22) Which of the following items are adjustments made to arrive at alternative minimum taxable income? A) excess percentage depletion B) excess of deprecation claimed on personalty acquired in the current year for taxable income purposes over that claimed for alternative minimum tax purposes C) tax-exempt interest income earned on private activity bonds D) statutory exemption 23) Becky places five-year property in service during June 2012 using the half-year convention. Depreciation is $1 500 under the 150% declining balance method and $2 000 under 200% declining balance. Becky uses the 200% declining balance method for regular income tax purposes. What is the amount of Becky’s AMT adjustment? A) $0 B) $1 500 positive adjustment C) $500 positive adjustment D) $500 negative adjustment 24) Becky places five-year property in service during June 2012 using the half-year convention. Depreciation is $1 500 under the 150% declining balance method and $2 000 under 200% declining balance. Becky uses the 150% declining balance method for regular income tax purposes. What is the amount of Becky’s AMT adjustment? A) $0 B) $1 500 positive adjustment C) $500 positive adjustment D) $500 negative adjustment 25) Which of the following statements about the alternative minimum tax depreciation rules is correct? A) The MACRS depreciation rules are used to calculate the depreciation deduction when calculating alternative minimum taxable income regardless of the date the property was placed in service. B) The excess of the gain reported on the disposition of tangible personal property for income tax purposes over the gain reported for alternative minimum tax purposes is a positive adjustment to taxable income in arriving at alternative minimum taxable income. C) A 31.5-year recovery period is used when calculating the commercial real property depreciation deduction for alternative minimum taxable income purposes. D) No depreciation adjustment is made when computing AMT for real property acquired after 1998. 26) Identify which of the following statements is true. A) A corporation’s adjusted current earnings (ACE) amount is calculated by making adjustments that are similar to those used in computing earnings and profits (E&P). B) The adjusted current earnings (ACE) adjustment attempts to adjust the AMT tax base towards a corporation’s economic income. C) Adjusted current earnings (ACE) is computed beginning with preadjustment alternative minimum taxable income. D) All of the above are true. 27) Which of the following is not an adjustment in calculating AMTI? A) gain on installment sales of noninventory property B) the regular tax NOL deduction C) production activities deduction D) the difference between the gains for AMTI and regular tax purposes 28) How does the deduction for U.S. production activities affect AMTI? A) The computation of qualified production activities is the same for taxable income and AMTI. B) The computation of qualified production activities is based on qualified production activities income for AMTI. C) The computation of qualified production activities is based on AMTI before the deduction for qualified production activities. D) The computation of qualified production activities is based on the lesser of qualified production activities income or AMTI before the deduction for qualified production activities. 29) Identify which of the following statements is false. A) Adjusted current earnings (ACE) is the same as E&P. B) A corporation’s positive adjusted current earnings (ACE) adjustment equals 75% of the excess of its ACE over its preadjustment AMTI (AMTI before this adjustment and the alternative tax NOL deduction). C) A corporation’s negative adjusted current earnings (ACE) adjustment equals 75% of the excess of its preadjustment AMTI (AMTI before this adjustment and the alternative tax NOL deduction) over its ACE but may not exceed the cumulative “net” ACE adjustment amounts from all post-1989 tax years. D) The ACE adjustment is not required of S corporations. 30) Tax-exempt interest income on state and local municipal bonds that are not a private activity is A) a tax preference item. B) a positive adjustment in calculating alternative minimum taxable income (AMTI). C) a negative adjustment in calculating alternative minimum taxable income (AMTI). D) included in calculating ACE (adjusted current earnings). 31) Certain adjustments must be made to alternative minimum taxable income (AMTI) to arrive at adjusted current earnings (ACE). Which one of the following adjustments increases AMTI to arrive at ACE? A) federal income taxes paid B) the 80% dividends-received deduction C) gain realized on the installment sale of noninventory property D) excess of capital losses over capital gains
