I:14-36. Tom and Mary are married and file a joint return for the current year with taxable income of
$100,000 and tax preferences and adjustments of $20,000 for AMT purposes. Their regular tax liability is
$15,750. What is the amount of their total tax liability? a. $370 b. $14,937 c. $15,750 d. $31,200
b
, I:14-
2; Example I:14-2. Solution: The amount of AMTI is $120,000. Their AMT base $120,000 - $62,550 or
$57,450. Their AMT is $57,450 x .26 = $14,937. Their tax liability is the greater of the AMT or regular
tax, in this case, $15,750.
I:14-37. In computing the alternative minimum taxable income, no deduction is allowed for a. alimony. b.
moving expenses. c. personal exemptions. d. individual retirement accounts.
c
, p. I:14-3. Solution:
Personal and dependency exemptions are added back to taxable income to get alternative minimum
taxable income. I:TB14-4
I:14-38. Harley s tentative minimum tax is computed by multiplying the AMT tax rates by her a. taxable
income. b. alternative minimum tax base. c. alternative minimum taxable income. d. tentative alternative
taxable income.
b
, p. I:14-3. Solution: The tentative minimum tax is computed by multiplying the
alternative minimum tax base (AMTI less the exemption) times the tax rate.
I:14-39. Charlton and Cindy have alternative minimum taxable income of $130,000 and file a joint return.
For purposes of computing the alternative minimum tax, their exemption is a. $0. b. $31,275. c. $42,500.
d. $62,550.
d
, p. I:14-3. Solution: The exemption for a married couple filing a joint return with AMTI of
$150,000 or less is $62,550.
I:14-40. Reva and Josh Lewis had alternative minimum taxable income of $350,000 this year and file a
joint return. For purposes of computing the alternative minimum tax, their exemption is a. $12,550. b.
$31,275. c. $42,500. d. $62,550.
a
, p. I:14-3. Solution: Alternative minimum taxable income Threshold
Excess Rate of reduction Reduction Exemption before reduction Allowable exemption
I:14-41. In computing AMTI, tax preference items are a. excluded. b. added only. c. subtracted only. d.
either added or subtracted.
b
, p. I:14-4. Solution: All tax preferences are added to compute the tax base
for AMT.
I:14-42. In computing AMTI, adjustments are a. limited. I:TB14-5 $350,000 150,000 200,000 25% $
50,000 62,550 $ 12,550 b. c. d. added only. subtracted only. either added or subtracted.
d,
p. I:14-4.
Solution: While most adjustments increase the AMT tax base, the AMT tax base may be reduced when
the timing differences reverse.
I:14-43. All of the following are considered adjustments to arrive at alternative minimum taxable income
except a. charitable contributions. b. gambling losses. c. qualified housing interest. d. personal property
taxes.
d
, pp. I:14-4 and I:14-5. Solution: Charitable contributions, qualified housing interest, and
gambling losses are all itemized deductions that are allowed for AMT purposes. Personal property taxes
are not.
I:14-44. Suzanne, a single taxpayer, has the following tax information for the current year. -$40,000