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Problem 8-64 (LO 8-2) [The following information applies to the questions displayed below.] In 2017, Janet...

Problem 8-64 (LO 8-2) [The following information applies to the questions displayed below.] In 2017, Janet and Ray are married filing jointly. They have five dependent children under 18 years of age. Janet and Ray’s taxable income is $140,000, and they itemize their deductions as follows: real property taxes of $5,000, state income taxes of $9,000, and mortgage interest expense of $15,000 (not a home-equity loan). (Use 2017 AMT exemption amounts). Use Tax Rate Schedule for reference. (Round your intermediate answers to whole dollar value.)

Problem 8-64 Part a a. What is Janet and Ray’s AMT?

Homework Answers

Answer #1

AMTI = taxable income + exemptions + itemized taxes = 140,000 + (7*4,050) + 5,000+9,000 = 182,350

AMT exemption:

L29 WS Particulars Amount
1 Filing status         84,500
2 AMTI       182,350
3 AMTI limit       160,900
4 2 less 3         21,450
5 Phase out - 4*25%            5,363
6 Exemption available (1-5)         79,138
7 Children exemption
8
9
10 Exemption         79,138

AMT base = 182,350 - 79,138 = 103,213

Tentative minimum tax = 103,213 * 26% = 26,835

Regular tax on 140,000 for joint return filers = 26,478

AMT = 26,835 - 26,478 = 357

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