​Jesse Placed Equipment That Cost $48,000 in Service in 2015

question 95

Short Answer

​Jesse placed equipment that cost $48,000 in service in 2015 (neither § 179 expensing nor bonus depreciation was elected).On July 1, 2017, Jesse sold the equipment for $22,000. ​
Regular tax and AMT depreciation amounts for the equipment are computed as follows.
​ $\begin{array}{cll}&\text { Regular Tax } & \text { AMT } \\&\text { Depreciation } & \text { Depreciation }\\2015 & \$ 9,600 & \$ 7,200 \\2016 & \$ 15,360 & \$ 12,240 \\2017 & \$ 4,608 & \$ 4,284\end{array}$ ​
​
What AMT adjustments will be required for the equipment for 2017?
​
A)​$5,844 positive adjustment depreciation; $1,292 positive adjustment equipment sale
B)​$324 positive adjustment depreciation; $(5,844) negative adjustment equipment sale
C)$648 positive adjustment depreciation; $(2,276) negative adjustment equipment sale
D)​$324 positive adjustment depreciation; $0 adjustment for the equipment sale

• A)​$5,844 positive adjustment depreciation; $1,292 positive adjustment equipment sale
• B)​$324 positive adjustment depreciation; $(5,844) negative adjustment equipment sale
• C)$648 positive adjustment depreciation; $(2,276) negative adjustment equipment sale
• D)​$324 positive adjustment depreciation; $0 adjustment for the equipment sale

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Definitions:

Tax Burden

Tax Burden describes the total amount of tax that individuals, corporations, or other entities must pay, relative to their income or profits.

Excise Tax

A specific duty charged on the sale or consumption of particular goods, such as luxury items, gasoline, and alcohol, which is often aimed at discouraging certain behaviors.

Consumers

Individuals or entities that purchase goods or services for personal use rather than for manufacturing or reselling.

Soft Coal

A term often used for bituminous coal, characterized by its relatively high volatile content and used primarily for electricity generation and industrial heat.