MODULE 36 TAXES: CORPORATE 565

(4) If any amount of tax is not paid by the original due date, interestmust be paid from the due
date until the tax is paid.
(5) A failure-to-pay tax delinquency penalty will be owed if the amount of tax paid by the original
due date of the return is less than 90% of the tax shown on the return. The failure-to-pay
pen-
alty is imposed at a rate of 0.5% per month (or fraction thereof), with a maximum penalty
of
25%.
2. Corporations are
subject to
a. Regular tax rates
Taxable income Rate
(1) $0-$50,000 15%
(2) $50,001-$75,000 25
(3) $75,001-$10 million 34
(4) Over $10 million 35
(5) The less-than-34% brackets .are phased out by adding an additional tax of 5% of the excess of
taxable income over $100,000, up to a maximum additional tax of $11,750.
(6) The 34% bracket is phased out for corporations with taxable income in excess of $15 million
by adding an additional 3% of the excess of taxable income over $15 million, up to a
maxi-
mum additional tax of $100,000.
3. Certain personal service corporations are not eligible to use the less-than-35% brackets and
their
taxable income is taxed at a flat 35% rate.
4. Alternative minimum tax (AMT)
(1) Computation. The AMT is generally the amount by which 20% of alternative minimum tax-
able income (AMTI) as reduced by an exemption and the alternative minimum tax foreign
tax
credit, exceeds the regular tax (i.e., regular tax liability reduced by the regular tax foreign
tax
credit). AMTI is equal to taxable income computed with specified adjustments and
increased
by tax preferences.
(2) Exemption. AMTI is offset by a $40,000 exemption. However, the exemption is reduced by
25% of AMTI over $150,000, and completely phased out once AMTI reaches $310,000.
(3) AMT formula
Regular taxable income before NOL deduction
+ Tax preference items
+( -) Adjustments (other than ACE and NOL deduction)
Pre-ACE alternative minimum taxable
income (AMTI)
+(-) ACE adjustment [75% of difference between pre-ACE AMTI and adjusted current earnings (ACE)]
- AMT NOL deduction [limited to 90% of pre-NOL AMTI]
Alternative minimum taxable income (AMTI)
- . Exemption ($40,000 less 25% of AMTI over $150,000)
Alternative minimum tax base
x 20% rate
Tentative AMT before foreign tax credit
- AMT foreign tax credit
Tentative minimum tax (TMT)
- Regular income tax (less regular tax foreign tax credit)
Alternative minimum tax (if
positive)
(4) Preferenceitems. The following are examples of items added to regular taxable income in
computing pre-ACE AMTI:
(a) Tax-exempt interest on private activity bonds (net of related expenses). However, tax-
 exempt interest on private activity bonds issued in 2009 or 2010 is not an
item of tax
preference. .
(b) Excess of accelerated over straight-line depreciation on real property and leased personal
property placed in service before 1987
(c) The excess of percentage depletion deduction over the property' s adjusted basis
(d) The excess of intangible drilling costs using a ten-year amortization over 65% of net oil
and gas i~come