Joshua purchased business furniture and fixtures (7-year property) for $40,000 in May 2012. On July 15, 2015, Joshua sold the furniture and fixtures for $30,000. During his years of ownership, he had taken $27,504 of depreciation for regular tax purposes. AMT depreciation for that period was $17,276. What is the 2015 AMT adjustment required as a result of the sale of the assets?
A) $0.
B) $7,276.
C) $10,228.
D)$17,504.

Question

Quizplus · Accepted Answer

To calculate the AMT adjustment required, we need to calculate the asset's adjusted basis for AMT purposes and compare it to the sale price.

Adjusted basis for AMT purposes = Original cost - AMT depreciation

Adjusted basis for AMT purposes = $40,000 - $17,276 = $22,724

Since the sale price ($30,000) is more than the adjusted basis for AMT purposes ($22,724), there is a positive adjustment required for AMT purposes.

The AMT adjustment required is calculated as follows:

AMT adjustment = Sale price - Adjusted basis for AMT purposes - Regular tax depreciation on the asset

AMT adjustment = $30,000 - $22,724 - $27,504 = $(10,228)

The negative sign indicates that there is a favorable adjustment for AMT purposes.

Therefore, the correct answer is (C) $10,228.

Joshua Purchased Business Furniture and Fixtures (7-Year Property) for $40,000