Included in Alice's regular taxable income and in her AMT base is a $300,000 capital gain on the sale of stock she owned for three years. Alice is in the 35% tax bracket for regular income tax purposes. In calculating her regular income tax liability, she uses the appropriate alternative tax rate on net capital gain of 20%.
a. What rate should Alice use in calculating her tentative AMT?
b. What is Alice's AMT adjustment?
c. How would your answers in parts (a) and (b) change if the taxpayer were a C corporation in the 34% tax bracket for regular income tax purposes?