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 these.

Question

Quizplus · Accepted Answer

Computation of adjustment for circulation expenditures:
2014 regular income tax deduction $24,000
2014 AMT deduction ($24,000/3)(8,000)
Positive AMT adjustment $16,000
2015 regular income tax deduction $15,000
2015 AMT deduction [($24,000/3)+ ($15,000/3)] (13,000)
Positive AMT adjustment $ 2,000

Vicki Owns and Operates a News Agency (As a Sole