Wallace Owns a Construction Company That Builds Both Commercial and Residential

question 63

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 complete 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.

---

Definitions:

Acquired Building

A building that has been purchased or obtained by a company or organization through purchase or other means of acquisition.

Appraised

The act of determining the value of an asset, typically by a professional appraiser, based on its characteristics and the market conditions.

Malpractice

Failure by a professional to meet the standards of conduct, performance, or ethics in their job, often resulting in harm to clients or patients.

Elements

Fundamental substances that consist of atoms of only one kind and cannot be broken down or converted into another substance by chemical means.