7. Yvonne Corporation manufactures and sells ceramic dinnerware. The company als

Question

7. Yvonne Corporation manufactures and sells ceramic dinnerware. The company also sells dinnerware that is purchased from unrelated foreign producers. During the 2017 tax year, Yvonne had a U. S. profit of $1.3 million (OPAI) and a loss from the imported merchandise of $200,000. What is Yvonne's DPAD? a. $33,000 b. $66,000 c. $99,000 d. $1,080,000 e. None of the above 8. Jackson, Inc. has the following items related to the AMT. Alternative minimum tax base $9,850,290 Regular tax Foreign AMT tax credit Cost of goods sold The corporation's AMT, if any, is: 1,120,152 123,000 2,000,000 a. $O b. $709,906. c. $726,906. d. $1,847,058. e. None of the above. 9. Which AMT adjustment would only be negative? a. Passive activity losses. b. AMT NOL deduction. c. DPAD d. Completed contract method. e. None of the above. 10. Canary Corporation has 5,000 shares of stock outstanding. It redeems in a qualifying stock redemption 1,200 shares for $475,000 at a time when it has paid-in capital of $300,000 and E & Pof S1.5 million. What would be the charge to Canary's E &P; as a result of the redemption? a. $72,000 b. $360,000 c.$432,000 d. $475,000 e. None of the above Page 2 of 7

Explanation / Answer

7.QPAI means excess of domestic products over the cost of goods sold allocable to DPGR(Domestic Production Gross receipts) and other expenses, losses or deduction allocable to DPGR

DPAD = 9% [$1.3 MILLION - $200,000(loss from imported merchandise)]

DPAD = $99000

[C]

8. Jackson Inc has the following items related to AMT.

$

Minimum tax before AMT foreign tax credit

1970058

[9850290*20%]

Less: AMT foreign tax credit

-123000

Less: Regular tax

-1120152

Corporation AMT

726906

[C]

9. Which AMT adjustment would only be negative?

[b] AMT NOL deduction

10. canary corporation has 5000 shares outstanding. it redeems in qualifying stock redemption 1200 shares for 475000

In qualifying stock redemption, E & P is reduced not more than the ratable share of E&P of canary corporation

$1.5 million *1200 shares/5000 shares

$1.5 million *24%

$360,000

[E]

$

Minimum tax before AMT foreign tax credit

1970058

[9850290*20%]

Less: AMT foreign tax credit

-123000

Less: Regular tax

-1120152

Corporation AMT

726906

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