Exam 12: Alternative Minimum Tax

In 2016,Glenn recorded a $108,000 loss on a passive activity.None of the loss is attributable to AMT adjustments or preferences.She has no other passive activities.Which of the following statements is correct?

Which of the following statements is correct?

Beula,who is a head of household and age 40,provides you with the following information from her financial records for 2016. ​ Regular income tax liability $ 35,776 AMT positive adjustments 33,000 AMT preferences 25,000 Taxable income 170,000 ​ Calculate her AMTI for 2016.

Cindy,who is single and age 68,has no dependents and has adjusted gross income of $50,000 in 2016.Her potential itemized deductions are as follows. ​ Medical expenses (before percentage limitation) $10,000 State income taxes 2,500 Real estate taxes 4,000 Mortgage (qualified housing and residence)interest 5,500 Unreimbursed employee expenses (before percentage limitation) 2,600 ​ What are Cindy's AMT adjustments for itemized deductions for 2016?

Are the AMT rates for the individual taxpayer the same as those for a corporate taxpayer?

If the AMT base is greater than $186,300,the AMT rate for an individual taxpayer is the same as the AMT rate for a C corporation.

Kerri,who had AGI of $120,000,itemized her deductions in the current year.She incurred unreimbursed employee business expenses of $8,500.Kerri incurs a positive AMT adjustment of $2,400 in computing AMT.

Frederick sells land and building whose adjusted basis for regular income tax purposes is $345,000 and for AMT purposes is $380,000.The sales proceeds are $850,000.Determine the effect on: ​ a.Taxable income. b.AMTI.

In determining the amount of the AMT adjustments,discuss the difference in the treatment of a building placed in service after 1986 and before 1999 and a building placed in service after December 31,1998.

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

Interest income on private activity bonds issued before 2009 and after 2010,reduced by expenses incurred in carrying the bonds,is a tax preference item that is included in computing AMTI.

The amount of the deduction for medical expenses under the regular income tax may be different than for AMT purposes if the taxpayer is at least age 65.

Since most tax preferences are merely timing differences,they eventually will reverse and net to zero.

What is the relationship between taxable income and AMTI?

Nell has a personal casualty loss deduction of $14,500 for regular income tax purposes.The loss was computed as $26,600,but it was reduced by $100 and by $12,000 (10% × $120,000 AGI).For AMT purposes,the casualty loss deduction also is $14,500.

Kay claimed percentage depletion of $119,000 for the current year for regular income tax purposes.Cost depletion would have been $60,000.Her basis in the property was $90,000 at the beginning of the current year.Kay must treat the percentage depletion deducted in excess of cost depletion,or $59,000,as a tax preference in computing AMTI.

Dale owns and operates Dale's Emporium as a sole proprietorship.On January 30,1998,Dale's Emporium acquired a warehouse for $100,000.For regular income tax purposes in 2016,depreciation was deducted under MACRS using a rate of 2.564%.Determine the AMT adjustment for depreciation and indicate whether it is positive or negative.

C corporations are not required to make AMT adjustments for depreciation.

Marvin,the vice president of Lavender,Inc. ,exercises stock options for 100 shares of stock in March 2015.The stock options are incentive stock options (ISOs).Their exercise price is $20 and the fair market value on the date of exercise is $28.The options were granted in March 2011 and all restrictions on the free transferability had lapsed by the exercise date.

How can interest on a private activity bond issued in 2008 result in both an AMT adjustment that decreases AMTI and an AMT preference that increases AMTI?