Jaclyn Biggs, who files as a head of household, never paid AMT before 2017. In 2
ID: 2576207 • Letter: J
Question
Jaclyn Biggs, who files as a head of household, never paid AMT before 2017. In 2017, her $197,900 taxable income included $178,000 ordinary income and a $19,900 capital gain taxed at 15 percent. Her 2017 AMTI in excess of her exemption amount was $218,175.
a. Compute Jaclyn’s total income tax for 2017.
b. Assume that Jaclyn has a $5,200 minimum tax credit carryforward from 2017. Her 2018 taxable income is $179,100, all of which is ordinary income. Her 2018 AMTI in excess of her exemption amount is $146,900. Compute Jaclyn’s total tax for 2018 (use the 2017 tax rates) and her minimum tax carryforward into 2019.
Individual Tax Rate Schedules Married Filing Jointly and Surviving Spouse If taxable income is: Not over $18,650 Over $18,650 but not over $75,900 Over $75,900 but not over $153,100 Over $153,100 but not over $233,350 $29,752.50 + 28% of excess over $153,100 Over $233,350 but not over $416,700 $52,222.50 + 33% of excess over $233,350 Over $416,700 but not over $470,700 $112,728 + 35% of excess over $416,700 Over $470,700 Married Filing Separately If taxable income is: Not over $9,325 Over $9,325 but not over $37,950 Over $37,950 but not over $76,550 Over $76,550 but not over $116,675 Over $116,675 but not over $208,350 $26,111.25 + 33% of excess over $116,675 Over $208,350 but not over $235,350 $56,364 + 35% of excess over $208,350 Over $235,350 Heads of Household If taxable income is: Not over $13,350 Over $13,350 but not over $50,800 Over $50,800 but not over $131,200 $6,952.50 + 25% of excess over $50,800 Over $131,200 but not over $212,500 $27,052.50 + 28% of excess over $131,200 Over $212,500 but not over $416,700 $49,816.50 + 33% of excess over $212,500 Over $416,700 but not over $444,550 $117,202.50 + 35% of excess over $416,700 Over $444,550 Single If taxable income is: Not over $9,325 Over $9,325 but not over $37,950 Over $37,950 but not over $91,900 Over $91,900 but not over $191,650 Over $191,650 but not over $416,700 $46,643.75 33% of excess over $191,650 Over $416,700 but not over $418,400 $120,910.25 + 35% of excess over $416,700 Over $418,400 The tax is: 10% of taxable income $1,865.00 + 15% of excess over $18,650 $10,452.50 + 25% of excess over $75,900 $131,628 + 39.6% of excess over $470,700 The tax is: 10% of taxable income $932.50 + 15% of excess over $9,325 $5,226.25 + 25% of excess over $37,950 $14,876.25 + 28% of excess over $76,550 $65,814 39.6% of excess over $235,350 The tax is: 10% of taxable income $1,335.00 + 15% of excess over $13,350 $126,950.00 + 39.6% of excess over $444,550 The tax is: 10% of taxable income $932.50 + 15% of excess over $9,325 $5,226.25 + 25% of excess over $37,950 $18,713.75 + 28% of excess over $91,900 $121,505.25 + 39.6% of excess over $418,400Explanation / Answer
Tax payable for 2017:
AMT exemption amount for 2017 is $54300
In this question AMT income in excess of exemption amount is $218175
Income upto $ 186300 Taxrate is 26% and above $186300 taxrate is 28%
accordingly,
upto $186300 = $ 48438 (186300*26%)
above$186300 =$ 8925 (218175 - 186300)*28%
Total = $ 57363
2017 taxes under normal provisions:
Capital gain tax @ 15% = $ 2985 ($ 19900 * 15%)
Ordinary income $178000 = $ 40156.5 ($27052.5 + 28%* (178000 - 131200))
Total = $ 43141.5
AMT TAX is greater than normal taxes so Tax payable for 2017 is $ 57363
COMPUTATION OF TAX FOR 2018
Tax payable on Ordinary Income $179100 = $ 40464.5 ($ 27052.5 + 28%(179100-131200))
Tax payable under AMT provisons :
Tax on $ 146900 = $ 38194 ( 146900*26%)
less : AMT carried forward = $5200
Net tax = $ 32994
Tax under normal provisons are greater than AMT provisions so TAX payable for 2018 is $40464.5
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.