Vicki owns and operates a news agency (as a sole proprietorship). During 2014, she incurred expenses of $24,000 to increase circulation of newspapers and magazines that her agency distributes. For regular income tax purposes, she elected to expense the $24,000 in 2014. In addition, Vicki incurred $15,000 in circulation expenditures in 2015 and again elected expense treatment. What AMT adjustments will be required in 2014 and 2015 as a result of the circulation expenditures?
A) $16,000 positive in 2014, $2,000 positive in 2015.
B) $16,000 negative in 2014, $2,000 positive in 2015.
C) $16,000 negative in 2014, $10,000 positive in 2015.
D) $16,000 positive in 2014, $10,000 positive in 2015.
E) None of the above.

Question

Quizplus · Accepted Answer

For AMT purposes, circulation expenditures must be capitalized and amortized over 3 years. In 2014, $8,000 of the $24,000 can be deducted, resulting in a $16,000 positive AMT adjustment. In 2015, $5,000 of the $15,000 can be deducted, resulting in a $2,000 positive AMT adjustment.

Vicki Owns and Operates a News Agency (As a Sole