Question

1.Archie runs a small mineral exploration business (as a sole proprietorship). In 2016, he purchased land (for $68,000) where he suspected a magnesium deposit was located. He incurred $18,000 of exploration costs related to the development of the magnesium mine in 2016 and an additional $22,000 of exploration costs in 2017. Archie elected to deduct these expenditures for regular tax purposes in both 2016 and 2017. In 2018, 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 2018 related to mine exploration expenditures and the sale of the land?

As a result, in 2018 a $........... negative  AMT adjustment is required for mine exploration expenditures and a
$........... negative  AMT adjustment for the sale of the land.

Answer 1

Question: As a result, in 2018 a $........... negative  AMT adjustment is required for mine exploration expenditures and a
$........... negative  AMT adjustment for the sale of the land.

Answer: As no expenses has been incurred on mines operation in the year 2018, no AMT Adjustment is required for mine exploration for the year. As the Land Acquisition was for $ 68000 and has been sold @ $ 66000, the difference of $ 2000 will be negative AMT Adjustment for the sale of Land. Imprtant to note here is that Expenses incurred on Exploration Cost during 2016.2017 has already been deducted for regular tax purpose in respective here, hence these will not impact during 2018.