Business Tax Credits & Corporate Alternative Minimum Tax - Ch13

Business Tax Credits & Corporate Alternative Minimum Tax - Ch13

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Unformatted text preview: CHAPTER 13 BUSINESS TAX CREDITS AND CORPORATE ALTERNATIVE MINIMUM TAX SOLUTIONS TO PROBLEM MATERIALS Status: Q/P Question/ Present in Prior Problem Topic Edition Edition 1 Limitation on general business credit for Modified 1 individuals 2 General business credit carryovers Modified 2 3 Issue recognition New 4 Rehabilitation expenditures tax credit Unchanged 3 5 Rehabilitation expenditures tax credit Unchanged 4 6 Ethics problem Unchanged 5 7 Work opportunity tax credit Unchanged 6 8 Welfare-to-work credit Unchanged 7 9 Incremental research activities credit Unchanged 8 10 Disabled access credit Modified 9 11 Foreign tax credit Unchanged 10 12 Exemption from corporate AMT for small Modified 11 corporations 13 AMT percentage depletion preference New 14 AMT adjustment for depreciation Unchanged 13 15 AMT adjustment for completed contract method Unchanged 14 16 Ethics problem Unchanged 15 17 AMT adjustment for gain or loss Unchanged 16 18 Issue recognition Unchanged 17 19 Computing AMT passive loss Unchanged 18 20 Calculation of ACE New 21 Adjusted current earnings (ACE) adjustment Unchanged 20 22 Adjusted current earnings (ACE) adjustment Unchanged 21 23 AMT preferences Unchanged 22 24 Tentative minimum tax calculation Modified 23 25 AMT calculation Unchanged 24 26 AMT and alternative tax on net capital gain Modified 25 13-1 13-2 2003 Entities Volume/Solutions Manual Status: Q/P Question/ Present in Prior Problem Topic Edition Edition 27 AMT calculation New 28 Tax preference items and AMT adjustments Unchanged 27 including private activity bonds Bridge Discipline Problem 1 General business credit limit and carryover Unchanged 1 2 Rehabilitation expenditures credit recapture Unchanged 2 3 Inflation adjustment for regular tax rates Unchanged 3 Research/ Problem 1 Rehabilitation expenditures tax credit Unchanged 1 2 Research activities credit Unchanged 2 3 AMT: Private activity bonds Unchanged 3 4 Miscellaneous itemized deductions and New damage award 5 Internet activity Unchanged 4 6 Internet activity Unchanged 5 PROBLEM MATERIAL 1. Canarys allowable general business credit for 2002 is limited to $30,000, determined as follows. Net income tax $190,000* Less: The greater of: $160,000 (tentative minimum tax) $41,250 [25% X ($190,000 - $25,000)] (160,000 ) Amount of general business credit allowed $ 30,000 * Net income tax = $190,000 (regular tax liability) + $0 [alternative minimum tax ($160,000 tentative minimum tax - $190,000 regular tax liability)] - $0 (nonrefundable credits). pp. 13-3, 13-4, and Example 2 2. 2002 general business credit $50,000 Total credit allowed (based on tax liability) $80,000 Less: Utilization of carryovers 1998 (5,000) 1999 (15,000) 2000 (5,000) 2001 (20,000 ) Remaining credit allowed $ 35,000 Business Tax Credits and Corporate Alternative Minimum Tax 13-3 Applied against 2002 general business credit (35,000 ) 2002 unused amount carried forward to 2003 $15,000 Therefore, the sources of the $80,000 general business credit allowed in 2002 are the...
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Business Tax Credits & Corporate Alternative Minimum Tax - Ch13

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