In 2014, Blake Incurs $270,000 of Mining Exploration Expenditures, and Deducts

question 91

Multiple Choice

In 2014, 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 2014.
• B) Blake will have a negative AMT adjustment of $27,000 in 2019.
• C) Over a 10-year period, positive and negative adjustments will net to zero.
• D) Only a. and c. are correct.
• E) a., b., and c. are correct.

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Definitions:

Excise Tax

A tax levied on specific goods, services, or transactions, often included in the price of the product.

Price Elasticity of Demand

Price elasticity of demand measures how the quantity demanded of a good or service changes in response to a change in its price, indicating its sensitivity to price changes.

Unitary

A property of elasticity where a change in price causes a proportional change in the quantity demanded or supplied, with an elasticity coefficient of 1.

Incidence

Refers to the impact or burden of a tax, how it is distributed among various participants in the market.