Alternative Minimum Tax

What exactly is the alternative minimum tax? The average taxpayer may have never heard of this term or what it entails. There are those who are aware of the tax but do not fully understand that it is not a lower tax compared to the regular income tax liability. Tax analysts and taxpayers who have paid the alternative minimum tax in the past frequently complain that the tax unfairly targets the middle class although Congress intended the tax to apply mostly to high-income taxpayers: “The AMT does

The alternative minimum tax (AMT) was created to prevent high income level individuals from using deductions and credits to avoid paying federal income taxes (Tritz, 2015). Due to inflation AMT now spreads to include more individuals beyond the highest-income taxpayers and straying from its original objective. Consequently, AMT has affected the economy by over-complicating the already complex tax code, creating an additional obligation for taxpayers, and burdening more taxpayers than its original

The alternative minimum tax (AMT) is an income tax levied by the federal government on corporations and individuals. Congress enacted the AMT as an alternate form of income taxation to ensure that taxpayers with substantial economic income cannot use exclusions, deductions, and credits to avoid a significant part of their tax liability. Because corporations are allowed to reduce their income tax liability, (sometimes to zero) with exclusions, deductions and credits; IRC Section 55 requires many

The Alternative Minimum Tax attempts to ensure that anyone who benefits from certain tax advantages pays at least a minimum amount of tax. The AMT provides an alternative set of rules for calculating your income tax. In general, these rules should determine the minimum amount of tax that someone with your income should be required to pay. If your regular tax falls below this minimum, you have to make up the difference by paying alternative minimum tax. Here are six facts the Internal Revenue Service

taxexempt interest income. LNS reports $1,345,000 in ordinary and necessary business expenses. What is LNS corporation 's taxable income for the year? 45. (LO1) ATW corporation currently uses the FIFO method of accounting for its inventory for book and tax purposes. Its beginning inventory for the current year was $8,000,000. Its ending inventory for the current year was $7,000,000. If ATW had been using the LIFO method of accounting for its inventory, its beginning inventory would have been $7,000

Under the tax law, certain tax benefits can significantly reduce a taxpayer’s regular tax amount. The alternative minimum tax (AMT) applies to taxpayers with high income by setting a limit on those benefits. It helps to ensure that those taxpayers pay at least a minimum amount of tax. The AMT is the excess of the tentative minimum tax over the regular tax. Therefore, the AMT is owed only if the tentative minimum tax is greater than the regular tax. The tentative minimum tax is figured separately

True / False – Chapter 13 Maria defers $100 of gain realized in a section 351 transactions. The stock she receives in the exchange has a fair market value of $500. Maria 's tax basis in the stock will be $400.
True 
 Control as it relates to a section 351 transaction is strictly defined to be 80 percent or more of the voting power of the stock of the corporation to which property is transferred.
 False 
 The definition of property as it relates to a §351 transaction includes money. True 
 To meet

Section 83 (b) is only permissible for AMT purposes but not ordinary income tax purposes. 1 (IRS gave the final ISO regulations in 2004. 2) With the early exercise option, Ms. Holmes would receive back restricted stocks with the same vesting schedule as the original option. If Ms. Holmes meets both ISO holding periods, she will pay tax on the entire spread between the sale price and the exercise as long-term capital gain. If a “disqualifying disposition”

create either current or future tax deductions * Corporate taxable income formula is relatively straight forward * Accounting Periods and Methods * Corporations measure their taxable income over a tax year and that their tax year must be the same as their financial accounting year * Generally elect their tax year when they file their first

Chapter 07 Individual Income Tax Computation and Tax Credits   True / False Questions   1. Both the width (or range) of the tax brackets (the amount of income taxed at a particular rate) in the tax rate schedules and the range of the tax rates in the tax rate schedules (the difference between the lowest tax rate and the highest tax rate) vary by filing status.    True    False   2. The tax rate schedules are set up to tax lower levels of income at higher tax rates than higher levels of income.