CHAPTER 12--ALTERNATIVE MIN

124under what circumstances are corporations exempt

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124.Under what circumstances are corporations exempt from the AMT? 125.For the ACE adjustment, discuss the relationship between ACE and unadjusted AMTI. 25
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CHAPTER 12--ALTERNATIVE MINIMUM TAX Key 1. The purpose of the AMT is to replace the regular income tax. FALSE 2. The AMT can be calculated using either the direct or the indirect approaches. The tax law uses the indirect approach while the tax forms use the direct approach. FALSE 3. AMT adjustments can be both positive and negative in calculating AMTI, whereas AMT tax preferences can be only positive. TRUE 4. Since most tax preferences are merely timing differences, they eventually will reverse and net to zero. FALSE 5. If circulation expenditures are amortized over a ten-year period for regular income tax purposes, there will be no AMT adjustment. FALSE 6. Altrice incurs circulation expenditures of $90,000 in 2010. No additional circulation expenditures are incurred in 2011 or 2012. The cumulative adjustment for circulation expenditures for 2010, 2011, and 2012 is $0. TRUE 7. Assuming no phaseout, the AMT exemption amount for married taxpayers filing jointly for 2010 is the same as the AMT exemption amount for C corporations. FALSE 8. If the AMT base is not greater than $175,000, the AMT rate for an individual taxpayer is the same as the AMT rate for a C corporation. FALSE 9. The net capital gain included in an individual taxpayer’s AMT base is eligible for the alternative tax rate on net capital gain. TRUE 10. Nonrefundable personal credits are permitted to offset the AMT. TRUE 1
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11. Prior to the effect of tax credits, Brent’s regular income tax liability is $145,000 and his tentative AMT is $120,000. Brent has nonrefundable business tax credits of $32,000. Brent’s tax liability is $113,000. FALSE 12. If the tentative AMT is less than the regular income tax, the AMT will be zero. TRUE 13. Jan’s tentative AMT is $32,500. Her regular income tax liability is $29,000. Jan’s AMT is $3,500. TRUE 14. The phaseout of the AMT exemption amount for a taxpayer filing as a head of household both begins and ends at a lower income level than it does for a married taxpayer who files a joint return. TRUE 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. TRUE 16. Peter incurred circulation expenditures of $210,000 in 2010 and deducted that amount for regular income tax purposes. Peter has a $70,000 negative AMT adjustment for 2011, for 2012, and for 2013. FALSE 17. Keosha acquires 10-year personal property to use in her business in 2010 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 2010. TRUE 18. Joel placed real property in service in 2010 that cost $500,000 and used MACRS for regular income tax purposes. He is required to make a positive adjustment for AMT purposes in 2010.
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  • Spring '12
  • honig
  • Taxation in the United States, regular income tax

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