Question

Atalia purchased used seven-year class property at a cost of $300,000 on April 15, 2019. Atalia's cost recovery deduction for 2019 for alternative minimum tax purposes, assuming she does not elect § 179, would be $32,130.

A. True
B. False

Answer 1

The statement regarding Atalia's cost recovery deduction for 2019 for AMT purposes being $32,130 is false without additional information. The MACRS convention needs more details to determine the exact amount, as AMT adjustments can change the deduction value.

Step-by-step explanation:

The question concerns whether Atalia's cost recovery deduction for 2019 for alternative minimum tax purposes is $32,130, given that she purchased used seven-year class property for $300,000 on April 15, 2019, without electing § 179. According to Modified Accelerated Cost Recovery System (MACRS) for seven-year property, the first-year depreciation rate is 14.29%. Since the property was placed in service in April, the half-year convention applies. However, without knowing Atalia's use of the property, her business income, or if she qualifies for any special depreciation allowances, it's not possible to confirm the specified amount of $32,130 as the exact deduction for AMT purposes. It is false to assume that the deduction for AMT purposes is the same as for regular tax purposes as they can differ, especially if there are AMT adjustment items that aren't specified in the question.