Conservative Mortimer starts a business in 2012 that he is certain will take a 3-4 years to be profitable, and requires a large amount of capital equipment in the first year. For long-term strategy he wants to save as much depreciation for profitable years. He is thus not interested in s.179, bonus, or declining-balance depreciation, and elects 10 years and straight-line depreciation for otherwise 7-year property under alternate MACRS class 24.4.
Making a long story short, he has 7-year property, but is electing 10 yr. straight-line.
The AMT depreciation calculation for this property should be:
1) 7-yr. 150% the listed AMT allowance for the property.
2) 7-yr. 100% because he is not electing declining-balance, even though AMT would allow it.
3) 10-yr. 150% because he is not electing 7 years, even though AMT would allow it.
4) 10-yr. 100% because AMT seeks no adjustment unless taxpayer elects more aggressive than 7yr 150%.
Making a long story short, he has 7-year property, but is electing 10 yr. straight-line.
The AMT depreciation calculation for this property should be:
1) 7-yr. 150% the listed AMT allowance for the property.
2) 7-yr. 100% because he is not electing declining-balance, even though AMT would allow it.
3) 10-yr. 150% because he is not electing 7 years, even though AMT would allow it.
4) 10-yr. 100% because AMT seeks no adjustment unless taxpayer elects more aggressive than 7yr 150%.
Comment