Which of the following statements is correct?
A)If the tentative minimum tax is $10,000 and the regular income tax liability is $12,000,the AMT is $2,000.
B)If the tentative minimum tax is $12,000 and the regular income tax liability is $10,000,the AMT is $12,000.
C)If the tentative minimum tax is $10,000 and the regular income tax liability is $12,000,the AMT is a negative $2,000.
D)If the tentative minimum tax is $12,000,and the regular income tax liability is $10,000,the AMT is $2,000.

Question

Quizplus · Accepted Answer

The AMT is the difference between the tentative minimum tax (the minimum tax required by law) and the regular income tax liability. In this case, the tentative minimum tax is $12,000 and the regular income tax liability is $10,000, so the AMT is $2,000 (tentative minimum tax - regular income tax liability = AMT). CHOICE A is incorrect because it subtracts the regular income tax liability from the tentative minimum tax instead of the other way around. CHOICE B is incorrect because it subtracts the tentative minimum tax from the regular income tax liability. CHOICE C is incorrect because it subtracts the regular income tax liability from the tentative minimum tax and gives a negative result.

Which of the Following Statements Is Correct