Falcon has a sole proprietorship that owns a silver mine that she purchased several years ago for $925,000. The adjusted basis at the beginning of the year is $400,000. For the year, Falcon deducts depletion of $700,000 (greater of cost depletion of $290,000 or percentage depletion of $700,000) for regular income tax purposes.
a. Calculate Falcon's AMT preference.
b. Calculate Falcon's adjusted basis for regular income tax purposes.
c. Calculate Falcon's adjusted basis for AMT purposes.