LO.3, 8 In March 2012, Helen Carlon acquired used equipment for her business at a cost of $300,000. The equipment is five-year class property for regular income tax purposes and for AMT purposes.

a. If Helen depreciates the equipment using the method that will produce the greatest deduction for 2012 for regular income tax purposes, what is the amount of the AMT adjustment? Helen does not elect § 179 limited expensing. Helen elected not to take additional first-year depreciation.

b. How can Helen reduce the AMT adjustment to $0? What circumstances would motivate her to do so?

c. Draft a letter to Helen regarding the choice of depreciation methods. Helen’s address is 500 Monticello Avenue, Glendale, AZ 85306.