Dale Owns and Operates Dale's Emporium as a Sole Proprietorship

question 61

Multiple Choice

Dale owns and operates Dale's Emporium as a sole proprietorship. On January 30, 2004, Dale's Emporium acquired a warehouse for $100,000. For regular income tax purposes in 2018, depreciation was deducted under MACRS using a 2.564% rate. Determine the AMT adjustment for depreciation and indicate whether it is positive or negative.

• A) $64 negative adjustment.
• B) $64 positive adjustment.
• C) No adjustment is required because Dale's Emporium used the Alternative Depreciation System ADS) to compute depreciation on the property for AMT purposes.
• D) No adjustment is required because Dale's Emporium used MACRS to compute the depreciation of the property for regular income tax purposes.

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