Question

Many AMT adjustments (e.g., depreciation, circulation expenditures, mining exploration and development costs, and research and experimental expenditures) can be avoided if the taxpayer elects to use the AMT tax treatment for regular tax purposes.

a) True
b) False

Answer 1

The claim that AMT adjustments can be avoided by electing AMT tax treatment for regular tax purposes is false. AMT is designed to ensure a minimum amount of tax liability and aligning expenses may simplify computations but does not eliminate AMT.

Step-by-step explanation:

The statement that many Alternative Minimum Tax (AMT) adjustments can be avoided if the taxpayer elects to use the AMT tax treatment for regular tax purposes is False. AMT adjustments are designed to ensure that taxpayers with substantial economic income pay at least a minimum amount of tax regardless of deductions, credits, or exemptions. Electing AMT tax treatment for regular tax purposes may not necessarily avoid AMT adjustments; instead, it aligns certain expenses like depreciation to be the same for both AMT and regular tax calculations, possibly simplifying the tax computations but not eliminating the potential for AMT liability.