On January 3,1997,White Corporation acquired an office building for $100,000 and claimed MACRS depreciation of 2.461%.The Alternative Depreciation System rate for the first recovery year is 2.396%.What was White's AMT adjustment (or preference)for depreciation with respect to the office building in 1997?
A)$65 positive adjustment.
B)$65 negative adjustment.
C)$0 adjustment or preference.
D)$2,461 positive adjustment.
E)None of the above.

Question

Quizplus · Accepted Answer

The AMT adjustment is calculated by taking the difference between the MACRS depreciation and the Alternative Depreciation System (ADS) depreciation. The MACRS depreciation is $100,000 * 2.461% = $2,461. The ADS depreciation is $100,000 * 2.396% = $2,396. The difference is $2,461 - $2,396 = $65, which is a positive adjustment.

On January 3,1997,White Corporation Acquired an Office Building for $100,000