Reference no: EM132988304

Questions -

Q1. Gabriel, age 40, and Emma, age 33, are married with two dependents. They recorded AGI of $250,000 in 2020 that included net investment income of $3,000 and gambling winnings of $2,500. The couple incurred the following expenses during the year (all of which resulted in itemized deductions for regular income tax purposes).

Medical expenses (before 10%-of-AGI floor) $12,000

State income taxes 5,800

Real estate tax 9,100

Interest on personal residence 18,600

Interest on home equity loan (proceeds were used to remodel the couple's kitchen) 9,800

Investment interest expense 4,500

Charitable contribution (cash) 14,200

What is Gabriel and Emma's AMT adjustment for itemized deductions in 2020? Is it positive or negative?

Q2. Gabriel and Emma also earned interest of $5,000 on private activity bonds that were issued in 2015. They borrowed money to buy these bonds and paid interest of $3,900 on the loan. Determine the effect on AMTI.2.Lynn, age 45, is single and has no dependents. Her income and expenses for 2020 are reported as follows.

Income-

Salary $233,000

Taxable interest on corporate bonds 13,700

Business income 64,000

Expenditures-

Home office expense deduction 3,200

State income taxes 6,000

Real estate taxes 8,500

Mortgage (qualified housing) interest 9,200

Home equity loan interest 2,500

Investment interest 15,500

Cash contributions to various charities 2,900

The $64,000 business income is from Apex Office Supplies Company, a sole proprietorship that Lynn owns and operates. Apex claimed MACRS depreciation of $3,175 on personal property used in the business and placed in service in the current year. Lynn received interest of $30,000 on City of Pensacola private activity bonds that were issued in 2013. Based on the information presented above, compute Lynn's AMT for 2020.