Question

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?

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