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9. Complete the following regarding AMT adjustments.Pineview Corporation placed an asset (three-year MACRS class life) costing $20,000 in service on June 1, 2015. Complete the table below by providing the AMT adjustment and indicate whether the adjustment increases or decreases taxable income.
2015666850001668Increases2016888873001588Increases2017296050002040Decreases2018148427001216DecreasesA separate tax system with a quasi-flat tax rate is applied each year to a corporation’s economic income. If the tentative alternative minimum tax is greater than the regular corporate income tax under § 11, then the corporation must pay the regular tax plus this excess, the alternative minimum tax (AMT).Certain adjustments must be made to this amount. Unlike tax preference items, which are always additions, AMT adjustments may either increase or decrease taxable income. The positive adjustments arise as a result of timing differences and are added back to the taxable income in computing AMTI. Because most adjustments only defer taxes, a corporation may recoup AMT paid on these adjustments when the deferral of regular tax created by the adjustment is reversed and the regular tax is due. Once AMT adjustments reverse themselves, they are deducted from taxable income to arrive at AMTI. This mechanism is called the netting process.A portion of depreciation on property placed in service after 1986. Depreciation allowances for purposes of the AMT are generally much less favorable than for the regular corporate income tax. Forproperty placed into service after 1998, this adjustment applies only to MACRS 3-, 5-, 7-, and 10-yearproperty that is depreciated using the 200 percent declining-balance method. The adjustment is the difference between the depreciation claimed for regular tax purposes and the depreciation using the 150 percent declining-balance method over the property’s shorter regular MACRS recovery period.Year TaxDeductionAMTDeductionAMTAdjustmentIncreases or Decreases2015 $6,668$5,000$6,668 - $5,000 = $1,668Increases2016 $8,888$7,300$8,888 - $7,300 = $1,588Increases2017 $2,960$5,000$2,960 - $5,000 = ($2,040)Decreases2018 $1,484$2,700$1,484 - $2,700 = ($1,216)DecreasesTotals $20,000$20,000$010. SafeCo Manufacturing Company pays $52 to purchase materials from related suppliers in Canada. SafeCo incurs $39.00 in labor costs at its factory in the United States to fabricate and assemble a garden tool. The company also incurs packaging, selling, and other costs of $5.20 and sells the garden tool for $166.