current year. 
C) Amortizing circulation expenditures over three years for regular tax purposes. 
D) Exercising incentive stock options. 
A) Investing in private-activity municipal bonds. 
B) Paying real estate taxes due in January of the next year in the current year. 
C) Amortizing circulation expenditures over three years for regular tax purposes. 
D) Exercising incentive stock options.

Question 14

What is the relationship between taxable income and AMTI? Use formulas as part of your answer.

Accepted Answer

The indirect method, rather than the dir

Question 15

The sale of business property could result in an AMT adjustment.

Accepted Answer

A) True 
 B)False

Question 16

In 2019, Liam's filing status is married filing separately.For regular tax purposes, he has three dependents.Liam does not itemize deductions; his regular taxable income is $456,000. What is Liam's 2019 AMT base?

Accepted Answer

A) $0. 
B) $412,350. 
C) $456,000. 
D) $468,200. 
A) $0. 
B) $412,350. 
C) $456,000. 
D) $468,200.

Question 17

Joel placed real property in service in 2019 that cost $900,000 and used MACRS depreciation for regular income tax purposes.He is required to make a positive adjustment for AMT purposes in 2019 for the excess of depreciation calculated for regular income tax purposes over the depreciation calculated for AMT purposes.

Accepted Answer

A) True 
 B)False

Question 18

How can an AMT adjustment be avoided by a taxpayer who incurs circulation expenditures in the current tax year?

Accepted Answer

For regular income tax purposes, the tax

Question 19

Durell's sole proprietorship builds residential housing.The business is eligible to use the completed contract method for regular income tax purposes.What can Durell do to minimize his AMT?

Accepted Answer

The use of the completed contract method

Question 20

A taxpayer who expenses circulation expenditures in the year incurred for regular income tax purposes will incur a positive AMT adjustment in the following year.

Accepted Answer

A) True 
 B)False

The standard deduction is allowed for regular income tax purposes but is disallowed for AMT purposes.This results in a positive AMT adjustment.

Which of the following statements is correct?

Celia and Christian, who are married filing jointly, have one dependent and do not itemize deductions.They report taxable income of $492,000 and tax preferences of $53,000 in 2019.What is their AMT base for 2019?

After personal property is fully depreciated for both regular income tax purposes and AMT purposes, no AMT adjustment will be required as a result of the sale of the property.

Frederick sells equipment whose adjusted basis for regular income tax purposes is $345,000 and for AMT purposes is $380,000 (the equipment was ineligible for full expensing).The sales proceeds are $850,000.Determine the effect on: a.Taxable income. b.AMTI.

Madge's tentative minimum tax (TMT) is $112,000.Her regular income tax liability is $99,000.Madge's AMT is $13,000.

What tax rates apply in calculating the TMT for an individual taxpayer?

Which of the following would not cause an individual taxpayer's AMTI to increase in the current year?

What is the relationship between taxable income and AMTI? Use formulas as part of your answer.

The sale of business property could result in an AMT adjustment.

In 2019, Liam's filing status is married filing separately.For regular tax purposes, he has three dependents.Liam does not itemize deductions; his regular taxable income is $456,000. What is Liam's 2019 AMT base?

How can an AMT adjustment be avoided by a taxpayer who incurs circulation expenditures in the current tax year?

Durell's sole proprietorship builds residential housing.The business is eligible to use the completed contract method for regular income tax purposes.What can Durell do to minimize his AMT?

A taxpayer who expenses circulation expenditures in the year incurred for regular income tax purposes will incur a positive AMT adjustment in the following year.

An Introduction to Taxation and Understanding the Federal Tax Law

Working With the Tax Law

Tax Formula and Tax Determination an Overview of Property Transactions

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Tax Credits and Payment Procedures

Property Transactions: Determination of Gain or Loss and Basic Considerations

Property Transactions: Nontaxable Exchanges

Property Transactions: Capital Gains and Losses

Property Transactions: Section 1231 and Recapture Provisions

Accounting Periods and Methods

Deferred Compensation

Corporations and Partnerships

Filters

Exam 12: Alternative Minimum Tax

The standard deduction is allowed for regular income tax purposes but is disallowed for AMT purposes.This results in a positive AMT adjustment.

Which of the following statements is correct?

Celia and Christian, who are married filing jointly, have one dependent and do not itemize deductions.They report taxable income of $492,000 and tax preferences of $53,000 in 2019.What is their AMT base for 2019?

After personal property is fully depreciated for both regular income tax purposes and AMT purposes, no AMT adjustment will be required as a result of the sale of the property.

Frederick sells equipment whose adjusted basis for regular income tax purposes is $345,000 and for AMT purposes is $380,000 (the equipment was ineligible for full expensing).The sales proceeds are $850,000.Determine the effect on: a.Taxable income. b.AMTI.

Madge's tentative minimum tax (TMT) is $112,000.Her regular income tax liability is $99,000.Madge's AMT is $13,000.

What tax rates apply in calculating the TMT for an individual taxpayer?

Which of the following would not cause an individual taxpayer's AMTI to increase in the current year?

What is the relationship between taxable income and AMTI? Use formulas as part of your answer.

The sale of business property could result in an AMT adjustment.

In 2019, Liam's filing status is married filing separately.For regular tax purposes, he has three dependents.Liam does not itemize deductions; his regular taxable income is $456,000. What is Liam's 2019 AMT base?

How can an AMT adjustment be avoided by a taxpayer who incurs circulation expenditures in the current tax year?

Durell's sole proprietorship builds residential housing.The business is eligible to use the completed contract method for regular income tax purposes.What can Durell do to minimize his AMT?

A taxpayer who expenses circulation expenditures in the year incurred for regular income tax purposes will incur a positive AMT adjustment in the following year.

An Introduction to Taxation and Understanding the Federal Tax Law

Working With the Tax Law

Tax Formula and Tax Determination an Overview of Property Transactions

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Tax Credits and Payment Procedures

Property Transactions: Determination of Gain or Loss and Basic Considerations

Property Transactions: Nontaxable Exchanges

Property Transactions: Capital Gains and Losses

Property Transactions: Section 1231 and Recapture Provisions

Accounting Periods and Methods

Deferred Compensation

Corporations and Partnerships

Filters