G Corp. is not eligible for the small corporation AMT exemption. G Corp. is an accrual basis taxpayer with the following taxable income and tax liability:
| Gross profit from sales |
|
$3,000,000
|
| Dividends from 25% owned corporations |
|
100,000 |
| Dividends from 10% owned corporations |
|
200,000 |
| Gain on installment sale of land |
|
250,000 |
| Gross income |
|
$3,550,000 |
|
|
|
| Operating expenses |
$1,750,000 |
|
| Depreciation expense |
400,000 |
|
| Organizational cost amortization expense |
25,000 |
|
| DRD (80,000 + 140,000) |
220,000 |
|
| |
|
|
| Total deductions |
|
$2,395,000 |
|
|
|
| Taxable income |
|
1,555,000 |
| Tax |
|
392,700 |
Additional information:
1. Tax-exempt interest = $80,000. The bonds are private activity bonds.
2. Key person life insurance proceeds = 500,000
3. Total gain related to installment sale made last year = 770,000. $250,000 reported this year.
4. Depreciation for AMT = 325,000 and for ACE = 330,000
5. Net AMT paid in past years = 100,000. Cumulative prior period positive ACE adjustment = $200,000
Determine the corporation's tax liability and carry-forward items.