corporate_AMT_examples_solutions - Solution: Corporate AMT...

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Solution : Corporate AMT Part 1 : For 2009, Lowell Corporation had the following transactions: Required : [a] Compute Lowell Corporation’s AMTI. [b] Determine the tentative minimum tax base. [c] Compute the tentative alternative minimum tax. [d] What is the amount Lowell’s AMT? Solution : Taxable income 5,000,000 Cost recovery – real property (in service in 1990) Regular income tax – MACRS 3,700,000 ADS (straight-line over 40 years) 2,000,000 Cost recovery – pollution control facility Regular income tax – amortized over 60 months 450,000 ADS – straight-line over longer class life 250,000 Tax-exempt interest on qualified private activity bonds (issued in 2005) 300,000 Percentage depletion in excess of property’s adjusted basis 700,000 Taxable income 5,000,000 Adjustments MACRS in excess of straight line 1,700,000 Amortization of pollution control facilities over ADS 200,000 1,900,000 Tax preference items Tax-exempt interest on private activity bonds (not a TPI if issued in 2010 or 2011) 300,000 Percentage depletion in excess of the property’s basis 700,000 700,000 Plus (minus): ACE adjustment - 0 - AMTI 7,900,000 Less: Exemption ($40,000) - 0 - AMT base 7,900,000 AMT tax rate x 20% Tentative minimum tax 1,580,000 Less: Regular income tax ($5,000,000 x 34%) (1,700,000) AMT (if positive) - 0 -
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corporate_AMT_examples_solutions - Solution: Corporate AMT...

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