Jones Corporation has $550,000 of regular taxable income, $120,000 of tax preference items, $240,000 of net positive AMT adjustment items (other than the ACE adjustment), and $970,000 of adjusted current earnings. Jones is not a small corporation exempt from the AMT and has no AMT adjustment for the U.S. production activities deduction.
a. What is Jones’ total federal income tax?
b. What minimum tax credit does Jones obtain? In what year(s) can Jones use it?
c. Suppose Jones qualifies as a small corporation that is exempt from the AMT. How would your answers to Parts a and b change?