CHAPTER 12--ALTERNATIVE MIN

False 19 after personal property is fully depreciated

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FALSE 19. After personal property is fully depreciated for both regular income tax purposes and AMT purposes, the positive and negative adjustments that have been made for AMT purposes will net to zero. TRUE 20. The required adjustment for AMT purposes for pollution control facilities placed in service in 2010 is equal to the difference between the amortization deduction allowed for regular income tax purposes and the depreciation deduction computed under ADS. FALSE 21. The AMT adjustment for mining exploration and development costs can be avoided if the taxpayer elects to write off the expenditures over a 10-year period, rather than being expensed in the year incurred for regular income tax purposes. TRUE 2
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22. Tammy expensed mining exploration and development costs of $100,000 incurred in 2010. She will be required to make negative AMT adjustments for each of the next nine years and a positive AMT adjustment in the current tax year. TRUE 23. For AMT purposes, taxpayers must capitalize and amortize research and experimental expenditures over a 10-year period. TRUE 24. Income from some long-term contracts can be reported using the completed contract method for regular income tax purposes, but the percentage of completion method is required for AMT purposes for all long-term contracts. TRUE 25. If all long-term contracts are accounted for under the percentage of completion method for regular income tax purposes, no adjustment is required for AMT purposes. TRUE 26. The exercise of an incentive stock option (ISO) increases both the AMTI and regular taxable income in the year of exercise. FALSE 27. In 2010, Daniel exercised an incentive stock option (ISO), acquiring stock with a fair market value of $210,000 for $165,000. His AMT basis for the stock is $210,000, his regular income tax basis for the stock is $165,000, and his AMT adjustment is $45,000 ($210,000 – $165,000). TRUE 28. The recognized gain for regular income tax purposes and the recognized gain for AMT purposes on the sale of stock acquired under an incentive stock option (ISO) program are always the same because the adjusted basis is the same. FALSE 29. For a building placed in service before 1999, the adjusted basis can be different for regular income tax purposes and for AMT purposes. TRUE 30. Land that originally cost $100,000 is sold for $80,000. There is a negative AMT adjustment of $20,000 associated with the sale of the land. FALSE 31. Losses associated with a passive activity owned by an individual are not deductible against active income or portfolio income in computing either the regular income tax or the AMT. TRUE 32. The deduction for charitable contributions in calculating the regular income tax can differ from that in calculating the AMT because the percentage limitations (20%, 30%, and 50%) may be applied to a different base amount. FALSE 3
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33. The deduction for charitable contributions in calculating the regular income tax is not the same as that in calculating the AMT.
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  • Spring '12
  • honig
  • Taxation in the United States, regular income tax

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