Exam 12: Alternative Minimum Tax

Beige,Inc. ,records AMTI of $200,000.Calculate the amount of the AMT exemption if: a.Beige is a small corporation for AMT purposes. b.Beige is not a small corporation for AMT purposes.

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

Durell owns a construction company that builds residential housing.The company is eligible to use the completed contract method for regular income tax purposes.What can Durell do to minimize his AMT?

For regular income tax purposes,Yolanda,who is single,is in the 35% tax bracket.Her AMT base is $220,000.Her tentative AMT is:

The AMT exemption for a corporation with $225,000 of AMTI is $18,750.

Mitch,who is single and age 66 and has no dependents,had AGI of $100,000 in 2016.His potential itemized deductions were as follows. ​ Medical expenses (before percentage limitation) $15,000 State income taxes 3,000 Real estate taxes 7,000 Mortgage (qualified housing and residence)interest 9,000 Cash contributions to various charities 4,000 Unreimbursed employee expenses (before percentage limitation) 4,300 ​ What is the amount of Mitch's AMT adjustment for itemized deductions for 2016?

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

Akeem,who does not itemize,incurred a net operating loss (NOL)of $50,000 in 2015.His deductions in 2015 included AMT tax preference items of $20,000,and he had no AMT adjustments.Assuming the NOL is not carried back,what is Akeem's ATNOLD carryover to 2015?

Discuss the tax year in which an AMT adjustment is first required for an ISO.

What itemized deductions are allowed for both regular income tax purposes and for AMT purposes?

In May 2013,Swallow,Inc. ,issues options to Karrie,a corporate officer,to purchase 100 shares of Swallow stock under an ISO plan.At the date the stock options are issued,the fair market value of the stock is $1,000 per share and the option price is $1,200 per share.The stock becomes freely transferable in 2014.Karrie exercises the options in November 2013 when the stock is selling for $1,500 per share.She sells the stock in December 2015 for $1,800 per share. ​ a.Determine the amount of the AMT adjustment for 2013. b.Determine the amount of the AMT adjustment for 2014. c.Determine Karrie's recognized gain for regular income tax purposes and for AMT purposes in 2015 on the sale of the stock. d.Determine the amount of the AMT adjustment for 2015.

Evan is a contractor who constructs both commercial and residential buildings.Even though some of the contracts could qualify for the use of the completed contract method,Evan decides to use the percentage of the completion method for all of his contracts.This increases Evan's AMT adjustment associated with long-term contracts for the current year.

In 2016,Linda incurs circulation expenses of $240,000 which she deducts in calculating taxable income. a.Calculate Linda's AMT adjustment for circulation expenses for 2016,2017,2018,and 2019. b.Advise Linda on how she could reduce or eliminate the AMT adjustment in 2016.

If the taxpayer elects to capitalize intangible drilling costs and to amortize them over a 3-year period for regular income tax purposes,there is no adjustment or preference for AMT purposes.

All of a C corporation's AMT is available for carryover as a minimum tax credit,regardless of whether the adjustments and preferences originate from timing differences or AMT preferences.

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 tax preference for excess depletion,if she maximized her regular-tax depletion deduction?

Melinda is in the 35% marginal regular tax bracket.She reports a net capital gain of $150,000 on the sale of land which is eligible for the lower tax on net capital gain in calculating the regular income tax.Discuss the tax rate that applies to the $150,000 net capital gain in calculating the tentative AMT for Melinda.

Omar acquires used 7-year personal property for $100,000 to use in his business in February 2016.Omar does not elect § 179 expensing,but he does take the maximum regular cost recovery deduction.He elects not to take additional first-year depreciation.As a result,Omar incurs a positive AMT adjustment in 2016 of what amount?

Abbygail,who is single,reported taxable income of $115,000 for 2016.She incurred positive AMT adjustments of $30,000,negative AMT adjustments of $12,000,and tax preference items of $50,000.Abbygail itemizes deductions. ​ a.Compute her AMTI. a.Compute Abbygail's tentative minimum tax. b.Assume the same facts as in part

After personal property is fully depreciated for both regular income tax purposes and AMT purposes,the positive and negative adjustments that have been made for AMT purposes will net to zero.