66 Wallace Owns a Construction Company That Builds Both Commercial and Residential

question 40

Multiple Choice

66. 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 these.

---

Definitions:

Manager

A person responsible for controlling or administering an organization or group of staff.

Human Relations

The field of study that examines how communication and relationships between individuals and groups affect organizational behavior and performance.

Productivity

The efficiency with which an organization or individual converts inputs into outputs, often measured as the amount of goods or services produced per unit of input.

Social Setting

The physical and social context in which people live, work, or interact, influencing their behavior, interactions, and perceptions.