25 May Question 1. Eula owns a mineral property that had a basis of $23,000 at the beginning of the year. Cost depletion is $19,000. The property qualifies for a 15% depletion rate. Gross income from the property was $20
Question
1. Eula owns a mineral property that had a basis of $23,000 at the beginning of the year. Cost depletion is $19,000. The property qualifies for a 15% depletion rate. Gross income from the property was $200,000 and net income before the percentage depletion deduction was $50,000. What is Eula’s tax preference for excess depletion?
a. $15,000.
b. $23,000.
c. $25,000.
d. $0.
e. None of the above.
2. Which of the following can produce an AMT preference rather than an AMT adjustment?
a. Interest on private activity bonds issued in 2013.
b. Percentage depletion.
c. Incentive stock options (ISOs).
d. Only a. and b.
e. a., b., and c.
3. Celia and Christian, who are married filing jointly, have one dependent and do not itemize deductions. They have taxable income of $82,000 and tax preferences of $53,000 in 2014. What is their AMT base for 2014?
a. $0.
b. $77,838.
c. $94,450.
d. $150,250.
e. None of the above.
4. Robin, who is a head of household and age 42, provides you with the following information from his financial records for 2014.
| Regular income tax liability | $ 42,539 |
| AMT positive adjustments | 30,000 |
| AMT preferences | 20,000 |
| Taxable income | 185,000 |
| Calculate his AMT for 2014. | |
| a. $13,066. | |
| b. $17,825. | |
| c. $42,539. | |
| d. $62,300. | |
| e. None of the above. |
5. Kay, who is single, had taxable income of $0 in 2014. She has positive timing adjustments of $206,300 and exclusion items of $100,000 for the year. What is the amount of her alternative minimum tax credit for carryover to 2015?
a. $80,560.
b. $68,861.
c. $68,288.
d. $12,272.
e. None of the above.
6. Sand Corporation, a calendar year taxpayer, has alternative minimum taxable income [before adjustment for adjusted current earnings (ACE)] of $900,000 for 2014. If Sand’s (ACE) is $975,000, its tentative minimum tax for 2014 is:
a. $0.
b. $56,250.
c. $180,000.
d. $191,250.
e. None of the above.
7. Mauve, Inc., has the following for 2012, 2013, and 2014 and no prior ACE adjustments.
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