Exam 5: Other Corporate Tax Levies

Drury Corporation,which was organized three years ago,reports the following adjusted current earnings (ACE)and preadjustment alternative minimum taxable income (AMTI)amounts. What is the ACE adjustment to increase (or decrease)taxable income to arrive at AMTI for the second previous year?

Wind Corporation is a personal holding company.Its taxable income for this year is $100,000.The corporation's charitable contributions are $5,000 greater than its income tax charitable contribution deduction limitation.Wind's UPHCI is $95,000,assuming no other adjustments must be made.

Flower Corporation,a C corporation but not a personal service corporation,has taxable income of $200,000 plus $125,000 of positive adjustments plus $150,000 of tax preferences.Its regular tax liability is $68,000.Calculate Flower Corporation's minimum tax credit.

A corporation cannot reasonably accumulate earnings to

Becky places five-year property in service during June 2014 using the half-year convention.Depreciation is $1,500 under the 150% declining balance method and $2,000 under 200% declining balance.Becky uses the 150% declining balance method for regular income tax purposes.What is the amount of Becky's AMT adjustment?

Given the following information about Jones Corporation,what are Jones's working capital needs using the Bardahl formula,assuming that federal income taxes are not an operating expense?

Arnold Corporation reports taxable income of $250,000,tax preference items of $20,000,and positive AMT adjustments of $20,000.What is its statutory exemption,when computing alternative minimum taxable income?

Which of the following items are tax preference items for purposes of arriving at alternative minimum taxable income?

Rich Company sold equipment this year for $50,000.The equipment had been depreciated using 200% declining balance.Accumulated depreciation totals $60,000 for regular tax purposes and $70,000 for AMTI.The equipment originally cost $90,000.What AMT issues does this sale present?

When using the Bardahl formula,an increase in annual credit sales (while holding the average accounts receivable balance constant)has which of the following effects on the working capital requirements?

Explain the carryover provisions of the minimum tax credit.

How is alternative minimum taxable income computed?

Larry Corporation purchased a new precision casting machine for its manufacturing facility.The machine cost $2 million,and another $150,000 was spent on installation.The machine was placed in service in June 2009.The old machine,which was placed in service in 2003,was sold in 2009 to an unrelated party for a $250,000 financial accounting profit.What asset disposition and capital recovery issues do you need to address when removing the old machine from,and placing the new machine on,the financial accounting and tax books and in calculating the 2009 tax depreciation?

Which of the following items are adjustments made to arrive at alternative minimum taxable income?

Foggy Corporation has regular taxable income of $1,200,000.It has $250,000 of interest income on private activity bonds and $100,000 of interest on City of New Orleans bonds.How much is Foggy's preadjustment AMTI?

Mullins Corporation is classified as a PHC for the current year,reporting $263,000 of taxable income on its federal income tax return: Actual charitable contributions made by Mullins Corporation were $75,000.What are the federal income tax due and the personal holding company (PHC)tax liability? Discuss the methods (if any)by which payment of the PHC tax can be avoided.

Identify which of the following statements is false.

When using the Bardahl formula,an increase in accounts payable (while holding purchases and operating expenses constant)has which of the following effects on the working capital requirements?

The minimum tax credit available for a corporation's alternative minimum tax liability can be carried forward indefinitely and offsets regular tax liabilities in future years.

Identify which of the following statements is false.