Jesse placed equipment that cost $48,000 in service in 2015 (neither § 179 expensing nor bonus depreciation was elected). On July 1, 2017, Jesse sold the equipment for $22,000.
Regular tax and AMT depreciation amounts for the equipment are computed as follows.

What AMT adjustments will be required for the equipment for 2017?

A)$5,844 positive adjustment depreciation; $1,292 positive adjustment equipment sale
B)$324 positive adjustment depreciation; $(5,844) negative adjustment equipment sale
C)$648 positive adjustment depreciation; $(2,276) negative adjustment equipment sale
D)$324 positive adjustment depreciation; $0 adjustment for the equipment sale

Question

​Jesse placed equipment that cost $48,000 in service in 2015 (neither § 179 expensing nor bonus depreciation was elected). On July 1, 2017, Jesse sold the equipment for $22,000. ​
Regular tax and AMT depreciation amounts for the equipment are computed as follows.
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What AMT adjustments will be required for the equipment for 2017?
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A)​$5,844 positive adjustment depreciation; $1,292 positive adjustment equipment sale 
B)​$324 positive adjustment depreciation; $(5,844) negative adjustment equipment sale 
C)$648 positive adjustment depreciation; $(2,276) negative adjustment equipment sale 
D)​$324 positive adjustment depreciation; $0 adjustment for the equipment sale

Quizplus · Accepted Answer

AMT adjustments are required when the depreciation taken for tax purposes exceeds the amount allowed for AMT purposes. In this case, regular tax depreciation is higher than AMT depreciation, resulting in a positive adjustment of $324. Additionally, the sale of the equipment results in a negative adjustment of $(5,844) as the gain recognized for regular tax purposes is higher than AMT. Therefore, the correct answer is B.

​Jesse Placed Equipment That Cost $48,000 in Service in 2015

Jesse Placed Equipment That Cost $48,000 in Service in 2015