Dan and Maureen file a joint income tax return for 2017. They have two dependent children, ages 7 and 9.
Together they earn wages of $152,000. They also receive taxable interest income of $8,000 and interest
on private activity bonds issued by the City of Los Angeles of $12,000. During 2017, they received a state
income tax refund of $3,000 relating to their 2016 state income tax return on which they itemized
deductions. Their expenses for the year consist of the following:
Home mortgage interest (on acquisition debt) $ 9,000
Interest on credit cards 2,000
Real property taxes 3,000
Cash contributions 15,000
Unreimbursed employee business expenses 20,000
State income taxes withheld 15,000
Instructions:
1. Prepare a schedule that shows the calculation of Dan and Maureen’s regular income tax liability.
2. Prepare a schedule that shows the calculate Dan and Maureen’s tentative minimum tax liability
assuming an AMT exemption amount of $84,500, before any phase-outs.
3. Do Dan and Maureen have to pay AMT tax? Explain your answer.
4. You must show supporting computations to receive credit.
