[jeff]

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[REGTaker]

C

[Anonymous]

The answer on this one is C – When computing alternative minimum taxable income, corporations may take an exemption of $40,000 minus 25 percent of alternative minimum taxable income exceeding $150,000.

Thus, this exemption is equal to zero when alternative minimum taxable income is equal to or exceeds $310,000.

Rona Corp.'s exempt portion of its 2014 alternative minimum taxable income was $27,500 = $40,000 – [25 percent * ($200,000 – $150,000)].

[Anonymous]

I found this in my book:Note: When answering questions regarding the computation of ACE, you must determine whether the question is asking 1) how an item impacts ACE, or 2) if starting with taxable income, is the items added or subtracted to compute ACE.

For example, the 100% dividends received deduction REDUCES ACE. But if the question starts with taxable income and asks what adjustment is required when starting with taxable income for the 100% DRD, NO ADJUSTMENT is required since the 100% DRD already reduced taxable income.

[REGTaker]

Why does Ninja have 70% DRD as an ACE adjustment? I don't understand that.

[Anonymous]

I think my note was talking about 100% DRDs – a 70% DRD still has an income adjustment needed.

[Anonymous]

I can't find any questions on AMT/ACE other than that SIM.

[Anonymous]

A furniture store (The Granite Corporation) has been very profitable. The installment sales method has been applied to the sale of an asset at a gain for tax purposes in order to defer payment of income taxes until later periods. Company officials are now determining the alternative minimum tax for the present year. Which of the following statements is true about that computation?

A The benefit derived from using the installment sales method must be added to taxable income as an adjustment.

B The benefit derived from using the installment sales method in connection must be eliminated as a preference item.

C The benefit derived from using the installment sales method must be added to taxable income as part of the adjusted current earnings (ACE) adjustment.

D The benefit derived from using the installment sales method is assumed to be one of the components of the annual exemption amount in determining the alternative minimum tax.

[REGTaker]

Alternative minimum tax preferences include:

tax-exempt interest from private activity bonds issued during 1994.

charitable contributions of appreciated capital gain property.

both

a only

b only

neither

[Anonymous]

Both?

[Anonymous]

I get so confused with ACE/AMT/Preferences.

[REGTaker]

B?

[REGTaker]

A only

Interest on specified private activity bonds that is excluded from income for regular tax calculations is added back as a preference item on IRS Form 6251 in determining alternative minimum tax. Alternative minimum tax preferences are always added back in calculating alternative minimum tax income. Other preference items include depletion, excess intangible drilling costs, accelerated depreciation on property placed in service before 1987, and exclusion of gain on qualified small business stock. Charitable contributions are not considered a preference.

[Anonymous]

But charitable contributions are a preference for individual AMT, right?

[REGTaker]

I have no idea.

[Anonymous]

Nope, they aren't. Sorry.

[Author]

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