M5 Corporate AMT

Question 1

Which corporations are exempt from AMT (gross receipts amount)?

Answer 1

Annual average gross receipts from the previous 3 periods are $7.5 million or less

($5 million for C Corp’s first three years of existence)

*Once it loses the small status, it can’t qualify for it in another year

Question 2

Corporate AMT calculation HIGH LEVEL

Answer 2

Regular taxable income BEFORE NOL, modified by adjustments, tax preference items and the adjusted current earnings ACE adjustment

Question 3

Corporate AMT Adjustments “A LIE”

Answer 3

A = Adjustments for gain/loss
L = Long-term contracts
I = Installment sales-dealer
E = Excess Depreciation

Question 4

Corporate AMT preferences (all P’s)

Answer 4

*ALWAYS ADD BACKS
Percentage Depletion (excess over adj basis of prop)
Private Activity Bonds (tax exempt interest)
Pre-1987 ACRS Depreciation

Question 5

Corporate Adjusted Current Earnings (ACE) adjustments (MOLDD)

Answer 5

*ALL ADD BACKS
M = Municipal bond interest
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 / ‘Unrelated’ / ‘Unaffliliated’)

Question 6

Adjusted Current Earnings (ACE) Calculation

Answer 6

Unadjusted Alternative Minimum Taxable (AMT) Income adjusted by MOLDD items

Difference between AMTI and that total (ACE) * 75% = ACE adjustment

*ACE adjustment can be negative BUT the amount of negative adjustment can’t be greater than the cumulative net positive ACE adjustments in previous tax years

Question 7

Alternative Tax NOL Deduction (ATNOLD) limitation

Answer 7

Limited to 90% of AMTI (without regard to the NOL and domestic production activities deduction)

Question 8

AMT Exemption Amount Calculation

Answer 8

$40,000

<25% * (AMTI - $150,000) >

Question 9

AMT Flat tax rate

Answer 9

20%

Question 10

What is the only credit allowed against TMT?

Answer 10

AMT Foreign Tax Credit (AMTFTC)

Question 11

AMT Credit carryforward rules

Answer 11

Forward FOREVER, NEVER carryback

Question 12

AMT Tax Base calculation

Answer 12

AMTI - Exemption

Question 13

TMT Calculation

Answer 13

AMT Base * 20% (flat tax rate)

Question 14

AMT Amount

Answer 14

TMT - Regular

*(if regular greater than TMT, NO AMT)