Why Form 1120 C Adjustment 2023-2024

Hello and welcome to the session. This is Professor Hat and in this session, we're going to look at corporate alternative minimum tax. This is part two of this series of lectures. In part one, we introduced the corporate art of alternative minimum tax. In this session, I'm going to be using some numbers to illustrate the concept. So, let's quickly review what we did in the prior session. We went over the formula for the corporate alternative minimum tax. In this session, we are going to look at some numbers to see how it works. The first thing we're going to look at is adjustments. So, how do adjustments work? For example, depreciation is a form of adjustment. The way we compute regular depreciation is accelerated compared to the AMT depreciation. We have two depreciation methods: one is accelerated for regular income tax, and the other is a slower method for AMT. We did the same thing for personal alternative minimum tax. Let's assume a company deducted $3,100 of depreciation expense for regular tax. The regular tax depreciation is $3,100,000. And for the purposes of AMT, they deducted $2,500,000. There's a difference of $600,000. They did not take enough depreciation for AMT, resulting in $600,000 less of depreciation. So, what's going to happen to their AMT? Alternative minimum taxable income will go up by $600,000. Let me show it to you on the excel sheet. Let's assume we are starting with regular taxable income of $5,150,700. We have an adjustment of $600,000, which is a positive adjustment. We need to add this adjustment as an AMT adjustment. The reason for this adjustment is because we deducted $3,100,000 for regular taxable income, but for AMT, we should have only deducted $2,500,000. By adding $600,000 to regular income, it's as if we only deducted $2,500,000 for...