25 May Question 1. Cindy, who is single and age 66, has no dependen
Question
1. Cindy, who is single and age 66, has no dependents and has adjusted gross income of $50,000 in 2014. Her potential itemized deductions are as follows:
| Medical expenses (before percentage limitation) | $10,000 |
| State income taxes | 2,500 |
| Real estate taxes | 4,000 |
| Mortgage (qualified housing and residence) interest | 5,500 |
| Unreimbursed employee expenses (before percentage limitation) | 2,600 |
What is the amount of Cindy’s AMT adjustment for itemized deductions for 2014?
2. In calculating her 2014 taxable income, Rhonda, who is age 45, deducts the following itemized deductions.
| Medical expenses [$6,500 – 10%($60,000)] | $ 500 |
| State income taxes | 2,500 |
| Property taxes | 3,000 |
| Home mortgage interest on principal residence | 5,000 |
| Charitable contributions | 3,500 |
| Miscellaneous itemized deductions [$2,000 – 2%($60,000)] | 800 |
| Total itemized deductions for regular income tax | $15,300 |
| Calculate Rhonda’s AMT adjustment for itemized deductions. |
3. Darin’s, who is age 30, has itemized deductions in calculating 2014 taxable income as follows:
| Medical expenses [$15,000 – 10%($100,000)] | $ 5,000 |
| Mortgage interest on personal residence | 7,000 |
| State income taxes | 4,000 |
| Real property taxes | 4,500 |
| Personal property taxes | 2,500 |
| Casualty loss [$14,000 – (10% × $100,000)] | 4,000 |
| Charitable contributions | 3,500 |
| Gambling losses ($3,200 limited to gambling income of $1,000) | 1,000 |
| Miscellaneous itemized deductions [$2,500 – 2%($100,000)] | 500 |
| Itemized deductions | $32,000 |
a. Calculate Darin’s itemized deductions for AMT purposes using the direct method.
b. Calculate Darin’s itemized deductions for AMT purposes using the indirect method.
4. Abbygail, who is single, had taxable income of $115,000 for 2014. She had positive AMT adjustments of $30,000; negative AMT adjustments of $12,000; and tax preference items of $50,000.
a. Compute her alternative minimum taxable income (AMTI).
b. Assume the same facts as in part a. Compute Abbygail’s tentative minimum tax.
5. Lilly is single and has no taxable income for 2014. She has positive timing adjustments of $600,000 and AMT exclusions of $200,000.
a. Calculate Lilly’s tentative AMT.
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