M5-Corporate AMT

Question 1

How to calculate AMT for corporations

Answer 1

Regular Taxable Income

A Adjustments for gain/loss
L Long-term contracts
I Installment sales (dealers)
E Excess depreciation

P Percentage depletion
P Private activity-issued post 1986
Tax-exempt interest income
P Pre-1987 ACRS excess depreciation
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Unadjusted alternative minimum taxable income

M Municipal interest income
O Organizational expense amortization
L Life insurance proceeds on key employees
D Difference between AMT and ACE depreciation
D Dividends-received deduction (under 20% ownership)

Alternative minimum taxable income (AMTI)

Alternative minimum tax base
x20%
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Gross Alternative Minimum tax

Tentative minimum tax

Alternative minimum tax
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Question 2

When computing a corporation’s income tax expense for estimated income tax purposes, both corporate tax credits and the alternative minimum tax should be taken into account. (true or false)

Answer 2

true

Question 3

The normal alternative minimum taxable income exemption amount for corporations is $40,000. It must be reduced by 25% of the amount by which AMTI exceeds $150,000, causing the exemption amount to be completely phased out when AMTI is $310,000 or more. (true or false)

Answer 3

true

Question 4

If a corporation’s tentative minimum tax exceeds the regular tax, the excess amount is the alternative minimum tax, which is payable in addition to the regular tax. (true or false)

Answer 4

true

Question 5

The alternative minimum tax (AMT) is computed as the:

Answer 5

excess of the tentative AMT over the regular tax.

Question 6

Real property (buildings) is subject to the mid-month convention under MACRS. Only personal property (machinery&equipment) is subject to the half-year and/or mid-quarter conventions. (true or false)

Answer 6

true

Question 7

Preference items and unfavorable adjustments increase AMTI. Favorable adjustments reduce AMTI. (true or false)

Answer 7

true

Question 8

Unused alternative minimum tax credit may be carried forward for how long?

Answer 8

indefinitely

Question 9

The foreign tax credit (Is or is not) calculated separately for corporate alternative minimum tax?

Answer 9

IS

Question 10

Corporations have an AMT exemption that functions similar to a standard deduction for individuals. (true or false)

Answer 10

true