Question 81 (LO 4) Compute ACC, Inc.’s tentative minimum tax (TMT), alternative minim

81 (LO 4) Compute ACC, Inc.’s tentative minimum tax (TMT), alternative minimum tax (AMT), and minimum tax credit (MTC) in each of the following alternative scenarios:

a. ACC’s alternative minimum tax base is $500,000 and its regular tax liability is $80,000.

b. ACC’s alternative minimum tax base is $300,000 and its regular tax liability is $80,000.

c. ACC’s alternative minimum tax base is $1,000,000 and its regular tax liability is $250,000.

82 (LO 4) In year 1, GSL Corp.’s alternative minimum tax base was $2,000,000 and its regular tax liability is $350,000.

a. What is GSL’s total tax liability for years 1, 2, 3, and 4 (by year) assuming the following?

Year 2: AMT base $600,000; Regular tax liability $100,000.

Year 3: AMT base $500,000; Regular tax liability $160,000.

Year 4: AMT base $1,000,000; Regular tax liability $150,000.

b. What, if any, minimum tax credit does GSL have at the end of year 4?

83 (LO 4) In year 1, Lazy Corporation reported a $500,000 net operating loss for regular tax purposes and a $450,000 net operating loss for alternative minimum tax purposes (called an alternative tax net operating loss). In year 2, Lazy reported $450,000 of taxable income before deducting its net operating loss carryover from year 1 (it elected to forgo the net operating loss carry back). It also reported $450,000 of alternative minimum taxable income before taking the alternative tax net operating loss carryover into account (it did not report any preference or adjustments in year 2). (Note that, subject to certain limitations, alternative tax NOLs are deducted from AMTI in the process of determining the alternative minimum tax.) What is Lazy Corporation’s year 2 tax liability? Assume Lazy did not have any MTC carryover from a prior year.

Comprehensive Problems

84 Compute MV, Corp.’s 2014 taxable income given the following information relating to its year 1 activities. Also, compute MV’s Schedule M-1 assuming that MV’s federal income tax expense for book purposes is $100,000.

• Gross profit from inventory sales of $500,000 (no book-tax differences).
• Dividends MV received from 25 percent owned corporation of $100,000.
• Expenses other than DRD, charitable contribution (CC), net operating loss (NOL), and domestic production activities deduction (DPAD) are $350,000 (no book-tax differences).
• NOL carryforward from prior year of $10,000.
• Cash charitable contribution of $120,000.
• Domestic production activities deduction of $5,000 (wage limitation does not apply).

85. Compute HC Inc.’s current year taxable income given the following information relating to its 2014 activities. Also, compute HC’s Schedule M-1 assuming that HC’s federal income tax expense for book purposes is $30,000.

• Gross profit from inventory sales of $310,000 (no book-tax differences).

• Dividends HC received from 28 percent-owned corporation of $120,000.
• Expenses other than DRD, charitable contribution (CC), net operating loss (NOL), and domestic production activities deduction (DPAD) are $300,000 (no book-tax differences).
• NOL carryover from prior year of $12,000.
• Cash charitable contribution of $50,000.
• Domestic production activities deduction of $4,000 (wage limitation does not apply).

HC, Inc.’s taxable income is $7,640, computed as follows:

86 Timpanogos Inc. is an accrual-method calendar-year corporation. For 2014, it reported financial statement income after taxes of $1,149,000. Timpanogos provided the following information relating to its 2014 activities:

Life insurance proceeds as a result of CEO’s death $200,000

Revenue from sales (for book and tax purposes) 2,000,000

Premiums paid on the key-person life insurance policies. The

policies have no cash surrender value. 21,000

Charitable contributions 180,000

Overhead costs that were expensed for book purposes but are

included in ending inventory for tax purposes under § 263A. 50,000

Overhead costs that were expensed for book purposes in 2013 $60,000

but were included in 2013 ending inventory for tax purposes

under §263A. All 2013 ending inventory was sold in 2014.

Cost of goods sold for book purposes 300,000

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