In the current year, DYL Corporation earned taxable and tax-exempt interest from the following investments.
Investment ___________________________________ Interest Income
10-year municipal bond (issued in 2009) ..................... $1,300
10-year private activity bond (issued in 2010) ................ 1,600
10-year Treasury bond (issued in 2014) ........................ 2,000
10-year private activity bond (issued in 2015) .................. 900
Savings account ................................................... 1,100
DYL Corporation purchased all of the bonds on their issuance date. In addition,
DYL Corporation borrowed funds with which to purchase the 2010 private activity bond and incurred interest expense of $350 on that loan in the current year.
a. How much interest income will DYL Corporation recognize for regular tax purposes in the current year?
b. What is its current year AMT preference or adjustment for interest?