Wallace Owns a Construction Company That Builds Both Commercial and Residential

question 76

Multiple Choice

Wallace owns a construction company that builds both commercial and residential buildings.He contracts to build a residential building for $800,000 for which he is eligible to use the completed contract method of accounting.In the current year for regular income tax purposes,Wallace does not recognize any income on the contract.Under the percentage of completion method,the income recognized under the contract would have been $60,000.Wallace's AMT adjustment is:

• A)$0.
• B)$60,000 negative adjustment.
• C)$60,000 positive adjustment.
• D)$800,000 positive adjustment.
• E)None of the above.

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Definitions:

Anaerobic Respiration

A form of respiration where energy is produced in the absence of oxygen, utilizing other electron acceptors and producing different end products.

Terminal Electron Acceptor

A compound that receives or accepts an electron during cellular respiration or photosynthesis, allowing for the process of energy generation to conclude.

Oxygen

A chemical element (O) essential for respiration in most living organisms and a critical component of water and most organic compounds.

Lactic Acid Fermentation

A metabolic process by which glucose and other six-carbon sugars are converted into cellular energy and the metabolite lactate, which occurs in some bacteria and animal cells, such as muscle cells.