Question 1

Mauve,Inc. ,has the following for 2013,2014,and 2015 and no prior ACE adjustments. 2013 2014 2015 Pre-adjusted AMTI $12,000 $15,000 $8,000 Adjusted current earnings 10,000 17,000 5,000 ​ What is the ACE adjustment for each of the three years? ​ 2013 2014 2015

Accepted Answer

The ACE adjustment is the difference between pre-adjusted AMTI and adjusted current earnings. For 2013, the ACE adjustment is $12,000 - $10,000 = $2,000. For 2014, the ACE adjustment is $15,000 - $17,000 = ($2,000). For 2015, the ACE adjustment is $8,000 - $5,000 = $3,000.

Question 2

Use the following data to calculate Jolene's AMTI. Taxable income $190,000 AMT adjustments Positive 70,000 Negative (14,000) Tax preferences 25,000

Accepted Answer

The answer of Use the following data to calculate Jolene's...

Question 3

Arlene,who is single,has taxable income for 2015 of $112,000.Calculate her alternative minimum tax,if any,given the following additional information. ​ AMT adjustments Positive $22,000 Negative (25,000) Tax preferences 46,000

Accepted Answer

The answer of Arlene,who is single,has taxable income for 2015...

Question 4

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?

Accepted Answer

The answer of Eula owns a mineral property that had...

Question 5

Use the following selected data to calculate Devon's taxable income. Tax preferences $ 45,000 Positive AMT adjustments 52,000 Negative AMT adjustments 15,000 AMTI 290,000

Accepted Answer

The answer of Use the following selected data to calculate...

Question 6

Omar acquires used 7-year personal property for $100,000 to use in his business in February 2015.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 2015 of what amount?

Accepted Answer

The AMT adjustment is the difference between the regular MACRS depreciation and the AMT depreciation. For 7-year property, the regular MACRS uses the 200% declining balance method, while AMT uses the 150% declining balance method. The difference in depreciation for 2015 results in a positive AMT adjustment of $3,580.

Question 7

Marvin,the vice president of Lavender,Inc. ,exercises stock options for 100 shares of stock in March 2014.The stock options are incentive stock options (ISOs).Their exercise price is $20 and the fair market value on the date of exercise is $28.The options were granted in March 2010 and all restrictions on the free transferability had lapsed by the exercise date.

Accepted Answer

The answer of Marvin,the vice president of Lavender,Inc. ,exercises stock...

Question 8

Ted,who is single,owns a personal residence in the city.He also owns a condo near the ocean.He uses the condo as a vacation home.In March 2015,he borrowed $50,000 on a home equity loan and used the proceeds to acquire a luxury automobile.During 2015,he paid the following amounts of interest. ​ ∙ on his personal residence $15,500 ∙ on the condo 6,200 ∙ on the home equity loan 4,800 ∙ on credit card obligations 1,700 What amount,if any,must Ted recognize as an AMT adjustment in 2015?

Accepted Answer

The interest on the home equity loan used to acquire a luxury automobile is not deductible for AMT purposes, so $4,800 must be recognized as an AMT adjustment.

Question 9

Bianca and David have the following for 2015. Regular income tax before credits $32,000 Tentative minimum tax before credits 45,000 ​
a.Calculate Bianca and David's AMT if they qualify for the adoption expense credit of $11,000.
b.Calculate Bianca and David's AMT if they qualify for the adoption expense credit of $13,190.

Accepted Answer

The answer of Bianca and David have the following for...

Question 10

Celia and Christian,who are married filing jointly,have one dependent and do not itemize deductions.They have taxable income of $92,000 and tax preferences of $53,000 in 2015.What is their AMT base for 2015?

Accepted Answer

To calculate AMT base, we need to add tax preferences to taxable income and then subtract AMT exemption. In 2015, the AMT exemption for married filing jointly is $83,400.

Tax preferences = $53,000
Taxable income = $92,000

AMT base = (Taxable income + Tax preferences) - AMT exemption
= ($92,000 + $53,000) - $83,400
= $161,600 - $83,400
= $88,200

Therefore, the correct answer is C) $88,875.

Question 11

Akeem,who does not itemize,incurred a net operating loss (NOL) of $50,000 in 2014.His deductions in 2014 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?

Accepted Answer

The ATNOLD (Alternative Tax Net Operating Loss Deduction) is calculated by reducing the NOL by tax preference items. Akeem's NOL is $50,000, and he has $20,000 in AMT tax preference items, so the ATNOLD carryover is $50,000 - $20,000 = $30,000.

Question 12

Gunter,who is divorced,has the following items for 2015. Salary $60,000 Gain on sale of land held nine months (regular income tax basis is $4,000 less than AMT basis) 10,000 Traditional IRA contribution 5,000 Alimony paid 9,000 Itemized deductions: Charitable contributions $3,000 Home mortgage interest on his principal residence 4,000 State income taxes 2,000 9,000 Tax preferences 15,000 ​ Calculate Gunter's AMTI for 2015.

Accepted Answer

The answer of Gunter,who is divorced,has the following items for...

Question 13

Mitch,who is single and age 66 and has no dependents,had AGI of $100,000 in 2015.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 2015?

Accepted Answer

Mitch's AMT adjustment for itemized deductions is $14,800. This is calculated by taking the total of his itemized deductions ($15,000 + $3,000 + $7,000 + $9,000 + $4,000 + $4,300 = $42,300) and subtracting the AMT standard deduction for his filing status ($27,500).

Question 14

In 2015,Glenn had a $108,000 loss on a passive activity.None of the loss is attributable to AMT adjustments or preferences.She has no other passive activities.Which of the following statements is correct?

Accepted Answer

In general, passive losses can only be offset against passive income or carried forward to future years. However, there are certain exceptions and limitations that may allow for the immediate deduction of passive losses in certain situations. Based on the information provided, it seems that none of these exceptions or limitations apply to Glenn's situation, so the passive loss cannot be deducted for regular income tax purposes in 2015. The other options are incorrect: A is wrong because the loss cannot be deducted for AMT purposes either; B is wrong because there is no indication that the loss is a tax preference item; D is wrong because there is no information about a positive adjustment or any other type of adjustment.

Question 15

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?

Accepted Answer

For AMT purposes, charitable contribution deductions are limited to 25% of AGI. Therefore, Vinny's charitable contribution deduction for AMT purposes would be $62,500 (25% of $250,000). However, since he contributed $200,000, the deduction is limited to the amount contributed, resulting in a charitable contribution deduction of $125,000.

Question 16

Wallace owns a construction company that builds both commercial and residential buildings.He contracts to build a residential building for $800,000 for which he is eligible to use the completed contract method of accounting.In the current year for regular income tax purposes,Wallace does not recognize any income on the contract.Under the percentage of completion method,the income recognized under the contract would have been $60,000.Wallace's AMT adjustment is:

Accepted Answer

The AMT adjustment for long-term contracts is the difference between the income recognized under the percentage of completion (POC) method and the income recognized under the completed contract (CC) method. In this case, since Wallace is eligible to use the CC method for regular income tax purposes, he does not recognize any income on the contract. However, if he were to use the POC method, he would recognize $60,000 of income in the current year. Therefore, the AMT adjustment is $60,000 positive adjustment.

Question 17

Tad and Audria,who are married filing a joint return,have AMTI of $256,000 for 2015.Calculate their AMT exemption.

Accepted Answer

The answer of Tad and Audria,who are married filing a...

Question 18

Caroline and Clint are married,have no dependents,and file a joint return in 2015.Use the following selected data to calculate their Federal income tax liability. ​ AMTI $285,000 Regular income tax liability 42,066 AMT tax preferences 90,000

Accepted Answer

The answer of Caroline and Clint are married,have no dependents,and...

Question 19

Robin,who is a head of household and age 42,provides you with the following information from his financial records for 2015.Robert itemizes deductions. Regular income tax liability $ 42,539 AMT positive adjustments 30,000 AMT preferences 20,000 Taxable income 181,000 ​ Calculate his AMT for 2015.

Accepted Answer

AMT=Regular income tax liability+AMT positive adjustments-AMT preferences=$42,539+$30,000-$20,000=$52,539

Question 20

Sand Corporation,a calendar year taxpayer,has alternative minimum taxable income [before adjustment for adjusted current earnings (ACE)] of $900,000 for 2015.If Sand's (ACE) is $975,000,its tentative minimum tax for 2015 is:

Accepted Answer

The answer of Sand Corporation,a calendar year taxpayer,has alternative minimum...

Quiz 15: Alternative Minimum Tax

Mauve,Inc. ,has the following for 2013,2014,and 2015 and no prior ACE adjustments. 2013 2014 2015 Pre-adjusted AMTI $12,000 $15,000 $8,000 Adjusted current earnings 10,000 17,000 5,000 What is the ACE adjustment for each of the three years? 2013 2014 2015

Use the following data to calculate Jolene's AMTI. Taxable income $190,000 AMT adjustments Positive 70,000 Negative (14,000) Tax preferences 25,000

Arlene,who is single,has taxable income for 2015 of $112,000.Calculate her alternative minimum tax,if any,given the following additional information. AMT adjustments Positive $22,000 Negative (25,000) Tax preferences 46,000

Use the following selected data to calculate Devon's taxable income. Tax preferences $ 45,000 Positive AMT adjustments 52,000 Negative AMT adjustments 15,000 AMTI 290,000

Celia and Christian,who are married filing jointly,have one dependent and do not itemize deductions.They have taxable income of $92,000 and tax preferences of $53,000 in 2015.What is their AMT base for 2015?

Akeem,who does not itemize,incurred a net operating loss (NOL) of $50,000 in 2014.His deductions in 2014 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?

In 2015,Glenn had a $108,000 loss on a passive activity.None of the loss is attributable to AMT adjustments or preferences.She has no other passive activities.Which of the following statements is correct?

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?

Tad and Audria,who are married filing a joint return,have AMTI of $256,000 for 2015.Calculate their AMT exemption.

Caroline and Clint are married,have no dependents,and file a joint return in 2015.Use the following selected data to calculate their Federal income tax liability. AMTI $285,000 Regular income tax liability 42,066 AMT tax preferences 90,000

Robin,who is a head of household and age 42,provides you with the following information from his financial records for 2015.Robert itemizes deductions. Regular income tax liability $ 42,539 AMT positive adjustments 30,000 AMT preferences 20,000 Taxable income 181,000 Calculate his AMT for 2015.

Sand Corporation,a calendar year taxpayer,has alternative minimum taxable income [before adjustment for adjusted current earnings (ACE) ] of $900,000 for 2015.If Sand's (ACE) is $975,000,its tentative minimum tax for 2015 is:

Quiz 15: Alternative Minimum Tax

Mauve,Inc. ,has the following for 2013,2014,and 2015 and no prior ACE adjustments. 2013 2014 2015 Pre-adjusted AMTI $12,000 $15,000 $8,000 Adjusted current earnings 10,000 17,000 5,000 ​ What is the ACE adjustment for each of the three years? ​ 2013 2014 2015

Use the following data to calculate Jolene's AMTI. Taxable income $190,000 AMT adjustments Positive 70,000 Negative (14,000) Tax preferences 25,000

Arlene,who is single,has taxable income for 2015 of $112,000.Calculate her alternative minimum tax,if any,given the following additional information. ​ AMT adjustments Positive $22,000 Negative (25,000) Tax preferences 46,000

Use the following selected data to calculate Devon's taxable income. Tax preferences $ 45,000 Positive AMT adjustments 52,000 Negative AMT adjustments 15,000 AMTI 290,000

Celia and Christian,who are married filing jointly,have one dependent and do not itemize deductions.They have taxable income of $92,000 and tax preferences of $53,000 in 2015.What is their AMT base for 2015?

Akeem,who does not itemize,incurred a net operating loss (NOL) of $50,000 in 2014.His deductions in 2014 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?

In 2015,Glenn had a $108,000 loss on a passive activity.None of the loss is attributable to AMT adjustments or preferences.She has no other passive activities.Which of the following statements is correct?

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?

Tad and Audria,who are married filing a joint return,have AMTI of $256,000 for 2015.Calculate their AMT exemption.

Caroline and Clint are married,have no dependents,and file a joint return in 2015.Use the following selected data to calculate their Federal income tax liability. ​ AMTI $285,000 Regular income tax liability 42,066 AMT tax preferences 90,000

Robin,who is a head of household and age 42,provides you with the following information from his financial records for 2015.Robert itemizes deductions. Regular income tax liability $ 42,539 AMT positive adjustments 30,000 AMT preferences 20,000 Taxable income 181,000 ​ Calculate his AMT for 2015.

Sand Corporation,a calendar year taxpayer,has alternative minimum taxable income [before adjustment for adjusted current earnings (ACE) ] of $900,000 for 2015.If Sand's (ACE) is $975,000,its tentative minimum tax for 2015 is:

Mauve,Inc. ,has the following for 2013,2014,and 2015 and no prior ACE adjustments. 2013 2014 2015 Pre-adjusted AMTI $12,000 $15,000 $8,000 Adjusted current earnings 10,000 17,000 5,000 What is the ACE adjustment for each of the three years? 2013 2014 2015

Arlene,who is single,has taxable income for 2015 of $112,000.Calculate her alternative minimum tax,if any,given the following additional information. AMT adjustments Positive $22,000 Negative (25,000) Tax preferences 46,000

Caroline and Clint are married,have no dependents,and file a joint return in 2015.Use the following selected data to calculate their Federal income tax liability. AMTI $285,000 Regular income tax liability 42,066 AMT tax preferences 90,000

Robin,who is a head of household and age 42,provides you with the following information from his financial records for 2015.Robert itemizes deductions. Regular income tax liability $ 42,539 AMT positive adjustments 30,000 AMT preferences 20,000 Taxable income 181,000 Calculate his AMT for 2015.