Which One of the Following Is Not a Tax Preference

question 43

Multiple Choice

Which one of the following is not a tax preference item used in computing the alternative minimum tax for an individual?

• A)Tax-exempt income from a Colorado Water Board bond
• B)Percentage depletion in excess of cost depletion on a silver mining property
• C)Tax-exempt interest on specified private activity bonds in tax years after 2012
• D)Exclusion of gain on the sale of certain qualified small business corporation stock in tax years after 2012
• E)None of the above; all are preference items.

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Definitions:

Prime Cost

The sum of direct materials and direct labor costs in a manufacturing process, not including overhead expenses.

Incremental Manufacturing Cost

The additional cost incurred to produce an additional unit of product, including direct materials, direct labor, and variable overhead.

Production Increase

The rise in the quantity of goods and services produced by a company over a specific period.

Total Variable Cost

The total of all expenses that change in direct proportion to the amount of goods or services produced.