Question 1

As to the AMT,a C corporation has no adjustments or preferences for itemized deductions.

Accepted Answer

A) True 
 B)False

Question 2

Tammy expensed mining exploration and development costs of $100,000 incurred in 2010.She will be required to make negative AMT adjustments for each of the next nine years and a positive AMT adjustment in the current tax year.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

Erin owns a mineral property that had a basis of $10,000 at the beginning of the year.The property qualifies for a 15% depletion rate.Gross income from the property was $120,000 and net income before the percentage depletion deduction was $50,000.What is Erin's tax preference for excess depletion?

Accepted Answer

A) $8,000 
B) $10,000. 
C) $18,000. 
D) $0. 
E) None of the above. 
A) $8,000 
B) $10,000. 
C) $18,000. 
D) $0. 
E) None of the above.

Question 5

Land that originally cost $100,000 is sold for $80,000.There is a negative AMT adjustment of $20,000 associated with the sale of the land.

Accepted Answer

A) True 
 B)False

Question 6

All of a 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 exclusions.

Accepted Answer

A) True 
 B)False

Question 7

In September,Dorothy purchases a building for $900,000 to use in her business as a warehouse.Dorothy uses the depreciation method which will provide her with the greatest deduction for regular income tax purposes.

Accepted Answer

The answer of In September,Dorothy purchases a building for $900,000...

Question 8

Peter incurred circulation expenditures of $210,000 in 2010 and deducted that amount for regular income tax purposes.Peter has a $70,000 negative AMT adjustment for 2011,for 2012,and for 2013.

Accepted Answer

A) True 
 B)False

Question 9

Andrea,who is single,has a personal exemption deduction in calculating her 2010 taxable income.She has no dependency deductions.What is the amount of the AMT adjustment in calculating AMTI?

Accepted Answer

In calculating Andrea's 2010 t

Question 10

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?

Accepted Answer

The use of the completed contract method

Question 11

Joel placed real property in service in 2010 that cost $500,000 and used MACRS for regular income tax purposes.He is required to make a positive adjustment for AMT purposes in 2010.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Robin,who is a head of household and age 42,provides you with the following information from his financial records for 2010.   Calculate his AMT for 2010.

Accepted Answer

A) $13,922. 
B) $14,810. 
C) $191,871. 
D) $219,425. 
E) None of the above. 
A) $13,922. 
B) $14,810. 
C) $191,871. 
D) $219,425. 
E) None of the above.

Question 14

For a building placed in service before 1999,the adjusted basis can be different for regular income tax purposes and for AMT purposes.

Accepted Answer

A) True 
 B)False

Question 15

The phaseout of the AMT exemption amount for a taxpayer filing as a head of household both begins and ends at a lower income level than it does for a married taxpayer who files a joint return.

Accepted Answer

A) True 
 B)False

Question 16

If a single taxpayer has regular income tax liability of $19,500 and AMTI of $130,000,calculate the AMT for 2010.

Accepted Answer

A) $3,296. 
B) $3,426. 
C) $22,796. 
D) $42,325. 
E) None of the above. 
A) $3,296. 
B) $3,426. 
C) $22,796. 
D) $42,325. 
E) None of the above.

Question 17

In 2010,Olive incurs circulation expenses of $150,000 which she deducts in calculating taxable income.

Accepted Answer

The answer of In 2010,Olive incurs circulation expenses of $150,000...

Question 18

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

Accepted Answer

For regular income tax purposes,no incom

Question 19

The AMT exemption for C corporations is $40,000 reduced by 25% of the amount by which AMTI exceeds $150,000.

Accepted Answer

A) True 
 B)False

Question 20

Jan's tentative AMT is $32,500.Her regular income tax liability is $29,000.Jan's AMT is $3,500.

Accepted Answer

A) True 
 B)False

Exam 15: Alternative Minimum Tax

As to the AMT,a C corporation has no adjustments or preferences for itemized deductions.

Tammy expensed mining exploration and development costs of $100,000 incurred in 2010.She will be required to make negative AMT adjustments for each of the next nine years and a positive AMT adjustment in the current tax year.

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

Erin owns a mineral property that had a basis of $10,000 at the beginning of the year.The property qualifies for a 15% depletion rate.Gross income from the property was $120,000 and net income before the percentage depletion deduction was $50,000.What is Erin's tax preference for excess depletion?

Land that originally cost $100,000 is sold for $80,000.There is a negative AMT adjustment of $20,000 associated with the sale of the land.

All of a 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 exclusions.

In September,Dorothy purchases a building for $900,000 to use in her business as a warehouse.Dorothy uses the depreciation method which will provide her with the greatest deduction for regular income tax purposes.

Peter incurred circulation expenditures of $210,000 in 2010 and deducted that amount for regular income tax purposes.Peter has a $70,000 negative AMT adjustment for 2011,for 2012,and for 2013.

Andrea,who is single,has a personal exemption deduction in calculating her 2010 taxable income.She has no dependency deductions.What is the amount of the AMT adjustment in calculating AMTI?

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?

Joel placed real property in service in 2010 that cost $500,000 and used MACRS for regular income tax purposes.He is required to make a positive adjustment for AMT purposes in 2010.

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

Robin,who is a head of household and age 42,provides you with the following information from his financial records for 2010. Calculate his AMT for 2010.

For a building placed in service before 1999,the adjusted basis can be different for regular income tax purposes and for AMT purposes.

The phaseout of the AMT exemption amount for a taxpayer filing as a head of household both begins and ends at a lower income level than it does for a married taxpayer who files a joint return.

If a single taxpayer has regular income tax liability of $19,500 and AMTI of $130,000,calculate the AMT for 2010.

In 2010,Olive incurs circulation expenses of $150,000 which she deducts in calculating taxable income.

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

The AMT exemption for C corporations is $40,000 reduced by 25% of the amount by which AMTI exceeds $150,000.

Jan's tentative AMT is $32,500.Her regular income tax liability is $29,000.Jan's AMT is $3,500.

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

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

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

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

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

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

The Federal Gift and Estate Taxes

Income Taxation of Trusts and Estates

Filters