Omar acquires used 7-year personal property for $100,000 to use in his business in February 2011.Omar does not elect § 179 expensing,but does take the maximum regular cost recovery deduction.As a result,Omar will have a positive AMT adjustment in 2011 of what amount?

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Quizplus · Accepted Answer

The regular cost recovery deduction for personal property with a 7-year recovery period is 14.29%, or $14,290 in this case. However, for AMT purposes, the AMT recovery deduction is calculated using straight-line depreciation over the recovery period, which is $100,000/7 = $14,285. Therefore, the positive AMT adjustment is the difference between the regular cost recovery deduction and the AMT recovery deduction, which is $14,290 - $10,710 = $3,580.

Omar Acquires Used 7-Year Personal Property for $100,000 to Use