In March 2017, Helen Carlon acquired used equipment for her business at a cost of $300,000. The equipment is five-year property for depreciation purposes.
a. If Helen depreciates the equipment using the method that will produce the greatest deduction for 2017 for regular income tax purposes, what is the amount of the AMT adjustment? Helen does not elect § 179 expensing.
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.