Income Salary $33,000 Interest on corporate bonds 1,800 Dividend income 1,900 Bu
ID: 2461338 • Letter: I
Question
Income
Salary
$33,000
Interest on corporate bonds
1,800
Dividend income
1,900
Business income
64,000
Expenses
Total medical expenses
12,000
State income taxes
6,000
Real property taxes
8,500
Home mortgage (qualified housing) interest
9,200
Investment interest
5,500
Cash contributions to various charities
2,900
The $64,000 business income is from Apex Office Supplies Company, a sole proprietorship that Lynn owns and operates. Apex claimed MACRS depreciation of $3,175 on real and personal property used in the business. AMT depreciation on the property would have been $2,500. Lynn received interest of $30,000 on City of Pensacola private activity bonds that were issued in 2011.
Based on the financial information presented above, compute Lynn's AMT for 2014.
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Note: If an amount is zero, enter "0". Round your intermediate computations and final answers to nearest dollar
Total income
$
Less: deductionsfor AGI
Adjusted gross income
$
Less: deductionsfrom AGI
Itemized deductions
$
Personal exemptions
Taxable income
$
Regular income tax calculation
Total tax
$
Computation of alternative minimum tax
Taxable income
$
Plus total adjustments and preferences
Less: Investment interest
Alternative minimum taxable income
Less: AMT exemption
AMT base
$
Tentative AMT
$
Total alternative minimum tax
$
Income
Salary
$33,000
Interest on corporate bonds
1,800
Dividend income
1,900
Business income
64,000
Expenses
Total medical expenses
12,000
State income taxes
6,000
Real property taxes
8,500
Home mortgage (qualified housing) interest
9,200
Investment interest
5,500
Cash contributions to various charities
2,900
Explanation / Answer
As the AMT exemption exceeds the AMT income, AMT would not be applicable.
Particulars Calculations Total Total income $33000 + 1800 + 1900 + 64000 + 30000 $130700 Less: deductionsfor AGI $12000 + 6000 + 8500 +9200 + 5500 +2900 + 3,175 + 6200 (standard deduction) $53475 Adjusted gross income $130700 - $53475 $77225 Less: deductionsfrom AGI Itemized deductions 0 Personal exemptions $3,950 Taxable income $77225 - $3,950 $73275 Regular income tax calculation $5081.25 + 0.25 *( - 36900) $9093.75 Total tax $9093.75 Computation of alternative minimum tax Taxable income $73275 Plus total adjustments and preferences (3,175-2500) + 6200 + 3950 + 6000 + 8500 $25325 Less: Investment interest 5,500 Alternative minimum taxable income $25325 - 5500 $19825 Less: AMT exemption $52800