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Exam 17: Business Tax Credits and Corporate Alternative Minimum Tax

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Question 41

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Explain the purpose of the disabled access credit and describe the general characteristics of its computation.

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The disabled access credit is designed t...

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Question 42

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An employer's tax deduction for wages is affected by the work opportunity tax credit.

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Question 43

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Several years ago,Sarah purchased a structure for $150,000 that was originally 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:

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.

The tax benefits resulting from tax credits and tax deductions are affected by the tax rate bracket of the taxpayer.

Joel placed real property in service in 2015 that cost $900,000 and used MACRS depreciation for regular income tax purposes.He is required to make a positive adjustment for AMT purposes in 2015 for the excess of depreciation calculated for regular income tax purposes over the depreciation calculated for AMT purposes.

The components of the general business credit include all of the following except:

Unless circulation expenditures are amortized over a three-year period for regular income tax purposes,there will be an AMT adjustment.

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

Ahmad is considering making a $10,000 investment in a venture which its promoter promises will generate immediate tax benefits for him.Ahmad,who normally itemizes his deductions,is in the 28% marginal tax bracket.If the investment is of a type where the taxpayer may claim either a tax credit of 25% of the amount of the expenditure or an itemized deduction for the amount of the investment,what treatment normally would be most beneficial to Ahmad and by how much will Ahmad's tax liability decline because of the investment?

Elmer exercises an incentive stock option (ISO)in 2015 for $6,000 (fair market value of the stock on the exercise date is $7,600).If Elmer sells the stock later in 2015 for $8,000,the AMT positive adjustment is $1,600 and the AMT negative adjustment is $2,000.

The work opportunity tax credit is available only for wages paid to qualifying individuals during their first year of employment.

Will all AMT adjustments reverse? That is,do they relate to timing differences?

In March 2015,Gray Corporation hired two individuals,both of whom were certified as long-term recipients of family assistance benefits.Each employee was paid $11,000 during 2015.Only one of the individuals continued to work for Gray Corporation in 2016,earning $9,000 during the year.No additional workers were hired in 2016.Gray Corporation's work opportunity tax credit amounts for 2015 and 2016 are:

The incremental research activities credit is 20% of the qualified research expenses that exceed the base amount.

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

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.

Under what circumstances are corporations exempt from the AMT?

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?

AMT adjustments can be positive or negative,whereas AMT preferences are always positive.