66. Wallace owns a construction company that builds both commercial and residential buildings. He contracts to build a residential building for $800,000 for which he is eligible to use the completed contract method of accounting. In the current year for regular income tax purposes, Wallace does not recognize any income on the contract. Under the percentage of completion method, the income recognized under the contract would have been $60,000. Wallace’s AMT adjustment is:
A) $0.
B) $60,000 negative adjustment.
C) $60,000 positive adjustment.
D) $800,000 positive adjustment.
E) None of these.

Question

66.	Wallace owns a construction company that builds both commercial and residential buildings. He contracts to build a residential building for $800,000 for which he is eligible to use the completed contract method of accounting. In the current year for regular income tax purposes, Wallace does not recognize any income on the contract. Under the percentage of completion method, the income recognized under the contract would have been $60,000. Wallace’s AMT adjustment is:
A) $0.
B)	$60,000 negative adjustment.
C)	$60,000 positive adjustment.
D)	$800,000 positive adjustment.
E)	None of these.

Quizplus · Accepted Answer

The amount of the AMT adjustment is the difference between the income recognized under the completed contract method ($0)and the amount that would have been recognized under the percentage of completion method ($60,000).Thus,Wallace has a positive adjustment of $60,000.

66 Wallace Owns a Construction Company That Builds Both Commercial and Residential