​Saffron Corporation, a Calendar Year Taxpayer, Has Alternative Minimum Taxable

question 83

Multiple Choice

​Saffron Corporation, a calendar year taxpayer, has alternative minimum taxable income (before adjustment for adjusted current earnings) of $2 million for 2016. If Saffron Corporation's adjusted current earnings is $4 million, its tentative minimum tax for 2016 is:

• A) ​$400,000.
• B) ​$692,000.
• C) ​$700,000.
• D) ​$800,000.
• E) ​None of the above.

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Definitions:

Reinvestment

The process of using dividends, interest, or any other form of income generated by an investment to purchase additional shares or units of that investment.

IRR Method

The process of estimating the rate of return on an investment by setting the net present value of all cash flows to zero, to assess its profitability.

MIRR

Modified Internal Rate of Return, a financial measure used to assess the attractiveness of investments by accounting for the cost of borrowing and reinvestment rates.

Cash Flows

The aggregate sum of money entering and exiting a business, notably affecting its cash flow.