1. 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 Eulas tax preference for excess depletion?
a. $15,000.
b. $23,000.
c. $25,000.
d. $0.
e. None of the above.
2. Which of the following can produce an AMT preference rather than an AMT adjustment?
a. Interest on private activity bonds issued in 2013.
b. Percentage depletion.
c. Incentive stock options (ISOs).
d. Only a. and b.
e. a., b., and c.
3. Celia and Christian, who are married filing jointly, have one dependent and do not itemize deductions. They have taxable income of $82,000 and tax preferences of $53,000 in 2014. What is their AMT base for 2014?
a. $0.
b. $77,838.
c. $94,450.
d. $150,250.
e. None of the above.
4. Robin, who is a head of household and age 42, provides you with the following information from his financial records for 2014.
Regular income tax liability
$ 42,539
AMT positive adjustments
30,000
AMT preferences
20,000
Taxable income
185,000
Calculate his AMT for 2014.
a. $13,066.
b. $17,825.
c. $42,539.
d. $62,300.
e. None of the above.
5. Kay, who is single, had taxable income of $0 in 2014. She has positive timing adjustments of $206,300 and exclusion items of $100,000 for the year. What is the amount of her alternative minimum tax credit for carryover to 2015?
a. $80,560.
b. $68,861.
c. $68,288.
d. $12,272.
e. None of the above.
6. Sand Corporation, a calendar year taxpayer, has alternative minimum taxable income [before adjustment for adjusted current earnings (ACE)] of $900,000 for 2014. If Sands (ACE) is $975,000, its tentative minimum tax for 2014 is:
a. $0.
b. $56,250.
c. $180,000.
d. $191,250.
e. None of the above.
7. Mauve, Inc., has the following for 2012, 2013, and 2014 and no prior ACE adjustments.
2012
2013
2014
Pre-adjusted AMTI
$12,000
$15,000
$8,000
Adjusted current earnings
10,000
17,000
5,000
What is the ACE adjustment for each of the three years?
2012 2013 2014
a. $0 $1,500 ($1,500)
b. ($2,000) $2,000 ($3,000)
c. $2,000 ($2,000) $3,000
d. ($1,500) $1,500 $2,250
e. $1,500 ($1,500) ($2,250)
8. Which of the following statements is correct?
a. A C corporation classified as a small corporation is eligible to have the AMT calculated using the AMT provisions for individuals.
b. A C corporation classified as a small corporation is notsubject to the AMT.
c. A C corporation classified as a small corporation is subject to the AMT only on its adjusted current earnings.
d. A C corporation classified as a small corporation is eligible to use the 20%/15%/0% tax rate on net capital gain and qualified dividends rather than the regular tax rates applicable to other C corporations.
e. a., b., and c. are correct.
9. Use the following data to calculate Jolenes AMTI.
Taxable income
$190,000
AMT adjustments
Positive
70,000
Negative
(14,000)
10.Use the following selected data to calculate Devons taxable income.
Tax preferences $ 45,000
Positive AMT adjustments 52,000
Negative AMT adjustments 15,000
AMTI 290,000