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Flashcards in AMT Deck (22):
1

Preference Items PPP
What do they do?

Get added to AMT
Private Activity Bonds
Personal and Real Property Excess Depreciation
Percent Depletion over Adjusted Basis

2

Corporate Preferences AMT = SLIM

70% DRD;s
Life Insurance Proceeds on Corporate Officers
Muni Bond Interest

3

Corporate Adjustments AMT - LIE

Long Term Contract Income (not % of completion, this is OK)
Installment Sale vs. Accrual Income when IS was Used
Excess Depreciation over 150%

4

CORPORATE AMT DEDUCTION FOR DEPRECIATION ON RESIDENTIAL REAL PROPERTY IS _____ YEARS, ___________ METHOD, _________ CONVENTION

LIMITED TO:
40 YEARS
SL METHOD
MID-MONTH CONVENTION

5

CORPORATE AMT ADD BACK
__________ DEPRECIATION OVER ________ METHOD
INTEREST ON _____________

AMOUNT OF DEPRECIATION OVER SL METHOD
INTEREST ON PRIVATE ACTIVITY BONDS

6

CORPORATE AMT PREFERENCE ITEMS
________ DEPRECIATION

GUESS USING PANIC TIMME
Passive activity
Accerlerated Deprec
NOL. Carryforward
Installment sale dealers
Contracts: Completed NO % OK

Taxes
Interest on home equity
Medical btwn 7.5 - 10
Misc. Itemized over 2%
E - Exemption and Standard deduction

7

Basic amt exemption corporations is ___________
Phase out between _______ and ___ by ___%
No phase out over ___________

40,000
phase out 150-200, 25% of
no phase out over 200

8

Estimated TAx payments are due:
what months

15th of:
April
June
September
December

4,6,9,12

9

Accumulated earnings credit
___________ for Nonservice corpos
____________ for certain service corps

250,000 for nonservice
150,000 for service

10

so if RE is 200,000 in danger of accumulated earnings tax
can't hoard earnings for certain things - to redeem stock of a certain shareholder.

no limit is 250,000

11

Are personal holding companies subject to the accumulated earnings tax

No, but they are subject to tax on undistributed Personal Holding Company income.

12

A ___________ is a contract to discharge an existing contract but substituting a new contract or new debtor.

Novation

13

Exemption from Corporate AMT
_____ year of existence
if the three years before the current tax were less than __________
ridiculous amount of rules here it's subject to or it's not
lets just assume they won't ask

1st year never
last three years less than 7.5 M in 2014

14

What section of IRS code is corporate AMT

55

15

AMTI stands for

Alternative MInimum Taxable Income

16

What is the exemption amount for Corps and what is it adjusted by

Exemption is $ less what% over what

This means that once a corps ________ reaches ________ there's no exemption

Exemption amount is 40,000 meaning as long as your add back items don't put you more than 40K over your taxable income, there's no AMT

Exemption is reduced by 25% that the total income you calculate after you add back the preference items is over $150,000

This means that by the time you hit $310,000 the exemption is gone.

17

What does ACE stand for in corporate minimum tax.

ACE is adjusted current earnings.

18

What is the alternative minimum tax rate for corporations.

20%

19

Must Know this calculation:
R-A and P =AMTI
AMTI - ACE - EXEMPTION = AMTI(2)
AMTI(2) x 20% = TMT
TMT - REGULAR TAX = AMT

AMT (IF POSITIVE) + REGULAR TAX = TOTAL PAID

TI - A & P = (AMTI - ACE - EXEMPTION) X 20% = TMT - REGULAR TAX = AMT

TiM went to A and P to compute his AMT
Then he ACED his test and was exempt by age 40 from the 20% tax.

20

Corporate preference items PILE

P - Interest on private activity bonds
I - Difference between installment sale method and accrual
L - Long term contract, no, % of completion yes
E - Excess Depreciation

21

CORPORATE ACE ITEMS - SLIM

ACE HARDWARE HAD A --SLIM--CHANCE OF BEATING HOME DEPOT'S EARNINGS
S - 70% DRD DEDUCTIONS
L - LIFE INSURANCE PROCEEDS
I - Placeholder
M - MUNICIPAL BOND INTEREST OTHER THAN PRIVATE ACTIVTY

22

PANIC Timme adapted for Corporations

PAnIC SliMe

Preferences - PAnIC
Passive Activity Bonds
Accelerated Depreciation
n - placeholder
Installment Sales
Contracts - Completed no, % Yes

ACE - Adjusted Current Earnings Additions (75%) SLiMe
Seventy% DRD deductions
Life Insurance Proceeds (net of Premiums)
i placeholder
M - Municipal Bonds (other than private acitivity)
e placeholder