Use IRS Publication 17 page 200-202, Form 6251 Instructions to answer the following questions.

1. If you owe AMT, you may be able to lower your total tax (regular tax plus AMT) by claiming itemized deductions on Form 1040, even if your total itemized deductions are less than the standard deduction. This is because

a. the standard deduction is not allowed for the AMT.
b. claiming the standard deduction on Form 1040, you cannot claim itemized deductions for the AMT.
c. the standard deduction is allowed for the AMT.
d. Both A and B above.

2. Which of the following would not be a part of the computation of alternative minimum tax?

a. Depreciation.
b. Personal exemptions.
c. Self-employment tax.
d. All itemized deductions.

3. Your AMT gain or loss from the disposition of property may be different from your gain or loss for the regular tax. This is because the property may have

a. a different location for the AMT.
b. a different adjusted basis for the AMT.
c. a different time period for the AMT.
d. a different allowable credit for the AMT.

4. Alternative minimum tax for individuals requires certain adjustments and preferences. Which of the following is a preference or adjustment item?

a. Personal exemptions.
b. Incentive stock options.
c. Tax exempt interest on certain private activity bonds.
d. All of the above.

5. Which of the following is not a tax preference item or an adjustment to taxable income for alternative minimum tax purposes?

a. Addition of personal exemptions.
b. Addition of standard deduction (if claimed).
c. Addition of all itemized deductions (if claimed).
d. None of the above.

6. If your filing status is married filing separately, you may have to pay the Alternative Minimum Tax if your taxable income for regular tax purposes, combined with certain adjustments and tax preference items, is more than

a. $ 62,550.
b. $ 22,500.
c. $ 33,125.
d. $ 42,500.

7. The tax law gives special treatment to some kinds of income and allows special deductions and credits for some kinds of expenses. Taxpayers who benefit from the law in these ways may have to pay at least a minimum amount of tax through an additional tax. This additional tax is

a. Tax on early distributions.
b. Tax preference items.
c. Alternative Minimum tax.
d. Personal property tax.

8. If your filing status is single or head of household, you may have to pay the Alternative Minimum Tax if your taxable income for regular tax purposes, combined with certain adjustments and tax preference items, is more than

a. $ 62,550.
b. $ 35,750.
c. $ 33,750.
d. $ 44,350.

9. To figure the amount, if any, of your alternative minimum tax (AMT) and to figure any credit limitation use

a. Form 6251.
b. Form 8801.
c. Form 1116.
d. Form 8814.

10. Attach Form 6251 to your return if

a. line 31 is greater than line 34.
b. you claim any general business credit, the qualified electric vehicle credit, the non-conventional source fuel credit, or the credit for prior year minimum tax.
c. the total of lines 8 through 27 if negative and line 31 would exceed line 34 if you did not take lines 8 through 27 into account.
d. all of the above.

Use IRS publication 510 to answer the following questions.

11. The following are exempt from the environmental taxes.

a. The Federal government.
b. State and local governments.
c. Indian tribal governments and non-profit educational organizations.
d. No one is exempt.

12. Environmental taxes are imposed on crude oil and petroleum products, the sale or use of Ozone-depleting chemicals (ODCs) and imported products containing or manufacturing with these chemicals. Figure the environmental tax on

a. Form 6627.
b. Form 720.
c. Form 4136.
d. Form 8849.

13. Tax is imposed on an imported taxable product when the product is

a. fabricated by the company.
b. first sold or used by its importer.
c. first bought from the company for resale.
d. transported across the border.

14. The importer may treat the sale of an article manufactured or assembled in the United States as the first sale or use of an imported taxable product incorporated in that article if

a. the importer has consistently treated the sale of similar items as the first sale or use of similar taxable imported items.
b. the importer has not chosen to treat entry into the United States as use of the product.
c. The importer has chosen to treat entry into the United States as use of the product.
d. Both A and B above.

15. Excise taxes are imposed on amounts paid for certain facilities and services. A communications tax is imposed on amounts paid for communications services such as local and toll telephone service, and teletypewriter exchange services of

a. 1%.
b. 2%.
c. 3%.
d. 5%.

16. Payments for certain services or payments for certain users are exempt from the communications tax. The tax does apply to the following service.

a. Payments received for the installation of any instrument, wire, pole, switchboard, apparatus, or equipment.
b. Payments for the repair or replacement of any instrument, wire, pole, switchboard, apparatus, or equipment incidental to ordinary maintenance.
c. Payments paid for a private line, an answering service and a one-way paging or message service if they provide access to a local telephone system.
d. Payments for a two-way radio service that provide access to a local telephone system.

17. The tax on transportation of persons by air is made up of two parts; the percentage tax and the domestic-segment tax. The domestic-segment tax is a flat dollar amount for each segment of taxable transportation for which an amount is paid. A segment is

a. a single take off only.
b. a single landing only.
c. a single take off and a single landing.
d. None of the above.

18. The excise tax registration requirements for activities relating to gasoline, diesel fuel, and kerosene do not apply for the following.

a. A blender.
b. An enterer.
c. A pipeline operator.
d. An industrial user.

19. Any person who produces a taxable article from new or raw material, or from scrap, salvage, or junk material, by processing or changing the form of an article or by combining or assembling two or more articles is 

a. A producer.
b. A manufacturer.
c. An importer.
d. A seller.

20. Tax attaches when the title to the article sold passes from the manufacturer

a. to the producer.
b. to the factory worker.
c. to the buyer.
d. to the seller.

21. Sale of an article to a nonprofit education organization for its exclusive use. (This does not apply to the taxes on coal, gas guzzlers, and vaccines.) This is an example of a sale by the manufacturer that is

a. exempt from the manufacturers tax.
b. taxable for manufactures tax.
c. access to a local telephone system.
d. fabricated by the company.

22. A tax is imposed on many articles of sport fishing equipment sold by the manufacturer. This includes any parts or accessories sold on or in connection with the sale of those articles. This tax is ____ of the sales price.

a. 10%.
b. 20%.
c. 30%.
d. 50%.

23. A tax is imposed on taxable tires sold by the manufacturer, producer, or importer at the rate of $.0945 for each 10 pounds of the maximum rated load capacity over

a. 3,500 pounds.
b. 4,000 pounds.
c. 5,000 pounds.
d. 10,000 pounds.

24. Tax is imposed on certain vaccines sold by the manufacturer in the United States. A taxable vaccine is any vaccine against measles (for example).

True False

25. For the regular tax, deductions or credits such as investment interest expense, net operating loss, capital loss, passive activity loss and the foreign tax credit are deductions and credits that may result in carry backs or carry forwards on other tax years.

True False

26. Tax is imposed on insurance policies issued by foreign insurers. The following rate apply to each dollar of the premium paid.

a. Casualty insurance and indemnity, fidelity, and surety bonds: 4 cents.
b. Life, sickness, and accident insurance, and annuity contracts: 1 cent.
c. Re-insurance policies covering any of the taxable contracts for any of the different kinds of insurance.
d. all of the above.

27. A tax is imposed on any person who issues a registration-required obligation not in registered form. The tax is 1% of the principal of the obligation, multiplied by the number of calendar years during the period starting on the date the obligation was issued and ending on the date it matures.

True False

28. To report and pay the excise taxes use

a. Form 4136.
b. Form 720.
c. Form 8849.
d. Form 6990.

29. Tax is imposed on certain vaccines sold by the manufacturer in the United States. Which vaccine is a taxable vaccine?

a. Influenza.
b. Hepatitis.
c. Polio.
d. All of the above.

30. The following truck type will meet the suitable for use standard and will be excluded from excise tax.

a. Platform truck bodies 21 feet or less in length.
b. Dump truck bodies with load capacities of eight cubic yards or less.
c. Refuse packer truck bodies with load capacities of 20 cubic yards or less.
d. Any of the above.

Use California Schedule P (540) Instructions to answer the following questions.

31.  Beginning January 1, 1996, a qualified taxpayer shall exclude income, positive and negative adjustments and preference items attributable to any trade or business when figuring AMTI. A qualified taxpayer is an owner of, or someone who had an ownership interest in, a trade or business and one who has aggregate gross receipts, less returns and allowances for the taxable year of less than $1,000,000 from trade or businesses for which you are the owner or have an ownership interest.

True False

32. California law provides an exclusion similar to the federal exclusion under IRC Section 1202 for 50% of the gain on sale of qualifying small business stock originally issued after August 10, 1993 and held for 5 years. However, for California purposes,

a. 80% of the issuing corporation's payroll as measured by total dollar value must be attributable to employment located within California.
b. At least 80% of the value of the assets of the corporation must be used by the corporation in the active conduct of one or more qualified trades or businesses in California.
c. If you exclude gain as allowed under R&TC Section 18152.5, multiply the excluded amount by 50%.
d. All of the above.

33. For taxable years beginning on or after January 1, 2002, the prior year alternative minimum tax (AMT) credit must be applied before any credits that can reduce regular tax below the tentative minimum tax (TMT).

True False

34. California tax law gives special treatment to some items of income and allows deductions and credits for some items of expense. Many individuals who benefit from these provisions must pay at least a minimum amount of tax and/or limit the amount of their credits. Use Schedule P(540 to determine if

a. You owe AMT.
b. Your credits must be reduced.
c. Your credits must be eliminated entirely.
d. All of the above.

35. Alternative Minimum tax (AMT) is required to be included in the computation of the estimated tax payments in order to meet a safe harbor from the underpayment of estimated tax liability.

True False

36. A qualified taxpayer must exclude income, positive and negative adjustments, and preference items attributable to any trade or business when figuring AMTI. These adjustments and preference items must also be excluded when calculating any deductions that may result in AMT carryovers. You are qualified taxpayer if you

a. Own or have an ownership interest in a trade or business.
b. Have aggregate gross receipts, less returns and allowances of less than $1,000,000 during the taxable year from all trades or businesses.
c. Own or have an ownership interest in a personal residence.
d. Both a and b are correct.

37. Service members domiciled outside of California, and their spouses, may exclude the member's military compensation form gross income when computing the tax rate on nonmilitary income.

True False

38. If you itemized deductions and your federal AGI is more than the amount shown on line 18 of Schedule P (540), your itemized deductions were limited for regular tax. For AMT,

a. This limitation applies only if you are a qualified taxpayer.
b. This limitation still applies.
c. This limitation does not apply.
d. None of the above.

39. If you paid AMT in a prior year, you may be able to claim the credit for prior year AMT. To see if you qualify for a credit for prior year alternative minimum tax, use

a. Form FTB 760.
b. Form FTB 3510.
c. Form FTB 6251.
d. FTB Schedule P (540).

40. For AMT, certain items of income, deductions, etc., receive different tax treatment than for regular tax. Therefore, you need to refigure items for ATM that you figured for regular tax. For regular tax, some deductions may

a. result in carryovers to future taxable years.
b. result in carry backs to previous years.
c. figures for AMT affect the carryovers for regular tax.
d. not include your distributive share of adjustments and tax preferences