Question

In 2018, Brenda has calculated her regular tax liability to be $32,500 and her tentative minimurm (TMT) to be $36,300. Additionally, Brenda holds an alternative minimum tax credit of $6,200 from 2014 What is Brenda's total 2018 Federal income tax liability?

a. $36,300.
b. $30,100.
c. $32,500.
d. $26,300.

Answer 1

Answer: The answer is a. $36,300

Step-by-step explanation:

Since the TMT is greater the regular tax liability of $32,500, then Brenda will pay the regular tax and the amount in which the TMT is greater than the regular tax.

$36,300 - $32,500 = $3,800

Therefore Brenda's Total 2018 federal income tax liability will be calculated thus

Regular tax liability + The amount TMT exceed the regular tax

= $32,500 + $3,800

= $36,300

Therefore Breda's total 2018 federal income tax liability is $36,300

Answer 2

a. $36,300

Step-by-step explanation:

Since the regular tax liability is lower than the tentative minimum tax (TMT), we presume the tax liability to be equal to $36,300.

Now that we have calculated the Tax liability, which is the same as the tentative minimum tax (TMT) in this case, we can apply the minimum tax credit. (Note that the tax credits are subtracted once the tax liability is calculated).

Brenda is currently calculating the tax liability for the year 2018. So, we can assume that the tax credit of 2014 may have expired. Hence, Brenda will not be entitled to subtract the tax credit from his tax liability .

Therefore,

Income tax liability =$36,300 - $0

Income tax liability = $36,300