Brown Inc., a calendar year taxpayer, reported the following transactions. Taxab

Question

Brown Inc., a calendar year taxpayer, reported the following transactions. Taxable income $2,600,000 Depreciation for regular income tax purposes on realty (placed in service in 2006) 550,000 Excess amortization of certified pollutions control facilities 450,000 Tax-exempt interest on private activity bonds (issued in 2007) 1,030,000 Percentage depletion in excess of the property's adjusted basis 60,000 ACE adjustment 0 Click here to access the tax table to use for this problem. a. Calculate Brown's regular income tax liability. $ b. Calculate Brown's tentative minimum tax (TMT). Note: If an amount is zero, enter "0". Computation of AMTI Taxable income $2,600,000 AMT adjustments and tax preferences: Depreciation on realty placed in service in 2006 $ Excess amortization of certified pollution control facilities $ Tax-exempt interest on private activity bonds $ Percentage depletion in excess of basis $ AMTI $ Exemption Alternative minimum tax base $ Tentative minimum tax $ c. Calculate Brown's AMT. $

Explanation / Answer

a)

Calculate Brown' regular income tax liability.

Taxable Income $2,600,000 *34% = $884,000.00

b)

Calculate Brown's Tentative Minimum Tax (TMT).

c)

Calculate Brown's AMT.

Amount ($) Amount ($)

b)

Calculate Brown's Tentative Minimum Tax (TMT).

Taxable income of Brown Inc $26,00,000.00 Adjustments Accelerated depreciation on realty in excess of straight-lin $5,50,000.00 Tax preferences- amortization of certified pollutions control facilities $4,50,000.00 Tax-exempt interest on private activity bonds $10,30,000.00 Percentage depletion in excess of the property's adjusted basis $60,000.00 $15,40,000.00 Alternative minimum taxable income $46,90,000.00 AMTI (from part a. above) $46,90,000.00 Less: Exemption (AMTI exceeds $310,000) $0.00 Alternative minimum tax base $46,90,000.00 Alternative minimum tax base $46,90,000.00 X 20% rate        X 20% Tentative minimum tax (no foreign tax credit) $9,38,000.00

c)

Calculate Brown's AMT.

Tentative minimum tax (from part c. above) $9,38,000.00 Less: Regular tax $8,84,000.00 AMT $54,000.00

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.