Factors that can cause the adjusted basis for AMT purposes to be different from the adjusted basis for regular income tax purposes include the following:
A)A different amount of depreciation (cost recovery)has been deducted for AMT purposes and regular income tax purposes.
B)The spread on an incentive stock option (ISO)is recognized for AMT purposes,but is not recognized for regular income tax purposes.
C)Two-percent miscellaneous itemized deductions are not deductible in calculating the AMT.
D)Only a.and b.
E)a. ,b. ,and c.

Question

Quizplus · Accepted Answer

Option (a) is correct because the amount of depreciation deducted for AMT purposes is usually calculated using different methods than those used for regular income tax purposes. For example, depreciation under the AMT system can be calculated using straight-line depreciation while the same asset can be depreciated using accelerated methods for regular income tax purposes.

Option (b) is correct because for ISOs, the spread (the difference between the fair market value of the stock and the exercise price) is recognized as taxable income for AMT purposes but is not recognized for regular income tax purposes.

Option (c) is also correct because, for AMT purposes, two-percent miscellaneous itemized deductions are not deductible. This means that the adjusted basis for AMT purposes will likely be higher than it would be for regular income tax purposes.

Therefore, the combined effect of all three options is the reason why the adjusted basis for AMT purposes can be different from the adjusted basis for regular income tax purposes which makes option (e) the correct answer.

Factors That Can Cause the Adjusted Basis for AMT Purposes