Certain adjustments must be made to a corporation’s pre-ACE alternative minimum taxable income (AMTI) to arrive at adjusted current earnings (ACE).  Which one of the following adjustments increases pre-ACE AMTI to arrive at ACE?
A. Excess of capital losses over capital gains.
B. 80% dividends-received deduction.
C. Amortization of organizational expenditures.
D. Private activity bond interest income.
Answer:C
C is corrent. A corporation’s organizational expenditures are not deductible and must be capitalized for purposes of converting a corporation’s pre-ACE alternative minimum taxable income (AMTI) to its adjusted current earnings (ACE). Private activity bond interest is a tax preference item and is added to regular taxable income in the process of computing a corporation’s pre-ACE AMTI.
A is incorrect. A net capital loss can’t be deducted so there is nothing to add back.
B is incorrect. The 80% DRD is not added back.
D is incorrect. Private activity bond interest is a preference item that would be added in computing pre-Ace AMTI.