In 2014, Blake incurs $270,000 of mining exploration expenditures, and deducts the entire amount for regular income tax purposes. Which of the following statements is correct?
A) For AMT purposes, Blake will have a positive adjustment of $243,000 in 2014.
B) Blake will have a negative AMT adjustment of $27,000 in 2019.
C) Over a 10-year period, positive and negative adjustments will net to zero.
D) Only a. and c. are correct.
E) a., b., and c. are correct.

Question

Quizplus · Accepted Answer

For AMT purposes, the entire $270,000 deduction is not allowed in the year incurred, resulting in a positive adjustment of $243,000 in 2014. The remaining $27,000 is deductible over 10 years, leading to a negative adjustment of $27,000 in 2019. Over time, these adjustments net to zero.

In 2014, Blake Incurs $270,000 of Mining Exploration Expenditures, and Deducts