Question

Problem 12-52 (LO. 2, 3, 4, 5)

Lynn, age 45, is single and has no dependents. Her income and expenses for 2019 are reported as follows.

Income Salary $233,000 Taxable interest on corporate bonds 13,700 Business income 64,000 Expenses Home office expense deduction (associated with sole proprietorship) 3,200 State income taxes 6,000 Real property taxes 8,500 Home mortgage (qualified housing) interest 9,200 Home equity loan interest 2,500 Investment interest 15,500 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 personal property used in the business and placed in service in the current year. Lynn received interest of $30,000 on City of Pensacola private activity bonds that were issued in 2013.

Based on the financial information presented above, compute Lynn's AMT for 2019. Ignore the one-half deduction for self-employment taxes for this problem.

Click here to access the Tax Rate Schedules. Click here to access exemption tables.

If an amount is zero, enter "0". Round your intermediate computations and final answers to nearest dollar.

Gross income $ Less: deductions for AGI Adjusted gross income $ Less: deductions from AGI Taxable income $ Regular income tax calculation Total tax $ Computation of alternative minimum tax Taxable income $ Plus: positive adjustments and tax preferences Less: negative adjustment Alternative minimum taxable income Less: AMT exemption AMT base $ TMT $ AMT $

Answer 1

Solution:

Gross income	310,700
Less: deductions for AGI	3,200
Adjusted gross income	307,500
Less: deductions from AGI	35,800
Taxable income	271,700
Total tax	70,289
Computation of alternative minimum tax
Taxable income	271,700
Plus: positive adjustments and tax preferences	40,000
Less: negative adjustment	1,800
Alternative minimum taxable income	309,900
Less: AMT exemption	71,700
AMT base	238,200
TMT	62,800
AMT	0