Alice Grim, a single taxpayer, has $719,000 taxable income, which includes a $240,000 capital gain taxed at 20%. Her alternative minimum taxable income in excess of her exemption amount is $937,400. Compute Alice's regular tax, AMT, and total tax.
What will be an ideal response?
Alice's regular tax is $191,440 = $143,440 tax on $479,000 ordinary income + $48,000 capital gains tax. Tentative minimum tax is $239,442 [26% × 191,500] + [28% × $505,900] + $48,000 capital gains tax. AMT is $48,002 ($239,442 ? $191,440). Total tax (regular tax + AMT) is $239,442.
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