ch15 - 1. The purpose of the AMT is to replace the regular...

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1. The purpose of the AMT is to replace the regular income tax. a. True *b. False 2. The AMT can be calculated using either the direct or the indirect approaches. Both the tax law and the tax forms use the direct approach. a. True *b. False 3. A tax preference increases alternative minimum taxable income while an adjustment decreases alternative minimum taxable income. a. True *b. False 4. Since most tax preferences are merely timing differences, they eventually will reverse and net to zero. a. True *b. False 5. If circulation expenditures are amortized over a ten-year period for regular income tax purposes, there will be no AMT adjustment. a. True *b. False 6. Danica incurs circulation expenditures of $120,000 in 2011. No additional circulation expenditures are incurred in 2012 or 2013. The cumulative adjustment for circulation expenditures for 2011, 2012, and 2013 is $120,000. a. True *b. False 7. Assuming no phaseout, the AMT exemption amount for a married taxpayer filing separately for 2011 is less than the AMT exemption amount for C corporations. *a. True b. False 8. If the AMT base is greater than $175,000, the AMT rate for an individual taxpayer is the same as the AMT rate for a C corporation.
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a. True *b. False 9. The net capital gain included in an individual taxpayer’s AMT base is not eligible for the alternative tax rate on net capital gain. This favorable alternative rate applies only in calculating the regular income tax. a. True *b. False 10. Business tax credits reduce the AMT and the regular income tax in the same way. a. True *b. False 11. Prior to the effect of tax credits, Brent’s regular income tax liability is $160,000 and his tentative AMT is $145,000. Brent has nonrefundable business tax credits of $31,000. Brent’s tax liability is $129,000. a. True *b. False 12. If the tentative AMT is less than the regular income tax, the AMT will be zero. *a. True b. False 13. Julia’s tentative AMT is $62,000. Her regular income tax liability is $59,000. Julia’s AMT is $3,000. *a. True b. False 14. The phaseout of the AMT exemption amount for a taxpayer filing as a head of household both begins and ends at a higher income level than it does for a single taxpayer. a. True *b. False 15. Negative AMT adjustments for the current year caused by timing differences are offset by the positive AMT adjustments for prior tax years also caused by timing differences.
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*a. True b. False 16. Moore incurred circulation expenditures of $300,000 in 2011 and deducted that amount for regular income tax purposes. Moore has a $100,000 negative AMT adjustment for 2012, for 2013, and for 2014. a. True *b. False 17. Keosha acquires 10-year personal property to use in her business in 2011 and takes the maximum cost recovery deduction for regular income tax purposes. As a result of this, Keosha will have a positive AMT adjustment in 2011. *a. True
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This note was uploaded on 04/02/2012 for the course ECON 101 taught by Professor Sing during the Spring '12 term at CUNY Hunter.

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ch15 - 1. The purpose of the AMT is to replace the regular...

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