1. Which of the following is not an adjustment for individuals?
a. depreciation deductions
b. miscellaneous itemized deductions
c. home mortgage interest
d. charitable contributions deductions
2. Which of the following statements regarding credits and the alternative minimum tax is true?
a. after 2003, only certain nonrefundable personal credits may be used to offset both regular tax and the alternative minimum tax
b. after 2003, all refundable personal credits may be used to offset both regular tax and the alternative minimum tax
c. a taxpayer may use business tax credits to offset this alternative minimum tax
d. a credit for foreign taxes paid is permitted to reduce the tentative minimum tax for corporations only
3. Which of the following statements regarding preferences for alternative minimum tax purposes are correct?
(1) any tax-exempt interest earned on certain private activity bonds must be added to alternative minimum taxable income
(2) only 7% of the gain excluded on the sale of qualified small business stock must be added to alternative minimum taxable income
(3) excess intangible drilling costs are no longer a tax preference
(4) the excess of the deduction for depletion over the adjusted basis of the property is subtracted from alternative minimum taxable income
a. 1&2
b. 1&3
c. 2&3
d. 3&4
4. Alternative minimum tax (AMT) traps can be all of the following except:
a. credit-based AMT traps
b. income-based AMT traps
c. itemized deductions-based AMT traps
d. deduction-based AMT traps
5. Which of the following are alternative minimum tax (AMT) planning techniques except:
a. making elections to minimize the AMT
b. timing the recognition of adjustment or preference items
c. utilizing alternative tax net operating losses
d. moving income into a non-AMT year
6. Which of the following statements regarding the moving of income into an alternative minimum tax (AMT) year is correct?
a. using this technique allows taxpayers to accelerate an unlimited amount of income into the AMT year
b. the minimum tax credit does play a role in this technique
c. this technique works when the AMT is due to the add-back of exclusion-type items
d. the taxpayer's marginal tax bracket in future years will be less than the top AMT rate of 28%
7. Which of the following statements regarding alternative minimum taxable (AMT) and private activity bonds is correct?
a. the interest earned on specified private activity bonds does not have to be added back to alternative minimum taxable income (AMTI)
b. because the interest earned on specified private activity bonds does have to be added back to AMTI, the market is slightly smaller and the issuers must offer a slightly higher yield
c. the exemption amount for corporations is not subject to phaseout to the increased yield on these bonds almost always is enough to make the after-tax yield as high as on municipal bonds not subject to AMT
d. the higher yield is of no interest for taxpayers not subject to AMT
8. All of the following offer elections that can be made by a taxpayer or a taxpayer's business to help mitigate the potential impact of the AMT except?
a. incentive stock options
b. intangible drilling costs
c. depreciation of property place in service after 1986
d. research and experimental expenditures paid or incurred after 1986