Choice "c" is correct. Tan's tax liability is calculated as follows:
|
|
|---|
Tan's regular tax
liability | $ 210,000 |
Plus: Tan's AMT ($240,000 −
210,000)* | 30,000 |
Plus: Tan's PHC tax** | 65,000 |
Tan's tax liability | $ 305,000 |
*Tan will pay alternative minimum tax (AMT) to the extent that AMT exceeds
regular tax.
**Tan will pay personal holding company tax in addition to its regular and
alternative minimum taxes.
