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Exam 17: Business Tax Credits and the Alternative Minimum Tax

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Question 31

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The purpose of the work opportunity tax credit is to encourage employers to hire individuals from specified target groups traditionally subject to high rates of unemployment.

A) True
B) False

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Question 32

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The net capital gain included in an individual taxpayer's AMT base is eligible for the lower tax rate on net capital gain.This favorable alternative rate applies in calculating both the regular income tax and the AMT.

A) True
B) False

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Question 33

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Unless circulation expenditures are amortized over a three-year period for regular income tax purposes, there will be an AMT adjustment.

During the year, Green, Inc., incurs the following research expenditure. Green's qualifying research expenditures for the year are:

If the regular income tax deduction for medical expenses is $0, under certain circumstances the AMT deduction for medical expenses can be greater than $0.

Beulah, who is single and itemizes deductions, provides you with the following information from her financial records for 2019.Compute Beulah's AMTI.

The components of the general business credit include all of the following except:

The purpose of the tax credit for rehabilitation expenditures is to encourage the relocation of businesses from older, economically distressed areas (i.e., inner city) to newer locations.

Which of the following, if any, correctly describes the research activities credit?

The tax benefits resulting from tax credits and tax deductions are affected by the tax rate bracket of the taxpayer.

Without the foreign tax credit, double taxation would result when:

The incremental research activities credit is 20% of the qualified research expenses that exceed the base amount.

Amber is in the process this year of renovating the office building (placed in service in 1976) used by her business. Because of current Federal Regulations that require the structure to be accessible to handicapped individuals, she incurs an additional $11,000 for various features, such as ramps and widened doorways, to make her office building more accessible.The $11,000 incurred will produce a disabled access credit of what amount?

In 2019, the amount of the deduction for medical expenses for regular tax purposes may be different than for AMT purposes.

After personal property is fully depreciated for both regular income tax purposes and AMT purposes, no AMT adjustment will be required as a result of the sale of the property.

A small employer incurs $31,500 for consulting fees related to establishing a qualified retirement plan for its 75 employees.As a result, the employer may claim the credit for small employer pension plan startup costs for $750.

Keosha acquires used 10-year personal property to use in her business in 2019 and uses MACRS depreciation for regular income tax purposes, even though the asset is eligible for full expensing.As a result, Keosha will incur a positive AMT adjustment in 2019, because AMT depreciation is slower.

Paul incurred circulation expenditures of $180,000 in 2019 and deducted that amount for regular income tax purposes.Paul has a $60,000 negative AMT adjustment for each of 2020, 2021, and for 2022.

Ahmad is considering making a $10,000 investment in a venture whose promoter promises will generate immediate tax benefits for him.Ahmad, who normally itemizes his deductions, is in the 32% marginal tax bracket.If the investment is of a type where the taxpayer may claim either a tax credit of 25% of the amount of the expenditure or an itemized deduction for the amount of the investment, what treatment is likely most beneficial to Ahmad, and by how much will Ahmad's tax liability decline because of the investment?

In March 2019, Gray Corporation hired two individuals, both of whom were certified as long-term recipients of family assistance benefits.Each employee was paid $11,000 during 2019.Gray's work opportunity tax credit amounts for 2019 is: