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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Definitions:

Purely Competitive

A market structure characterized by a large number of small firms, homogenous products, and easy entry and exit, leading to firms being price takers.

Resource Demand Curve

A graphical representation showing the relationship between the price of a resource and the quantity of the resource demanded by employers.

Marginal Product

The additional output that results from using one more unit of a specific input, holding all other inputs constant.

Product Price

The monetary value assigned to a good or service that is to be sold in the marketplace.