LO 2 Olga is married and files a joint tax return with her husband What amount

# Lo 2 olga is married and files a joint tax return

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60. [LO 2] Olga is married and files a joint tax return with her husband. What amount of AMT exemption may she deduct under the following alternative circumstances? (Use 2011 AMT exemption amounts.) a. Her AMTI is \$90,000. Because Olga's AMTI does not exceed \$150,000 (the threshold amount for MFJ), her AMT exemption is not phased-out and she is entitled to the full exemption amount of \$74,450. 7- 32
Chapter 7 - Individual Income Tax Computation and Tax Credits b. Her AMTI is \$180,000. Because Olga’s AMTI exceeds \$150,000, she must phase-out her exemption and is entitled to an exemption of \$66,950. Olga’s exemption is calculated as follows: \$74,450 – [(180,000 – 150,000) x 25%] = \$66,950 c. Her AMTI is \$450,000. Olga is not allowed to deduct any exemption amount because it is entirely phased out as follows: \$74,450 – [(450,000 – 150,000) x 25%] = –550, limited to \$0. 61. [LO 2] Corbett’s AMTI is \$130,000. What is his AMT exemption under the following alternative circumstances? (Use 2011 AMT exemption amounts.) a. He is married and files a joint return. Because his AGI is below the \$150,000 threshold for MFJ, his exemption is not phased out and he is entitled to a full \$74,450 exemption. b. He is married and files a separate return. Corbett’s AGI is in the phase-out range for married filing separately. His exemption amount is reduced to \$23,475. \$37,225 – [(130,000 – 75,000) × 25%] = \$23,475 c. His filing status is single. Corbett’s AGI is in the phase-out range for single filing status. His exemption amount is reduced to \$44,075. \$48,450 – [(130,000 – 112,500) × 25%] = \$44,075 d. His filing status is head of household. Corbett’s AGI is in the phase-out range for head of household filing status. His exemption amount is reduced to \$44,075. \$48,450 – [(130,000 – 112,500) × 25%] = \$44,075. 7- 33
Chapter 7 - Individual Income Tax Computation and Tax Credits 62. [LO 2] In 2012, Juanita is married and files a joint tax return with her husband. What is her tentative minimum tax in each of the following alternative circumstances? a. Her AMT base is \$100,000, all ordinary income. Juanita’s tentative minimum tax is \$26,000. Description Amount Reference (1) AMT base \$100,000 (2) Dividends taxed at preferential rate 0 (3) Tax rate applicable to dividends 15% (4) Tax on dividends 0 (2) × (3) (5) AMT base taxed at regular AMT rates 100,000 (1) – (2) (6) Tax on AMT base taxed at 26% rate 26,000 100,000 × 26% (7) Tax on AMT base (in excess of \$175,000) taxed at 28% rate 0 Tentative minimum tax \$26,000 (4) + (6) + (7) b. Her AMT base is \$250,000, all ordinary income. Juanita’s tentative minimum tax is \$66,500. Description Amount Reference (1) AMT base \$250,000 (2) Dividends taxed at preferential rate 0 (3) Tax rate applicable to dividends 15% (4) Tax on dividends 0 (2) × (3) (5) AMT base taxed at regular AMT rates 250,000 (1) – (2) (6) Tax on AMT base taxed at 26% rate 45,500 175,000 × 26% (7) Tax on AMT base (in excess of \$175,000) taxed at 28% rate 21,000 (250,000 – 175,000) × 28% Tentative minimum tax \$66,500 (4) + (6) + (7) c. Her AMT base is \$100,000, which includes \$10,000 of qualified dividends. Juanita’s tentative minimum tax is \$24,900. Description Amount Reference (1) AMT base \$100,000 (2) Dividends taxed at preferential rate 10,000 (3) Tax rate applicable to dividends 15% (4) Tax on dividends 1,500 (2) × (3) (5) AMT base taxed at regular AMT rates 90,000 (1) – (2) 7- 34
Chapter 7 - Individual Income Tax Computation and Tax Credits (6) Tax on AMT base taxed at 26% rate 23,400 90,000 × 26%

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• Fall '12
• MichaeleL.Morrow
• Taxation in the United States