b. Calculate Falcon's adjusted basis for regular income tax purposes — Inc owns silver mine that purchased several years ago 925 000 The

Falcon, Inc., owns a silver mine that it 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.

SOLUTION