FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 17: Business Tax Credits and the Alternative Minimum Tax

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 1

True/False

Review LaterAdd Note

Review Later

If the cost of a building constructed and placed into service by an eligible small business in the current year includes the cost of a wheelchair ramp, the cost of the ramp qualifies for the disabled access credit.

A) True
B) False

Correct Answer

verified

Show Answer

Question 2

Multiple Choice

Review LaterAdd Note

Review Later

Which of the following best describes the treatment applicable to unused business credits?

A) Unused amounts are carried forward indefinitely.
B) Unused amounts are first carried back one year and then forward for 20 years.
C) Unused amounts are first carried back one year and then forward for 10 years.
D) Unused amounts are first carried back three years and then carried forward for 15 years.

E) C) and D)
F) A) and B)

Correct Answer

verified

Show Answer

Question 3

Multiple Choice

Review LaterAdd Note

In the current tax year David, a 32-year-old single taxpayer, reported itemized deductions of $24,500, comprised of the following amounts. $6,000 of medical expenses in excess of 7.5% of AGI) 4,500 of property taxes on his home 2,500 of investment expenses not limited by investment income) 3,000 of charitable contributions 8,500 of home mortgage interest Which of David's itemized deductions could create an AMT preference?

In working with the foreign tax credit, a U.S.corporation may be able to alleviate the problem of excess foreign taxes by:

Cardinal Company incurs $800,000 during the year to construct a facility that will be used exclusively for the care of its employees' pre-school age children during normal working hours.Assuming Cardinal claims the credit for employer-provided child care this year, its basis in the newly constructed facility is $640,000.

Kay claimed percentage depletion of $119,000 for the current year for regular income tax purposes.Cost depletion would have been $60,000.Her basis in the property was $90,000 at the beginning of the current year.Kay must treat the percentage depletion deducted in excess of cost depletion, or $59,000, as a preference in computing AMTI.

Jackson sells qualifying small business stock for $125,000 adjusted basis of $105,000) in 2018 the stock was acquired in 2012).In calculating gross income for regular income tax purposes, he excludes all of his realized gain of $20,000.The $20,000 exclusion is a preference in calculating Jackson's AMTI.

In March 2018, Gray Corporation hired two individuals, both of whom were certified as long-term recipients of family assistance benefits.Each employee was paid $11,000 during 2018.Gray Corporation's work opportunity tax credit amounts for 2018 is:

Marvin, the vice president of Lavender, Inc., exercises stock options for 100 shares of stock in March 2018.The stock options are incentive stock options ISOs) .Their exercise price is $20 and the fair market value on the date of exercise is $28.The options were granted in March 2014 and all restrictions on the free transferability had lapsed by the exercise date.

Vinny's AGI is $250,000.He contributed $200,000 in cash to the Boy Scouts, a public charity.What is Vinny's charitable contribution deduction for AMT purposes?

Unused foreign tax credits are carried back two years and then forward 20 years.

Do AMT adjustments and AMT preferences increase or decrease AMTI?

If the taxpayer elects to capitalize and to amortize intangible drilling costs over a 3-year period for regular income tax purposes, there is no adjustment or preference for AMT purposes.

A, B and C are each single, report wage income of $135,000, and take the standard deduction.The following additional information is provided about each taxpayer. A: Resides in New York.$45,000 interest income from Treasury bonds.B: Resides in Nevada.$45,000 capital gain from the sale of stock. C: Resides in Florida.$45,000 interest income from private-activity municipal bonds. All else being equal and taking into consideration the principles underlying the AMT, which of these taxpayers has the highest likelihood of being subject to the AMT in the current tax year?

Prior to the effect of the tax credits, Justin's regular income tax liability is $200,000.and his tentative minimum tax is $195,000.Justin reports the following credits. Calculate Justin's tax liability after credits.

Eula owns a mineral property that had a basis of $23,000 at the beginning of the year.Cost depletion is $19,000.The property qualifies for a 15% depletion rate.Gross income from the property was $200,000, and net income before the percentage depletion deduction was $50,000.What is Eula's AMT preference for excess depletion, if she maximized her regular-tax depletion deduction?

Green Company, in the renovation of its building, incurs $9,000 of expenditures that qualify for the disabled access credit.The disabled access credit is:

Elmer exercises an incentive stock option ISO) in March for $6,000 fair market value of the stock on the exercise date is $7,600).If Elmer sells the stock in November of the same tax year for $8,000, he reports a $1,600 AMT adjustment for the year.

Akeem, who does not itemize, incurred a net operating loss NOL) of $50,000 in 2017.His deductions in 2017 included AMT tax preference items of $20,000, and he had no AMT adjustments.Assuming the NOL is not carried back, what is Akeem's ATNOLD carryover to 2018?

The components of the general business credit include all of the following except: