Corporate AMT

Question 1

Describe the alternative minimum tax corporate exemption phase-out.

Answer 1

25% of AMTI over $150,000.

Question 2

What is the alternative minimum tax exemption for corporations?

Answer 2

The exemption is $40,000.

Question 3

Describe the alternative minimum tax (AMT) net operating loss (NOL) deduction.

Answer 3

1. Allowed for carryover of net operating losses under the AMT in prior years;
2. Limited to 90% of AMTI.

Question 4

List the alternative minimum tax preference types.

Answer 4

1. Percentage depletion over adjusted basis;
2. Interest on private activity municipal bonds;
3. Excess intangible drilling costs;
4. Pre-1987 accelerated depreciation over straight-line.

Question 5

Describe the formula used to determine the alternative minimum tax for corporations.

Answer 5

Taxable Income  
  \+ Tax Preferences  
  \+/- AMT Adjustments and ACE Adjustment  
  = Alternative Minimum Taxable Income (AMTI)  
  - Minimum Tax Exemption  
  = Tax Base  
  x Tax Rate (20%)  
  = Tentative Tax  
  - Regular Tax  
  = Alternative Minimum Tax (AMT.)

Question 6

Define the “alternative minimum tax adjustments.”

Answer 6

Specific adjustments that can either increase or decrease taxable income when computing alternative minimum taxable income.

Question 7

Define “tax preferences.”

Answer 7

Specific adjustments that increase taxable income when computing alternative minimum taxable income (AMTI.)

Question 8

What purpose does the calculation of an Alternative Minimum Tax serve?

Answer 8

Taxpayer must pay the greater of alternate minimum tax or regular tax.

Question 9

Describe the adjusted current earnings (ACE) adjustment that must be made to the alternative minimum taxable income (AMTI) to help determine the alternative minimum tax.

Answer 9

[ACE - AMTI (before adjustments)] x 75%.

Question 10

List the alternative minimum tax adjustment types.

Answer 10

1. Gains from installment sales;
2. Accelerated portion of depreciation;
3. Adjustment for adjusted current earnings.

Question 11

What is the TMT exemption criteria for corporations?

Answer 11

TMT is zero if past 3 yr averge revenue is less than $7.5M, except the limit is $5M for the first year of testing (yr 2). Year one has no limit and no testing requirement.