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
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.
, 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
, 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.
, 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.
, 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.
, p. I:14-4. Solution: All tax preferences are added to compute the tax base
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.
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
, 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
I:14-44. Suzanne, a single taxpayer, has the following tax information for the current year. -$40,000