Question

a long term contract on the construction of a personal residence shows the following in 2017:

Cost incurred to date in 2017 is $25,000.

Royce Burnett, a taxpayer, elects to report the profit for regular tax purposes using the completed contract method. Which of the following statements is true regarding the alternative minimum taxable income (AMTI) adjustment for 2017?

A. Royce can decrease regular taxable income by $15,000.
B. Royce can decrease regular taxable income by $30,000.
C. Royce can increase regular taxable income by $30,000.
D. Royce does not have an AMTI adjustment for 2017.

Generally, by how much can the alternative minimum tax foreign tax credit reduce the tentative minimum tax for 2017?

A. Not more than 10%
B. Not more than 50%
C. Not more than 90%
D. 100%

At what alternative minimum taxable income is the alternative minimum tax exemption amount of $24,100 for estates completely phased out?

A. $80,450
B. $96,400
C. $176,850
D. $249,450

The alternative minimum tax exemption amount begins to phase out when taxpayers reach a certain level of alternative minimum taxable income. If a married taxpayer has an AMT of $500,000 for 2017 what amount of AMT exemption is phased out?

A. $0
B. $42,250
C. $54,300
D. $84,500

Deferral preferences (items):

A. are adjustments and preferences that are not exclusion preferences (items)
B. are defined by the Internal Revenue Code
C. are the same as adjustments, which are explained by IRC Sections 56 and 58.
D. are the same as preferences, which are explained by IRC Section 57.

Answer 1

Answer 1(d)

Explanation

The alternative minimum Taxable income is less than gross income of 50000 in 2017 , so the cost incurred amount is 25000 that's why royace does not have an AMTI adjustment in 2017.

Answer 2(B)

Explanation

in alternative minimum tax the foreighn tax credit reduce accordingly to gross income , the tentative exemption is not treated as more tha 50%

Answer 3(A)

Explanation

Alternative minimum tax exemption is married filing separate in phase out is 80450

Answer 4(D)

​​​​​​Explanation

the married tax payer in AMTI is 84500, the tentative exemption when married filing jointly in exemption amount is 84500

Answer 5(A)

Explanation

deferral preference item is for example :depreciation & Exclusions item is: ( standards deductions)

So the deferral preference item are adjustment and preferences that are not permanent cause difference in Taxable income over item.