Question

Generally, the tax rate that applies to the unearned income of a minor under the kiddie tax in 2018 is:

a.The same as the head of household rate.

b.The same as the parents' tax rate.

c.The unearned income of a minor is not taxed.

d.The same as the single taxpayer rate.

e.The same as the trust and estate rate

Which of the following is not a tax preference or adjustment item for the individual alternative minimum tax computation?

a.State income tax refunds.

b.Private activity bond interest.

c.Depreciation of certain assets.

d.State income taxes.

e.All of these choices are adjustments or tax preference items.

The Individual Alternative Minimum Tax (AMT) (LO 6.5)

Complete the simplified formula for calculating AMT.

Answer: Plus or minus AMT tax preferences and adjustment; Plus or Minus AMT exemption; Plus or minus tax

Regular taxable income (before standard deductions) + – = – = x = –

Answer 1

Generally, the tax rate that applies to the unearned income of a minor under the kiddie tax in 2018 is:

d. The same as the single taxpayer rate under the Tax Cuts and Jobs Act.

Which of the following is not a tax preference or adjustment item for the individual alternative minimum tax computation?

d. State income taxes are not allowable under AMT.

All the other items mentioned are allowable under AMT.

Complete the simplified formula for calculating AMT.

Taxable Income

Add: Positive Adjustments

Less: Negative Adjustments

Add: Tax Preferences

= Alternated Minimum taxable income.