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

question 72

Multiple Choice

Dale owns and operates Dale's Emporium as a sole proprietorship.On January 30, 2005, Dale's Emporium acquired a warehouse for $100,000.In 2019, for regular tax purposes, the MACRS depreciation deduction was calculated using a 2.564% rate.Determine the AMT adjustment for depreciation and indicate whether it is positive or negative.

• A)A $64 negative adjustment.
• B)A $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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Definitions:

Credit Sales

Credit Sales are transactions where the goods or services are provided to the customer with the agreement that payment will be made at a future date.

Effect on Profit

The impact that specific actions or events have on the net income of a company.

Trade Receivables

Amounts owed to a business by its customers following the sale of goods or services on credit.