Question 1

Why is there no AMT adjustment for charitable contributions?

Accepted Answer

The charitable contribution de

Question 2

Jackson sells qualifying small business stock for $125,000 (adjusted basis of $105,000) in 2012. In calculating gross income for regular income tax purposes, he excludes all of his realized gain of $20,000.The $20,000 exclusion is a tax preference in calculating Jackson's AMTI.

Accepted Answer

A) True 
 B)False

Question 3

Tricia sold land that originally cost $105,000 for $112,000.There is a positive AMT adjustment of $7,000 associated with the sale of the land.

Accepted Answer

A) True 
 B)False

Question 4

Mitch, who is single and has no dependents, had AGI of $100,000 in 2012.His potential itemized deductions were as follows:   What is the amount of Mitch's AMT adjustment for itemized deductions for 2012?

Accepted Answer

A) $14,800. 
B) $16,800. 
C) $19,300. 
D) $25,800. 
E) None of the above. 
A) $14,800. 
B) $16,800. 
C) $19,300. 
D) $25,800. 
E) None of the above.

Question 5

Celia and Amos, who are married filing jointly, have one dependent and do not itemize deductions. They have taxable income of $82,000 and tax preferences of $53,000 in 2012. What is their AMT base for 2012?

Accepted Answer

A) $0. 
B) $85,925. 
C) $94,450. 
D) $158,300. 
E) None of the above. 
A) $0. 
B) $85,925. 
C) $94,450. 
D) $158,300. 
E) None of the above.

Question 6

The AMT adjustment for mining exploration and development costs can be avoided if the taxpayer elects to write off the expenditures in the year incurred for regular income tax purposes, rather than writing off the expenditures over a 10-year period for regular income tax purposes.

Accepted Answer

A) True 
 B)False

Question 7

The AMT does not apply to qualifying "small corporations."

Accepted Answer

A) True 
 B)False

Question 8

Julia's tentative AMT is $94,000. Her regular income tax liability is $72,000. Julia's AMT is $22,000.

Accepted Answer

A) True 
 B)False

Question 9

Vicki owns and operates a news agency (as a sole proprietorship). During 2012, 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 2012. In addition, Vicki incurred $15,000 in circulation expenditures in 2013 and again elected expense treatment.What AMT adjustments will be required in 2012 and 2013 as a result of the circulation expenditures?

Accepted Answer

A) $16,000 positive in 2012, $2,000 positive in 2013. 
B) $16,000 negative in 2012, $2,000 positive in 2013. 
C) $16,000 negative in 2012, $10,000 positive in 2013. 
D) $16,000 positive in 2012, $10,000 positive in 2013. 
E) None of the above. 
A) $16,000 positive in 2012, $2,000 positive in 2013. 
B) $16,000 negative in 2012, $2,000 positive in 2013. 
C) $16,000 negative in 2012, $10,000 positive in 2013. 
D) $16,000 positive in 2012, $10,000 positive in 2013. 
E) None of the above.

Question 10

If Jessica exercises an ISO and disposes of the option in the same tax year, are any AMT adjustments required?

Accepted Answer

In this case, no AMT adjustmen

Question 11

Lavender, Inc., incurs research and experimental expenditures of $210,000 in 2012.Determine the amount of the AMT adjustment for 2012 and for 2013 if for regular income tax purposes:

Accepted Answer

The answer of Lavender, Inc., incurs research and experimental expenditures...

Question 12

Factors that can cause the adjusted basis for AMT purposes to be different from the adjusted basis for regular income tax purposes include the following:

Accepted Answer

A) A different amount of depreciation (cost recovery) has been deducted for AMT purposes and regular income tax purposes. 
B) The spread on an incentive stock option (ISO) is recognized for AMT purposes, but is not recognized for regular income tax purposes. 
C) A different amount has been deducted for circulation expenditures for AMT purposes and for regular income tax purposes. 
D) Only a.and b. 
E) a., b., and c. 
A) A different amount of depreciation (cost recovery) has been deducted for AMT purposes and regular income tax purposes. 
B) The spread on an incentive stock option (ISO) is recognized for AMT purposes, but is not recognized for regular income tax purposes. 
C) A different amount has been deducted for circulation expenditures for AMT purposes and for regular income tax purposes. 
D) Only a.and b. 
E) a., b., and c.

Question 13

Because passive losses are not deductible in computing either taxable income or AMTI, no adjustment for passive losses is required for AMT purposes.

Accepted Answer

A) True 
 B)False

Question 14

Certain adjustments apply in calculating the corporate AMT that do not apply in calculating the noncorporate AMT and certain adjustments apply in calculating the noncorporate AMT that do not apply in calculating the corporate AMT.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

For regular income tax purposes, no inco

Question 16

Which of the following normally produces positive AMT adjustments?

Accepted Answer

A) Real property taxes deduction. 
B) Standard deduction. 
C) Charitable contribution deduction. 
D) Only a.and b.are correct. 
E) a., b., and c.are correct. 
A) Real property taxes deduction. 
B) Standard deduction. 
C) Charitable contribution deduction. 
D) Only a.and b.are correct. 
E) a., b., and c.are correct.

Question 17

Bianca and Barney have the following for 2012:

Accepted Answer

@#IMG-DLM& @#IMG-DLM& @#IMG-DLM& Only $11,000 of t

Question 18

A tax preference can increase or decrease alternative minimum taxable income while an adjustment can only increase alternative minimum taxable income.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following itemized deductions definitely will be the same amount for the regular income tax and the AMT and thus result in no AMT adjustment in 2012?

Accepted Answer

A) Real property taxes. 
B) Medical expenses. 
C) Charitable contributions. 
D) Only b.and c. 
E) a., b., and c. 
A) Real property taxes. 
B) Medical expenses. 
C) Charitable contributions. 
D) Only b.and c. 
E) a., b., and c.

Question 20

The net capital gain included in an individual taxpayer's AMT base is eligible for the alternative tax rate on net capital gain. This favorable alternative rate applies both in calculating the regular income tax and the AMT.

Accepted Answer

A) True 
 B)False

Exam 15: Alternative Minimum Tax

Why is there no AMT adjustment for charitable contributions?

Jackson sells qualifying small business stock for $125,000 (adjusted basis of $105,000) in 2012. In calculating gross income for regular income tax purposes, he excludes all of his realized gain of $20,000.The $20,000 exclusion is a tax preference in calculating Jackson's AMTI.

Tricia sold land that originally cost $105,000 for $112,000.There is a positive AMT adjustment of $7,000 associated with the sale of the land.

Mitch, who is single and has no dependents, had AGI of $100,000 in 2012.His potential itemized deductions were as follows: What is the amount of Mitch's AMT adjustment for itemized deductions for 2012?

Celia and Amos, who are married filing jointly, have one dependent and do not itemize deductions. They have taxable income of $82,000 and tax preferences of $53,000 in 2012. What is their AMT base for 2012?

The AMT adjustment for mining exploration and development costs can be avoided if the taxpayer elects to write off the expenditures in the year incurred for regular income tax purposes, rather than writing off the expenditures over a 10-year period for regular income tax purposes.

The AMT does not apply to qualifying "small corporations."

Julia's tentative AMT is $94,000. Her regular income tax liability is $72,000. Julia's AMT is $22,000.

If Jessica exercises an ISO and disposes of the option in the same tax year, are any AMT adjustments required?

Lavender, Inc., incurs research and experimental expenditures of $210,000 in 2012.Determine the amount of the AMT adjustment for 2012 and for 2013 if for regular income tax purposes:

Factors that can cause the adjusted basis for AMT purposes to be different from the adjusted basis for regular income tax purposes include the following:

Because passive losses are not deductible in computing either taxable income or AMTI, no adjustment for passive losses is required for AMT purposes.

Certain adjustments apply in calculating the corporate AMT that do not apply in calculating the noncorporate AMT and certain adjustments apply in calculating the noncorporate AMT that do not apply in calculating the corporate AMT.

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

Which of the following normally produces positive AMT adjustments?

Bianca and Barney have the following for 2012:

A tax preference can increase or decrease alternative minimum taxable income while an adjustment can only increase alternative minimum taxable income.

Which of the following itemized deductions definitely will be the same amount for the regular income tax and the AMT and thus result in no AMT adjustment in 2012?

The net capital gain included in an individual taxpayer's AMT base is eligible for the alternative tax rate on net capital gain. This favorable alternative rate applies both in calculating the regular income tax and the AMT.

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