FlyAnywhere Inc. has current year taxable income of $1.3million, including the following items:
MACRS depreciation deduction = $410,000
70% DRD = $35,000
80% DRD = $115,000
The following information is also available from FlyAnywhere’sbooks and records:
FlyAnywhere earned $20,000 of municipal bond interest, of which$6,000 is from private activity bonds
FlyAnywhere received $1 million on the death of its CEO
FlyAnywhere has no NOLs or tax credits
AMT depreciation = ACE depreciation = $380,000
Required
1. Calculate the following
a. Regular tax liability
b. AMTI before ACE adjustment
c. ACE and ACE adjustment
d. AMTI
e. Tentative minimum tax
f. AMT
g. Total tax liability
2. How would your answers to the questions above change if thedeath benefit received on the death of the CEO was $2 million?
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