Question
Problem 12-34 (LO. 2, 3, 8) Angela, who is single, incurs circulation expenditures of $153,000 during 2016. She is deciding whether to deduct the entire
Problem 12-34 (LO. 2, 3, 8)
Angela, who is single, incurs circulation expenditures of $153,000 during 2016. She is deciding whether to deduct the entire $153,000 or to capitalize it and elect to deduct it over a three-year period.
Angela already knows that she will be subject to the AMT for 2016 at both the 26% and 28% rates. Angela is in the 28% bracket for regular income tax purposes this year; she reports regular taxable income of $153,000 before considering the circulation expenses. Angela expects to be in the 28% regular tax bracket in 2017 and 2018.
If an answer is zero enter "0".
If Angela deducts the $153,000 in 2016, her total tax savings over the three years will be ?????$. Ignoring the time value of money, if she elects to capitalize the circulation expenses, her total tax savings over the three years will be ???????$.Assume a discount rate of 4%. The present value factors at 4% are: Year 1: 1.00000; Year 2: 0.92456 and Year 3: 0.88900. If she elects to capitalize the circulation expenses, her total tax savings over the three years, assuming a discount rate of 4%, will be $????.
Can you please explain how to calculate the tax savings over 3 years on this AMT related question.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started