Personal Income Tax

Personal Income Tax


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Problem 12-29 (LO. 2)

Use the following data to calculate Chiara’s AMT base in 2016:

Taxable income $148,000
Positive AMT adjustments 73,000
Negative AMT adjustments 55,000
Preferences 30,000

Chiara will file as a single taxpayer and chooses to itemize her deductions. The personal/dependency exemption amount is $4,050.

Click here to access the exemption table.

Chiara’s taxable income $152,050
Plus or minus: Positive adjustments [removed]
Negative adjustments [removed]
Plus: Tax preferences [removed]
Equals: AMTI $[removed]
Less: [removed]
Equals: AMT base $[removed]  






Problem 12-54 (LO. 2, 3, 4)

Pat, who is age 66 and single with no dependents, received a salary of $90,000 in 2016. She earned interest income of $1,000, dividend income of $5,000, gambling winnings of $4,000, and interest income from private activity bonds (issued in 2006) of $40,000. The dividends are not qualified dividends. The following additional information is relevant.

Medical expenses (before 7.5%-of-AGI floor) $12,000
State income taxes 4,100
Real estate taxes 2,800
Mortgage interest on residence 3,100
Investment interest expense 1,800
Gambling losses 5,100

a. Compute Pat’s taxable income and AMTI.

Taxable Income Computation
Adjusted gross income $[removed]
itemized deductions [removed]
Less: personal exemption [removed]
Taxable income $[removed]
AMTI Computation
Taxable income, before exemption $[removed]
Add: itemized deductions adjustments [removed]
Add: income tax preference items [removed]
AMTI $[removed]

b. Determine if Pat’s AMT exemption will be limited.

His tentative exemption of $[removed] is phased out  at a rate of 25 cents on the dollar when AMTI exceeds $[removed].

If required, round amounts to the nearest dollar.

Computation of AMT Base and Tax
AMTI $[removed]
AMT exemption [removed]
AMT base $[removed]
Tentative AMT $[removed]


Problem 11-52 (LO. 2, 3, 7)

Five years ago Gerald invested $150,000 in a passive activity, his sole investment venture. On January 1, 2015, his amount at risk in the activity was $30,000. His shares of the income and losses were as follows:

Year Income (Loss)
2015 ($40,000)
2016 (30,000)
2017 50,000

Gerald holds no suspended at-risk or passive activity losses at the beginning of 2015.

If an answer is zero, enter “0”.



d.  Assuming Gerald has $50,000 income in 2017, (and considering both at-risk and passive activity loss rules), what is the amount of Gerald’s suspended passive activity losses at the end of 2017 under the at-risk rules and under the passive activity loss rules?
Under the at-risk rules: $[removed]
Under the passive activity loss rules: $[removed]