Pheasant, Inc., is going to be subject to the AMT in 2017. The corporation owns an investment building and is considering disposing of it and investing in other realty. Based on an appraisal of the building's value, the realized gain would be $85,000.
Ed has offered to purchase the building from Pheasant with a December 29, 2017 closing date. Ed wants to close the transaction in 2017 because he will receive certain beneficial tax consequences only if the transaction is closed prior to 2018. Abby has offered to purchase the building with a January 2, 2018 closing date.
The adjusted basis of the building is $95,000 greater for AMT purposes than for the regular income tax. Pheasant expects to be in the 34% regular income tax bracket.
What are the relevant Federal income tax issues that Pheasant faces in making its decision?