Tammy expensed mining exploration and development costs of $100,000 incurred in 2010.She will be required to make negative AMT adjustments for each of the next nine years and a positive AMT adjustment in the current tax year.

Question

Quizplus · Accepted Answer

Mining exploration and development costs are subject to special tax treatment and must be capitalized rather than expensed for regular tax purposes. However, they are deductible as a negative adjustment for AMT purposes over a period of 10 years, beginning in the year the costs were incurred. Therefore, Tammy will be required to make negative AMT adjustments for each of the next nine years and a positive AMT adjustment in the current tax year.

Tammy Expensed Mining Exploration and Development Costs of $100,000 Incurred