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Exam 14: Business Tax Credits and Corporate Alternative Minimum Tax

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Question 31

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Golden Corporation is an eligible small business for purposes of the disabled access credit.During the year,Golden makes the following expenditures on a structure originally placed in service in 1988. $\begin{array} { lr } \text{Removal of architectural barriers}&\$ 8,500 \\ \text {Acquired equipment for disabled persons }&\underline{6,750} \\ &\underline{\$14,750} \\\end{array}$ In addition,$8,000 was expended by Golden on a building originally placed in service in the current year to ensure easy accessibility by disabled individuals.Calculate the amount of the disabled access credit available to Golden Corporation.

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\(\begin{array}{lr}
\text{Eligible acces...

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Question 32

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Roger is considering making a $6,000 investment in a venture that its promoter promises will generate immediate tax benefits for him.Roger,who does not anticipate itemizing his deductions,is in the 30% marginal income tax bracket.If the investment is of a type that produces a tax credit of 40% of the amount of the expenditure,by how much will Roger's tax liability decline because of the investment?

A) $0.
B) $1,800.
C) $2,200.
D) $2,400.
E) None of the above.

F) A) and B)
G) A) and E)

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Question 33

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Which of the following best describes the treatment applicable to unused business credits?

After personal property is fully depreciated for both regular income tax purposes and AMT purposes,the positive and negative adjustments that have been made for AMT purposes will net to zero.

Cardinal Company incurs $800,000 during the year to construct a facility that will be used exclusively for the care of its employees' pre-school age children during normal working hours.Assuming Cardinal claims the credit for employer-provided child care this year,its basis in the newly constructed facility is $640,000.

Sand,Inc.,has AMTI of $200,000.Calculate the amount of the AMT exemption if: a. Sand is a small corporation for AMT purposes b. Sand is not a small corporation for AMT purposes

A small employer incurs $1,500 for consulting fees related to establishing a qualified retirement plan for its 75 employees.As a result,the employer may claim the credit for small employer pension plan startup costs for $750.

Tanver Corporation,a calendar year corporation,has alternative minimum taxable income of $7 million in 2013 (before adjustment for adjusted current earnings) .If Tanver's adjusted current earnings is $16 million,its tentative minimum tax for 2013 is:

The components of the general business credit include all of the following except:

Which of the following can produce an AMT preference rather than an AMT adjustment?

All taxpayers are eligible to take the basic research credit.

Interest income on private activity bonds issued before 2009 and after 2010,reduced by expenses incurred in carrying the bonds,is a tax preference item that is included in computing AMTI.

Sand Corporation,a calendar year taxpayer,has alternative minimum taxable income [before adjustment for adjusted current earnings (ACE) ] of $900,000 for 2013.If Sand's (ACE) is $975,000,its tentative minimum tax for 2013 is:

During the year,Purple Corporation (a U.S.Corporation) has U.S.-source income of $1,800,000 and foreign income of $600,000.The foreign-source income generates foreign income taxes of $150,000.The U.S.income tax before the foreign tax credit is $816,000.Purple Corporation's foreign tax credit is:

Which of the following correctly describes the tax credit for rehabilitation expenditures?

Factors that can cause the adjusted basis for AMT purposes to be different from the adjusted basis for regular income tax purposes include the following:

Because current U.S.corporate income tax rates are higher than many foreign corporate income tax rates,the overall limitation does not yield a lower foreign tax credit than the amount of foreign taxes actually paid.

Will all AMT adjustments reverse? That is,do they relate to timing differences?

Several years ago,Tom purchased a structure for $300,000 that was originally placed in service in 1929.Three and one-half years ago he incurred qualifying rehabilitation expenditures of $600,000.In the current year,Tom sold the property in a taxable transaction.Calculate the amount of the recapture of the tax credit for rehabilitation expenditures.

In March 2013,Gray Corporation hired two individuals,both of whom were certified as long-term recipients of family assistance benefits.Each employee was paid $11,000 during 2013.Only one of the individuals continued to work for Gray Corporation in 2014,earning $9,000 during the year.No additional workers were hired in 2014.Gray Corporation's work opportunity tax credit amounts for 2013 and 2014 are: