Question

Amber, Inc., reports taxable income of $212,000. In addition, Amber records the following information which may affect its AMT. Depreciation on buildings was $52,000. ADS would have been $41,000. The president of Amber exercised stock options on Amber stock. She paid $30,000 for the stock, which had a fair market value at exercise date of $49,000. At the end of the year, the stock was worth $54,000. Amber deducted percentage depletion of $65,000. The adjusted basis of the natural resource at the beginning of the year was $39,000. Amber contributed CSX stock worth $20,000 to the Red Cross. Amber purchased the stock four months ago for $19,000. What is Amber's AMTI?

$212,000

$233,000

$238,000

$249,000

none of these

Answer 1

Explanation:

Depriciation($52,000 - $41,000).....................................................$11,000

depletion in excess of fair value($65,000-$39,000).......................$26,000

the stock options are positive adjustment of $19,000($49,000-$30,000) for amber's president rather than for amber

Charitable contributions are neither a tax preferrence nor a adjustment

Therefore

Taxable Income	$212,000
Plus:Adjustments and preferences	$37,000
AMTI	$249,000