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In: Accounting

Herbie is the owner of two apartment buildings. Following is information related to the two buildings:...

Herbie is the owner of two apartment buildings. Following is information related to the two buildings:

Building A
Date acquired: 3/15/97
Total cost: $350,000
Cost allocated to land: $56,000

Building B
Date acquired: 8/31/04
Total cost: $555,000
Cost allocated to land: $99,900

Herbie elected the maximum depreciation available for each asset. What is the effect of depreciation on AMTI for 2017? (Use Table 6A-6 and Table 13A-1) (round your intermediate calculations to the nearest whole dollar amount.)

Building A AMT Adjustment?
Building B AMT Adjustment?
Total?

Solutions

Expert Solution

For property placed in service after 1998, if the 200% declining balance (DB) MACRS method is  used for regular tax purposes, depreciation must be recalculated for AMT purposes using 150% DB MACRS. The difference between regular depreciation and this redetermined amount is an income adjustment subject to inclusion in Alternative Minimum Tax Income (AMTI). For all other property placed in service after 1998, the depreciation method is the same for regular tax and AMT purposes.

Building-1 Building-2
Cost of Asset 15.3.97 294000 31.8.2004 455100
Depreciation 44100 34133
31.12.97 249900 2005 420968
Depreciation 37485 63145
31.12.98 212415 2006 357822
Depreciation 31862 53673
1999 180553 2007 304149
Depreciation 27083 45622
2000 153470 2008 258527
Depreciation 23020 38779
2001 130449 2009 219748
Depreciation 19567 32962
2002 110882 2010 186786
Depreciation 16632 28018
2003 94250 2011 158768
Depreciation 14137 23815
2004 80112 2012 134953
Depreciation 12017 20243
2005 68095 2013 114710
Depreciation 10214 17206
2006 57881 2014 97503
Depreciation 8682 14625
2007 49199 2015 82878
Depreciation 7380 12432
2008 41819 2016 70446
Depreciation 6273 10567
2009 35546 2017 59879
Depreciation 5332
2010 30214
Depreciation 4532
2011 25682
Depreciation 3852
2012 21830
Depreciation 3274
2013 18555
Depreciation 2783
2014 15772
Depreciation 2366
2015 13406
Depreciation 2011
2016 11395
Depreciation 1709
2017 9686

Building A AMT Adjustment

ekkarill92 answered 1 year ago
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