King Corporation, an accrual method taxpayer, reports the following results for
ID: 2426704 • Letter: K
Question
King Corporation, an accrual method taxpayer, reports the following results for 2014
Regular taxable income before regular tax NOL deduction $800,000
Minus: Regular tax NOL deduction (200,000)
Regular taxable income $600,000
Alternative tax NOL deduction $175,000
AMT depreciation adjustment $148,000
Personal property acquired eight years ago and sold this year:
Acquisition cost $50,000
Regular tax depreciation $38,845
AMT depreciation $26,845
Increase in LIFO recapture amount $75,000
Tax-exempt interest income:
Private activity bonds (not issued in 2009 or 2010) $31,000
Other bonds (not issued in 2009 or 2010) $33,000
Dividends received (less than 1% ownership) $120,000
Dividends paid $110,000
King is not a small corporation exempt from the alternative minimum tax (AMT), and it has no AMT adjustment for the U.S. production activities deduction. Regular taxable income includes $35,000 of Sec. 1231 gain from a prior year installment sale on which King’s total realized gain was $350,000. Regular taxable income also includes $39,000 of Sec. 1231 gain from a 2014 installment sale on which King’s total realized gain is $195,000. King’s ACE adjustments for prior years are a net positive $500,000. Prepare Form 4626 for King Corporation to report its 2014 AMT liability (if any).
Form 4626 can be found at: http://www.irs.gov/pub/irs-pdf/f4626.pdf
Explanation / Answer
Solution: https://www.irs.gov/pub/irs-pdf/f4626.pdf
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