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Exam 14: Business Tax Credits and Corporate Alternative Minimum Tax

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Question 1

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How can interest on a private activity bond issued in 2008 result in both an AMT adjustment that decreases AMTI and an AMT preference that increases AMTI?

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The interest on a private activity bond ...

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Question 2

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What is the relationship between the regular income tax liability and the tentative AMT?

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If the tentative AMT exceeds t...

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The purpose of the work opportunity tax credit is to encourage employers to hire individuals from specified target groups traditionally subject to high rates of unemployment.

A negative ACE adjustment is beneficial to a corporation.

During the year,Green,Inc.,incurs the following research expenditures: In-house wages, supplies, computer time $~~~~~~~~~~~~~~~~$ $60,000 Paid Blue Foundation for research $~~~~~~~~~~~~~~~~~~~~~~~~~$ 30,000 Green's qualifying research expenditures for the year are:

Since most tax preferences are merely timing differences,they eventually will reverse and net to zero.

In determining the amount of the AMT adjustments,discuss the difference in the treatment of a building placed in service after 1986 and before January 1,1999 and a building placed in service after December 31,1998.

In computing the foreign tax credit,the greater of the foreign income taxes paid or the overall limitation is allowed.

Employers are encouraged by the work opportunity tax credit to hire individuals who have been long-term recipients of family assistance welfare benefits.

Summer Corporation's business is international in scope and is subject to income taxes in several countries.Summer's earnings and income taxes paid in the relevant foreign countries are: $\begin{array}{lrr}Country & Income & Taxes \\\hline A & \$1,000,000 & \$500,000 \\ B & 300,000 & 30,000 \\C & \underline{400,000} & \underline{120,000} \\Total & \underline{\$1,700,000} & \underline{\$ 650,000} \\\end{array}$ If Summer Corporation's worldwide income subject to taxation in the United States is $2,400,000 and the U.S.income tax due prior to the foreign tax credit is $816,000,compute the allowable foreign tax credit.If,instead,the total foreign income taxes paid were $550,000,compute the allowable foreign tax credit.

Keosha acquires 10-year personal property to use in her business in 2013 and takes the maximum cost recovery deduction for regular income tax purposes.As a result of this,Keosha will have a positive AMT adjustment in 2013.

A LIFO method is applied to general business credit carryovers,carrybacks,and utilization of credits earned during a particular year.

In deciding to enact the alternative minimum tax,Congress was concerned about the inequity that resulted when taxpayers with substantial economic incomes could avoid paying regular income tax.

All foreign taxes qualify for the foreign tax credit.

During the year,Green Corporation (a U.S.corporation) has U.S.-source income of $750,000 and foreign income of $500,000.The foreign-source income generates foreign income taxes of $240,000.The U.S.income tax before the foreign tax credit is $425,000.Green Corporation's foreign tax credit is:

A taxpayer who expenses circulation expenditures in the year incurred for regular income tax purposes will have a positive AMT adjustment in the following year.

In June,Della purchases a building for $800,000 to use in her business as an office building.Della uses the depreciation method which will provide her with the greatest deduction for regular income tax purposes. a. Calculate the AMT adjustment for depreciation in 2013 if Della purchased the builing in 2013 b. Calculate the AMT preference for dopreciation in 2013 if Della purchased the building in 1986.

Green Company,in the renovation of its building,incurs $9,000 of expenditures that qualify for the disabled access credit.The disabled access credit is:

In May 2013,Blue Corporation hired Camilla,Jolene,and Tyrone,all of whom are certified as long-term family assistance recipients.Each employee is paid $12,000 during 2013.Camilla and Tyrone continued to work for Blue Corporation in 2014,earning $14,000 each.Blue hired no additional employees during 2014. a. Compute Blue Corporation's work opportunity tax credits for 2013 and 2014. b. Assum Blue Corporation pays total wages of $500,000 to its employees chuing 2013 and $560,000 chuing 2014. How much may Blus Cormoration claim as a wage deduction for 2013 and 2014 if the work opportunity tax credit is claimed in both years?

Amber is in the process this year of renovating the office building (originally 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?