Tammy expensed mining exploration and development costs of $100,000 incurred in 2012.She will be required to make negative AMT adjustments for each of the next nine years and a positive AMT adjustment in the current tax year.

Question

Quizplus · Accepted Answer

Mining exploration and development costs are a preference item for AMT purposes and therefore require negative adjustments spread out over nine years. In addition, since Tammy expensed these costs in 2012, she will need to make a positive AMT adjustment in the current tax year to add back the expenses for regular tax purposes.

Tammy Expensed Mining Exploration and Development Costs of $100,000 Incurred