Which of the Following Statements Describing the Alternative Minimum Tax

question 43

Multiple Choice

Which of the following statements describing the alternative minimum tax (AMT) is most correct?

• A)Generally, those taxpayers most concerned about being in AMT are low income taxpayers who elect the standard deduction.
• B)The AMT was enacted in an attempt to limit the ability of taxpayers to engage in questionable tax planning activities.
• C)The goal of the AMT is to try to ensure that all taxpayers with economic income pay at least some income tax.
• D)None of these is true.

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Definitions:

Required Return

The minimum annual percentage earned by an investment that will induce individuals or companies to put money into a particular security or project.

Market Capitalization Rate

The expected rate of return on a portfolio consisting of all publicly traded stocks, used as a measure to value a company's stocks based on the market’s expectations of its future earnings.

Earnings Retention Ratio

A financial metric indicating the percentage of a company's net earnings that is not paid out as dividends, but instead retained for reinvestment.

Excluding Growth Opportunities

The omission or overlooking of potential future projects or investments that could lead to an increase in company value.