Problem $12-30($Algorithmic$)($LO$.3)$

Archie runs a small mineral exploration business $($as a sole proprietorship$).$ In $2019,$ he

purchased land $($for $$68,000)$ where he suspected a magnesium deposit was located. He

incurred $$26,000$ of exploration costs related to the development of the magnesium mine in

$2019$ and an additional $$22,000$ of exploration costs in $2020.$ Archie elected to deduct these

expenditures for regular tax purposes in both $2019$ and $2020.$

In $2021,$ given a decline in magnesium prices, Archie chose to sell the property for $$66,000,$

rather than bring the mine to production. What AMT adjustments are required in $2021$

related to mine exploration expenditures and the sale of the land?

As a result, in $2021$ a $

AMT adjustment is required for mine

exploration expenditures and a $

negative

AMT adjustment for the sale of

the land.