Exam 12: Alternative Minimum Tax

Joel placed real property in service in 2016 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 2016 for the excess of depreciation calculated for regular income tax purposes over the depreciation calculated for AMT purposes.

Prior to the effect of the tax credits,Justin's regular income tax liability is $200,000.and his tentative minimum tax is $195,000.Justin reports the following credits. Child tax credit $1,000 Adoption expenses credit 5,000 ​ Calculate Justin's tax liability after credits.

Interest on a home equity loan cannot be deducted for AMT purposes.

Lavender,Inc. ,incurs research and experimental expenditures of $210,000 in 2016.Determine the amount of the AMT adjustment for 2016 and for 2017 if for regular income tax purposes: ​ ​ a.Lavender fully deducts the research and experimental expenses. b.Lavender capitalizes the research and experimental expenses and elects to amortize them over a 10-year period.

Why is there no AMT adjustment for charitable contributions?

In the current tax year,Ben exercised an incentive stock option (ISO),acquiring stock with a fair market value of $190,000 for $170,000.His AMT basis for the stock is $170,000,his regular income tax basis for the stock is $170,000,and his AMT adjustment is $0 ($170,000 - $170,000).

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

In calculating her 2016 taxable income,Rhonda,who is age 45,claims the following itemized deductions. Medical expenses [$6,500 - 10%($60,000)] $ 500 State income taxes 2,500 Property taxes 3,000 Home mortgage interest on principal residence 5,000 Charitable contributions 3,500 Miscellaneous itemized deductions [$2,000 - 2%($60,000)] 800 Total itemized deductions for regular income tax $15,300 ​ Calculate Rhonda's AMT adjustment for itemized deductions.

Vicki owns and operates a news agency (as a sole proprietorship).During 2016,she incurred expenses of $24,000 to increase circulation of newspapers and magazines that her agency distributes.For regular income tax purposes,she elected to expense the $24,000 in 2016.In addition,Vicki incurred $15,000 in circulation expenditures in 2017 and again elected expense treatment.What AMT adjustments will be required in 2016 and 2017 as a result of the circulation expenditures?

Ashby,who is single and age 30,provides you with the following information from his financial records for 2016. Regular income tax liability $ 47,228 AMTI 225,000 Taxable income 195,000 ​ Calculate his AMT exemption for 2016.

Celia and Christian,who are married filing jointly,have one dependent and do not itemize deductions.They have taxable income of $192,000 and tax preferences of $53,000 in 2016.What is their AMT base for 2016?

Vinny's AGI is $250,000.He contributed $200,000 in cash to the Boy Scouts,a public charity.What is Vinny's charitable contribution deduction for AMT purposes?

Cher sold undeveloped land that originally cost $150,000 for $225,000.There is a positive AMT adjustment of $75,000 associated with the sale of the land.

A taxpayer has a passive activity loss for the current tax year for regular income tax purposes and for AMT purposes.Is it possible that the passive activity losses will be the same amount?

In calculating the AMT using the indirect method,do AMT adjustments and AMT preferences increase or decrease AMTI?

What effect do deductible gambling losses for regular income tax purposes have in calculating AMTI?

After 1993,the corporate AMT no longer applies for small C corporations.

Mauve,Inc. ,records the following gross receipts in 2014,2015,and 2016. 2014 2015 2016 $4,900,000 $8,700,000 $5,800,000 ​ ​ ​ ​ What is Mauve,Inc.'s TMT in each of these three years? ​ 2014 2015 2016

Tad and Audria,who are married filing a joint return,have AMTI of $256,000 for 2016.Calculate their AMT exemption.

Use the following data to calculate Jolene's AMTI.Jolene does not itemize deductions. Taxable income $190,000 AMT adjustments Positive 70,000 Negative (14,000) AMT preferences 25,000