Question 1

If circulation expenditures are amortized over a ten-year period for regular income tax purposes, there will be no AMT adjustment.

Accepted Answer

A) True 
 B)False  False

Question 2

The amount of the deduction for medical expenses under the regular income tax may be different than for AMT purposes.

Accepted Answer

A) True 
 B)False  True

Question 3

In deciding to enact the alternative minimum tax, Congress was concerned about the inequity that resulted when taxpayers with substantial economic incomes could avoid paying regular income tax.

Accepted Answer

A) True 
 B)False  True

Question 4

Tad is a vice-president of Ruby Corporation. In 2012, he acquired 800 shares of Ruby Corporation stock under the corporation's incentive stock option (ISO) plan for an option price of $33 per share. At the date of exercise in 2012, the fair market value of the stock was $43 per share. The stock became freely transferable in 2013. Tad sold the 800 shares for $50 per share in 2014. Which of the following statements is incorrect?

Accepted Answer

A) Acquisition of the stock in 2012 had no effect on Tad's taxable income, but increased AMTI by $8,000 in 2012. 
B) Tad's regular income tax basis for the stock is $26,400 and his AMT basis is $34,400 in 2012. 
C) Tad must report a negative AMT adjustment of $5,000 in 2013. 
D) Tad will have a positive AMT adjustment of $5,000 in 2014. 
E) All of the above are correct. 
A) Acquisition of the stock in 2012 had no effect on Tad's taxable income, but increased AMTI by $8,000 in 2012. 
B) Tad's regular income tax basis for the stock is $26,400 and his AMT basis is $34,400 in 2012. 
C) Tad must report a negative AMT adjustment of $5,000 in 2013. 
D) Tad will have a positive AMT adjustment of $5,000 in 2014. 
E) All of the above are correct.

Question 5

Sand Corporation, a calendar year taxpayer, has alternative minimum taxable income [before adjustment for adjusted current earnings (ACE)] of $750,000 for 2012.If Sand's (ACE) is $975,000, its tentative minimum tax for 2012 is:

Accepted Answer

A) $150,000. 
B) $183,750. 
C) $195,000. 
D) $225,000. 
E) None of the above. 
A) $150,000. 
B) $183,750. 
C) $195,000. 
D) $225,000. 
E) None of the above.

Question 6

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

Accepted Answer

No, the rates are different.Th

Question 7

Omar acquires used 7-year personal property for $100,000 to use in his business in February 2012.Omar does not elect § 179 expensing, but does take the maximum regular cost recovery deduction.He elects not to take additional first-year depreciation.As a result, Omar will have a positive AMT adjustment in 2012 of what amount?

Accepted Answer

A) $0. 
B) $3,580. 
C) $10,710. 
D) $14,290. 
E) None of the above. 
A) $0. 
B) $3,580. 
C) $10,710. 
D) $14,290. 
E) None of the above.

Question 8

In 2012, Sean incurs $90,000 of mining exploration expenditures, and deducts the entire amount for regular income tax purposes.Which of the following statements is correct?

Accepted Answer

A) For AMT purposes, Sean will have a positive adjustment of $81,000 in 2012. 
B) Sean will have a negative AMT adjustment of $9,000 in 2017. 
C) Over a 10-year period, positive and negative adjustments will net to zero. 
D) Only a.and c.are correct. 
E) a., b., and c.are correct. 
A) For AMT purposes, Sean will have a positive adjustment of $81,000 in 2012. 
B) Sean will have a negative AMT adjustment of $9,000 in 2017. 
C) Over a 10-year period, positive and negative adjustments will net to zero. 
D) Only a.and c.are correct. 
E) a., b., and c.are correct.

Question 9

Ashly is able to reduce her regular income tax liability from $47,000 to $43,500 as the result of the alternative tax on net capital gain.Ashly's tentative AMT is $51,000.

Accepted Answer

A) Ashly's tax liability is reduced by $3,500 as the result of the alternative tax calculation on net capital gain. 
B) Ashly's AMT is increased by $3,500 as the result of the alternative tax calculation on net capital gain. 
C) Ashly's tax liability is $43,500. 
D) Ashly's tax liability is $47,000. 
E) None of the above. 
A) Ashly's tax liability is reduced by $3,500 as the result of the alternative tax calculation on net capital gain. 
B) Ashly's AMT is increased by $3,500 as the result of the alternative tax calculation on net capital gain. 
C) Ashly's tax liability is $43,500. 
D) Ashly's tax liability is $47,000. 
E) None of the above.

Question 10

If the taxpayer elects to capitalize intangible drilling costs and to amortize them over a 10-year period for regular income tax purposes, there is no adjustment or preference for AMT purposes.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following statements is correct?

Accepted Answer

A) The deduction for personal and dependency exemptions is not permitted in calculating the AMT.Therefore, in converting regular taxable income to AMTI, a positive adjustment is required. 
B) To the extent that itemized deductions exceed the standard deduction for regular income tax purposes, a positive AMT adjustment is required in converting regular taxable income to AMTI. 
C) The charitable contribution deduction for AMT purposes and for regular income tax purposes can be different. If this occurs, a positive AMT adjustment is required for the amount of the difference. 
D) Only a.and b.are correct. 
E) a., b., and c.are correct. 
A) The deduction for personal and dependency exemptions is not permitted in calculating the AMT.Therefore, in converting regular taxable income to AMTI, a positive adjustment is required. 
B) To the extent that itemized deductions exceed the standard deduction for regular income tax purposes, a positive AMT adjustment is required in converting regular taxable income to AMTI. 
C) The charitable contribution deduction for AMT purposes and for regular income tax purposes can be different. If this occurs, a positive AMT adjustment is required for the amount of the difference. 
D) Only a.and b.are correct. 
E) a., b., and c.are correct.

Question 12

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:

Accepted Answer

A) $57,200. 
B) $58,100. 
C) $61,600. 
D) $77,000. 
E) None of the above. 
A) $57,200. 
B) $58,100. 
C) $61,600. 
D) $77,000. 
E) None of the above.

Question 13

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?

Accepted Answer

The interest on a private activity bond

Question 14

Which of the following statements is incorrect?

Accepted Answer

A) If the tentative minimum tax exceeds the regular income tax liability, the AMT is $0. 
B) The exemption amount increases as AMTI increases. 
C) The AMT tax rate for an individual taxpayer can be as high as 26%. 
D) Only a.and b.are incorrect. 
E) a., b., and c.are incorrect. 
A) If the tentative minimum tax exceeds the regular income tax liability, the AMT is $0. 
B) The exemption amount increases as AMTI increases. 
C) The AMT tax rate for an individual taxpayer can be as high as 26%. 
D) Only a.and b.are incorrect. 
E) a., b., and c.are incorrect.

Question 15

Altrice incurs circulation expenditures of $180,000 in 2012.No additional circulation expenditures are incurred in 2013 or 2014.The cumulative adjustment for circulation expenditures for 2012, 2013, and 2014 is $180,000.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

Smoke, Inc., provides you with the following information:
   Calculate Smoke's AMT for 2012.

Accepted Answer

Smoke's AM

Question 18

Identify an AMT adjustment that applies for the individual taxpayer that does not apply for the corporate taxpayer and identify an AMT adjustment that applies for the corporate taxpayer that does not apply for the individual taxpayer.

Accepted Answer

Among the AMT adjustments that apply for

Question 19

In calculating her taxable income, Rhonda deducts the following itemized deductions.
   Calculate Rhonda's AMT adjustment for itemized deductions.

Accepted Answer

Rhonda's allowed itemized dedu

Question 20

Vinny's AGI is $220,000.He contributed $130,000 in cash to the Boy Scouts, a public charity.What is Vinny's charitable contribution deduction for AMT purposes?

Accepted Answer

A) $0. 
B) $66,000. 
C) $110,000. 
D) $130,000. 
E) None of the above. 
A) $0. 
B) $66,000. 
C) $110,000. 
D) $130,000. 
E) None of the above.

Exam 15: Alternative Minimum Tax

If circulation expenditures are amortized over a ten-year period for regular income tax purposes, there will be no AMT adjustment.

The amount of the deduction for medical expenses under the regular income tax may be different than for AMT purposes.

In deciding to enact the alternative minimum tax, Congress was concerned about the inequity that resulted when taxpayers with substantial economic incomes could avoid paying regular income tax.

Sand Corporation, a calendar year taxpayer, has alternative minimum taxable income [before adjustment for adjusted current earnings (ACE)] of $750,000 for 2012.If Sand's (ACE) is $975,000, its tentative minimum tax for 2012 is:

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

In 2012, Sean incurs $90,000 of mining exploration expenditures, and deducts the entire amount for regular income tax purposes.Which of the following statements is correct?

Ashly is able to reduce her regular income tax liability from $47,000 to $43,500 as the result of the alternative tax on net capital gain.Ashly's tentative AMT is $51,000.

If the taxpayer elects to capitalize intangible drilling costs and to amortize them over a 10-year period for regular income tax purposes, there is no adjustment or preference for AMT purposes.

Which of the following statements is correct?

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:

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?

Which of the following statements is incorrect?

Altrice incurs circulation expenditures of $180,000 in 2012.No additional circulation expenditures are incurred in 2013 or 2014.The cumulative adjustment for circulation expenditures for 2012, 2013, and 2014 is $180,000.

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

Smoke, Inc., provides you with the following information: Calculate Smoke's AMT for 2012.

Identify an AMT adjustment that applies for the individual taxpayer that does not apply for the corporate taxpayer and identify an AMT adjustment that applies for the corporate taxpayer that does not apply for the individual taxpayer.

In calculating her taxable income, Rhonda deducts the following itemized deductions. Calculate Rhonda's AMT adjustment for itemized deductions.

Vinny's AGI is $220,000.He contributed $130,000 in cash to the Boy Scouts, a public charity.What is Vinny's charitable contribution deduction for AMT purposes?

An Introduction to Taxation and Understanding the Federal Tax Law

Working With the Tax Law

Computing the Tax

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 Payments

A: Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 1

Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 2

Property Transactions: Capital Gains and Losses, 1231, Recapture Provisions

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Corporations: Distributions in Complete Liquidation and an Overview of Reorganizations

Partnerships

S: Corporations

Exempt Entities

Multistate Corporate Taxation

Taxation of International Transactions

Tax Practice and Ethics

Income Taxation of Trusts and Estates

Filters