In 2017, Blake incurs $270,000 of mining exploration expenditures, and deducts the entire amount for regular income tax purposes. Which of the following statements is correct?
A) For AMT purposes, Blake will have a positive adjustment of $243,000 in 2017.
B) Blake will have a negative AMT adjustment of $27,000 in 2021.
C) Over a 10-year period, positive and negative adjustments for mining exploration expenditures will net to zero.
D) Only a. and c. are correct.
E) a., b., and c. are correct.

Question

Quizplus · Accepted Answer

For AMT purposes, Blake will have a positive adjustment of $243,000 in 2017 because only 70% of the mining exploration expenditures can be deducted immediately, leading to a $243,000 adjustment. In 2021, Blake will have a negative AMT adjustment of $27,000 as the remaining 30% is amortized over 10 years. Over the 10-year period, the positive and negative adjustments will net to zero.

In 2017, Blake Incurs $270,000 of Mining Exploration Expenditures, and Deducts