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For the current year, CCP Inc.

received the following interest income: $19,000 interest from Irvine City bonds: Bonds issued in 2011 and proceeds used to fund public schools. $33,250 interest from Fluor Corporation bonds. $17,200 interest from Mission Viejo City: Bonds issued in 2012 and proceeds used to lure new business to the area. $15,900 interest from U.S. Treasury notes. a. What amount of this interest income is taxable to CCP?

b. What amount of interest should CCP report as a preference item when calculating its alternative minimum tax liability?

Explanation:

a. $49,150. The $33,250 interest from the Fluor Corporation bonds and the $15,900 interest from the U.S. Treasury notes are taxable interest. b. $17,200 interest from Mission Viejo City bonds (Private activity bonds issued in 2011)