Lisa has nonrefundable credits of $65,000 for 2015. Her regular income tax liabi

Question

Lisa has nonrefundable credits of $65,000 for 2015. Her regular income tax liability before credits is $190,000, AND HER TMT IS$150,000.

a. Compute the amount of Lisa's AMT. Note: If an amount is zero, enter "0".

TMT $ 150,000

Regular income tax liability 190,000

Excess of regular tax over TMT liability 40,000

# Lisa's AMT is $$

. b. What is the amount of Lisa's regular income tax liability after credits? Nonrefundable personal credits can be used to offset the entire amount of the taxpayer’s regular tax liability. Lisa's regular income tax liability after credits is $$ .

Explanation / Answer

Answer:a Lisa’s AMT is $0.

TMT                                                               $150,000

Less: Regular income tax liability                      (190,000)

Equals: Excess of TMT over regular tax liability ($ 40,000)

Because the result is negative, Lisa has no AMT.

Answer:b. Nonrefundable personal credits can be used to offset the entire amount of the taxpayer’s regular tax liability irrespective of the amount of the tentative minimum tax. Therefore, Lisa can use the full $65,000 in credits to reduce her regular income tax liability to $125,000 ($190,000 $65,000).

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