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Exam 17: Tax Credits and Corporate Alternative Minimum Tax

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Question 31

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Because current U.S.corporate income tax rates are higher than many foreign corporate income tax rates only infrequently will the credit's, the overall limitation yield a lower foreign tax credit than the amount of foreign taxes actually paid.

A) True
B) False

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Question 32

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Discuss the treatment of unused general business credits.

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Unused general business credits are init...

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Question 33

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In May 2013, Cindy incurred qualifying rehabilitation expenditures of $500,000 on a certified historic structure and properly claimed the tax credit for rehabilitation expenditures.In March 2017, she sold the building at a loss.Calculate the rehabilitation expenditures credit recapture that she must report in 2017.

Amber is in the process this year of renovating the office building (placed in service in 1976) used by her business.Because of current Federal Regulations that require the structure to be accessible to handicapped individuals, she incurs an additional $11,000 for various features, such as ramps and widened doorways, to make her office building more accessible.The $11,000 incurred will produce a disabled access credit of what amount?

On February 1, 2017, Omar acquires used 7-year personal property for $100,000 for use in his business.Omar does not elect § 179 expensing, but he does take the maximum regular cost recovery deduction.As a result, Omar incurs a positive AMT adjustment in 2017 of what amount?

Steve records a tentative general business credit of $110,000 for the current year.His net regular tax liability before the general business credit is $125,000, and his tentative minimum tax is $100,000.Compute Steve's allowable general business credit for the year.

The AMT exemption for a corporation with $225,000 of AMTI is $18,750.

Ford Corporation, a calendar year corporation, has alternative minimum taxable income (before any exemption) of $1.28 million for 2017.The company is not a small corporation.If the regular corporate tax is $209,000, Ford's alternative minimum tax for 2017 is:

Why is there a need for a second tax system called the alternative minimum tax?

Cardinal Corporation hires two persons certified to be eligible employees for the work opportunity tax credit under the general rules (e.g., food stamp recipients) , each of whom is paid $9,000 during the year.As a result of this event, Cardinal Corporation may claim a work opportunity credit of:

All foreign taxes qualify for the foreign tax credit.

Several years ago, Sarah purchased a structure for $150,000 that was placed in service in 1929.In the current year, she incurred qualifying rehabilitation expenditures of $200,000.The amount of the tax credit for rehabilitation expenditures, and the amount by which the building's basis for cost recovery would increase as a result of the rehabilitation expenditures are the following amounts.

After personal property is fully depreciated for both regular income tax purposes and AMT purposes, the positive and negative adjustments that have been made for AMT purposes will net to zero.

Identify an AMT adjustment that applies for the individual taxpayer that does not apply for the corporate taxpayer and identify an AMT adjustment that applies for the corporate taxpayer that does not apply for the individual taxpayer.

Are the AMT rates for the individual taxpayer the same as those for a corporate taxpayer?

Vicki owns and operates a news agency (as a sole proprietorship) .During 2017, she incurred expenses of $24,000 to increase circulation of newspapers and magazines that her agency distributes.For regular income tax purposes, she elected to expense the $24,000 in 2017.In addition, Vicki incurred $15,000 in circulation expenditures in 2018 and again elected expense treatment.What AMT adjustments will be required in 2017 and 2018 as a result of the circulation expenditures?

Black Company paid wages of $180,000, of which $40,000 was qualified wages for the work opportunity tax credit under the general rules.Black Company's deduction for wages for the year is:

The sale of business property could result in an AMT adjustment.

The required adjustment for AMT purposes for pollution control facilities placed in service this year is equal to the difference between the amortization deduction allowed for regular income tax purposes and the depreciation deduction computed under ADS.

AMTI may be defined as regular taxable income after AMT adjustments (other than the NOL and ACE adjustments) and after tax preferences.