12) Identify which of the following statements is false. A) The alternative minimum tax is the excess of the tentative minimum tax amount over the regular tax amount. B) All corporations with gross receipts of less than $10 million are exempt from the AMT. C) If the firm does not qualify for Small C corporation status the C corporation statutory exemption amount for alternative minimum tax purposes is phased out when alternative minimum taxable income reaches $310 000. D) The purpose of the AMT is to ensure that every taxpayer with substantial economic income pays a minimum tax. 13) Identify which of the following statements is false. A) The corporate AMT produces relatively little tax revenue. B) The small corporation AMT exemption exempts 95% of all corporations from the AMT. C) The corporate AMT is similar to the AMT for individuals. D) The starting point for computing a corporation’s AMT is book income. 14) The Small C corporation exemption from AMT continues as long as average gross receipts for the three preceding tax years are A) $6.5 million or less. B) $7.0 million or less. C) $7.5 million or less. D) $8.0 million or less. 15) When computing a corporation’s alternative minimum taxable income its taxable income is A) only increased (never decreased) by tax preference items. B) only increased (never decreased) by adjustments. C) increased by the statutory exemption of $40 000. D) increased by 75% of the excess of adjusted current earnings over taxable income. 16) In the last three years Wolf Corporation had gross receipts of $3 000 000 $5 000 000 and $10 000 000. Which of the following statements is correct? A) Wolf receives a statutory exemption of $40 000 based on its receipts. B) Wolf is exempt from the AMT. C) Wolf is subject to the AMT in the current year. D) There is insufficient information to determine whether Wolf is subject to the AMT. 17) Identify which of the following statements is true. A) The corporate alternative minimum tax rate is 35%. B) No credits are allowed when computing the tentative minimum tax. C) Tax preference items always increase alternative minimum taxable income. D) All of the above are false. 18) Which of the following items are tax preference items for purposes of arriving at alternative minimum taxable income? A) excess intangible drilling costs on oil and gas properties B) interest income earned on federal obligations C) all depreciation claimed on pre-1987 real property acquisitions D) excess of net long-term capital gains over short-term capital losses 19) Foggy Corporation has regular taxable income of $1 200 000. It has $250 000 of interest income on private activity bonds and $100 000 of interest on City of New Orleans bonds. How much is Foggy’s preadjustment AMTI? A) $1 200 000 B) $1 350 000 C) $1 450 000 D) $1 550 000 20) Identify which of the following statements is true. A) Depreciation on real property may be a tax preference item for purposes of computing AMT. B) Depreciation on real property may be an adjustment item for purposes of computing AMT. C) Adjustments to taxable income always increase alternative minimum taxable income. D) Both A and B are true. 21) Identify which of the following statements is false. A) Tax-exempt interest on certain private activity bonds may be taxed under the alternative minimum tax. B) Tax preference items and adjustments may either increase or decrease taxable income to obtain AMTI. C) Depending on the date an asset is placed in service depreciation may be an adjustment to taxable income or a tax preference item for alternative minimum tax purposes. D) Different depreciation rules are used when computing taxable income and alternative minimum taxable income.
