AMT

Question 1

AMT

Answer 1

Corporations are also subject to the alternative minimum tax. The tax is computed at a rate of 20% on alternative minimum taxable income (AMTI) in excess of $40,000. If this amount exceeds the corporation’s regular tax, the excess is added to the company’s tax liability.

Question 2

AMTI Question #101267

Answer 2

The alternative minimum taxable income (AMTI) is used to arrive at the alternative minimum tax (AMT). Generally, AMTI starts with the taxpayer’s taxable income. To this amount, the individual taxpayer adds preference items and adds or subtracts adjustments to arrive at AMTI. A corporate taxpayer adds preference items, adds or subtracts adjustments, and subtracts any alternative minimum tax net operating loss (AMTNOL) deduction to arrive at AMTI.

Question 3

AMT preference

Answer 3

Tax preference items that must be added to taxable income (TI) to determine alternative minimum taxable income (AMTI) include the following:

a. Excess of percentage depletion over the cost basis of the underlying property
b. Tax-exempt interest on specified private activity bonds issued after August 7, 1986

Note: This is not a complete list.

Question 4

Other preferences

Answer 4

Other preference items include depletion, excess intangible drilling costs, accelerated depreciation on property placed in service before 1987, and exclusion of gain on qualified small business stock. Charitable contributions are not considered a preference.

Question 5

Preference logic

Answer 5

Interest on specified private activity bonds that is excluded from income for regular tax calculations is added back as a preference item on IRS Form 6251 in determining alternative minimum tax

Question 6

Exemption

Answer 6

The corporate exemption is $40,000. It is reduced by 25% of AMTI in excess of $150,000.

Question 7

AMT depreciation

Answer 7

The corporate exemption is $40,000. It is reduced by 25% of AMTI in excess of $150,000.

Question 8

PHC tax

Answer 8

The personal holding company (PHC) tax is imposed in addition to the regular income tax and alternative minimum tax (AMT).

Question 9

Estimated tax payments- not related to AMT

Answer 9

General Safe Harbor Rule: To avoid any penalty for underpayment of estimated taxes, the taxpayer must pay in 100% of the prior-year tax paid or 90% of the current-year tax due.

Special Safe Harbor Rule: If the taxpayer had taxable income in the previous year in excess of $150,000, then the safe harbor for avoiding underpayment penalties is 110% of the prior-year tax.

Question 10

adjustment

Answer 10

The difference between the regular tax depreciation of $15,000 and the amount permitted for AMT ($10,000) requires an adjustment.