REG_2_04

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  1. What is the formula to calculate the AMT Exemption amount?
    • Start with the base rate: $54,300 single / $84,500 MFJ / $42,250 MFS
    • Calculate reduction: [AMTI - ($120,700 S / $160,900 MFJ / $80,450 MFS)] * 25%
    • Determine the exemption: base rate - reduction = exception
  2. What are the 5 timing difference adjustments to determine AMTI? What makes timing differences unique?
    • P - A - N - I - C
    • Passive activity losses
    • Accelerated depreciation (post 1986 purchase)
    • Net operating loss of the individual taxpayer
    • Installment income of a dealer
    • Contracts (must use percentage of completion)
    • Timing differences may require either add back or subtract from regular taxable income to determine AMTI
  3. What are the 4 permanent difference adjustments to determine AMTI? What makes permanent differences unique?
    • T - I - M - E
    • Tax deductions (taxable refunds used in itemized deductions, investment interest)
    • Interest deductions on home equity loans not used to buy, build, or improve the home
    • Miscellaneous deductions
    • Exemptions
    • Permanent differences are unique b/c
    • ++ are always ADDED BACK to regular taxable income to determine AMTI
    • ++ cannot be carried forward as part of the AMT credit
  4. What are the 3 preference items to determine AMTI? What makes these unique?
    • P - P - P
    • Private activity bond interest
    • Percentage depletion deduction (excess over adjusted basis of property)
    • Pre-1987 accelerated depreciation
    • These items are always add backs to regular taxable income to determine AMTI
  5. Which of the following are Adjustments vs Preferences: (a) passive activity losses, (b) private bond activity tax-exempt interest, (c) Home equity interest, (d) personal and standard deductions
    • (a) Adjustment
    • (b) Preference
    • (c) Adjustment
    • (d) Adjustment
  6. Which of the following are Adjustments vs Preferences: (a) percentage depletion, (b) state & local income or sales tax, (c) section 179 expense, (d) real property using accelerated depreciation
    • (a) Preference
    • (b) Adjustment
    • (c) Neither – no adjustment is needed
    • (d) Adjustment
  7. Which of the following are Adjustments vs Preferences: (a) passive activity losses, (b) completed contract method, (c) Pre-1987 accelerated depreciation, (d) installment method sales
    • (a) Adjustment
    • (b) Adjustment
    • (c) Preference
    • (d) Adjustment
  8. True / False: A preference adjustment must be made for all tax-exempt interest received.
    • False
    • Only tax-exempt interest from private bond activity
  9. Which tax credits used to reduce regular income tax due can also be used to reduce AMT?
    • ALL PERSONAL (non-refundable) TAX CREDITS
    • Foreign tax credit
    • Child and dependent care credit
    • Adoption credit
    • Child tax credit
    • Contributions to retirement plans credit
    • Residential energy credit
  10. What two common taxes are deemed Other Taxes?
    • Self-employment tax
    • Additional MCare tax on wages >$200,000 S / $250,000 MFJ / $125,000 MFS
  11. Which tax do you pay, the Tentative AMT or the Regular Tax?
    Whichever is greater
  12. A child earns $3000 in unearned income. Assume the child’s standard deduction is $950. How much is taxable at the parent’s rate?
    • $3,000 – standard deduction = $2,100
    • Amount taxed at child’s rate = $950 (the same amt as the deduction)
    • Amt taxed at parent’s rate: $3,000 – 950 (std deduct) – 950 (child’s rate) = $1,100
  13. What is the AMT tax rate?
    All taxpayers except married filing separately: 26% on the first $187,800 of the AMTI tax base and 28% on all amounts above that.
  14. What is the formula to determine the AMT?
    • Regular Taxable Income
    • +/- Adjustments
    • + Preferences
    • AMTI
    • - AMT Exemption
    • AMT Base
    • x AMT Tax Rate
    • Tentative AMT Tax
    • Less Credits
    • Tentative AMT
    • - Regular Income Tax
    • AMT
  15. How is an AMT tax credit used? How long is the carryback or carryforward?
    • In a year when no AMT tax is due, the previous AMT paid (only using timing difference adjustments, NOT permanent adjustments or preference items) can be used to reduce regular income taxes due.
    • The carryforward is forever. No carryback.
  16. What is the difference in depreciation used for regular tax purposes vs AMTI?
    • Real Property: Regular uses MACRS. AMTI uses straight-line over 40 years.
    • Personal Property: Regular uses MACRS (200% declining), AMTI uses 150% declining.

Card Set Information

Author:
BethG
ID:
334362
Filename:
REG_2_04
Updated:
2017-11-18 01:41:19
Tags:
REG TAX
Folders:

Description:
Becker Review 2017
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