Vicki owns and operates a news agency (as a sole proprietorship).During 2016,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 2016.In addition,Vicki incurred $15,000 in circulation expenditures in 2017 and again elected expense treatment.What AMT adjustments will be required in 2016 and 2017 as a result of the circulation expenditures?
A)$16,000 positive in 2016,$2,000 positive in 2017.
B)$16,000 negative in 2016,$2,000 positive in 2017.
C)$16,000 negative in 2016,$10,000 positive in 2017.
D)$16,000 positive in 2016,$10,000 positive in 2017.
E)None of the above.

Question

Quizplus · Accepted Answer

For AMT purposes, circulation expenditures must be capitalized and amortized over 3 years. In 2016, $8,000 of the $24,000 is deductible, resulting in a $16,000 positive AMT adjustment. In 2017, $13,000 of the $15,000 is deductible, resulting in a $2,000 positive AMT adjustment.

Vicki Owns and Operates a News Agency (As a Sole