Because the Alternative Minimum Tax (AMT)is Not Indexed to Inflation

question 166

Multiple Choice

Because the alternative minimum tax (AMT) is not indexed to inflation:

• A) more American families have become subject to the AMT over time.
• B) fewer American families have become subject to the AMT over time.
• C) every American family is subject to the AMT today.
• D) no American family is subject to the AMT today.

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Definitions:

Uncollectible Accounts

Accounts receivable that a company has determined it will not be able to collect due to customer default.

Direct Write-off

A method of accounting for bad debts where uncollectible accounts receivable are directly written off against income at the time they are deemed uncollectible.

Bad Debts Recovered

When an account receivable has been written off and is recovered, this account, which is in the Other Revenue category, is credited in the direct write-off method if the recovery is in a year following the write-off.

Allowance for Doubtful Accounts

A contra asset account that estimates the portion of receivables that may not be collectible, affecting a company’s net income and assets.