Josepi’s construction company uses the completed contract method. During the three year period 2012–2014, Josepi recognized the following income on his two construction contracts.
|
Year |
Contract 1 |
Contract 2 |
|
2012 |
$700,000* |
$ –0– |
|
2013 |
–0– |
–0– |
|
2014 |
–0– |
800,000** |
If Josepi had used the percentage of completion method, he would have recognized the following income.
|
Year |
Contract 1 |
Contract 2 |
|
2012 |
$40,000 |
$275,000 |
|
2013 |
–0– |
225,000 |
|
2014 |
–0– |
300,000 |
Calculate Josepi’s AMT adjustment for the three tax years.