25 May Question 1. Arlene, who is single, has taxable income for 2014 of $112,000. Calculat
Question
1. Arlene, who is single, has taxable income for 2014 of $112,000. Calculate her alternative minimum tax, if any, given the following additional information.
| AMT adjustments | |
| Positive | $22,000 |
| Negative | (25,000) |
| Tax preferences | 46,000 |
2. Caroline and Clint are married, have no dependents, and file a joint return in 2014. Use the following selected data to calculate their Federal income tax liability.
| AMTI | $285,000 |
| Regular income tax liability | 42,066 |
| AMT tax preferences | 90,000 |
3. Bianca and David have the following for 2014:
Regular income tax before credits $32,000
Tentative AMT before credits 45,000
a. Calculate Bianca and David’s AMT if they qualify for the adoption expense credit of $11,000.
b. Calculate Bianca and David’s AMT if they qualify for the adoption expense credit of $13,190.
4. Gunter, who is divorced, has the following items for 2014.
| Salary
Gain on sale of land held nine months (regular income tax basis is $4,000 |
$60,000 |
| less than AMT basis) | 10,000 |
| Traditional IRA contribution | 5,000 |
| Alimony paid | 9,000 |
| Itemized deductions: | |
| Charitable contributions $3,000 | |
| Home mortgage interest on his principal residence 4,000 | |
| State income taxes 2,000 | 9,000 |
| Tax preferences | 15,000 |
Calculate Gunter’s AMTI for 2014.
5. Tad and Audria, who are married filing a joint return, have AMTI of $256,000 for 2014. Calculate their AMT exemption.
ANSWER: Statutory amount $82,100
Less phaseout: 25%($256,000 – $156,500) (24,875)
AMTI exemption $57,225
6. In 2014, Linda incurs circulation expenses of $240,000 which she deducts in calculating taxable income.
a. Calculate Linda’s AMT adjustment for circulation expenses for 2014, 2015, 2016, and 2017.
b. Advise Linda on how she could reduce or eliminate the AMT adjustment in 2014.
7. In June, Della purchases a building for $800,000 to use in her business as an office building. Della uses the depreciation method which will provide her with the greatest deduction for regular income tax purposes.
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