Dallas and Houston Corporations comprise an affiliated group that formed at the beginning of the current year. The following items pertain to Dallas and Houston for the current year:

Determine each corporation€™s AMT liability if they file separate tax returns, and determine the group€™s consolidated AMT liability if they elect to file a consolidated tax return. Assume that, if the group elects to file a consolidated tax return, its consolidated taxable income, consolidated AMT preference and adjustment items, and consolidated adjusted current earnings equal the sum of the corporations€™ separate amounts. Assume also that the corporations do not qualify for the small corporation and first-year exemptions from the AMT. Ignore the U.S. production activities deduction.

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Houston Total S400,000 S 900,000 210,000 385,000 720,0001,460,000 Transaction Dallas Taxable income S500,000 AMT preference & adjustment items 175,000 Adjusted current earnings 740,000