Problem $12-30($Algorithmic$)($LO$.3)$

Archie runs a small mineral exploration business $($as a sole proprietorship$).$ In $2019,$ he purchased land $($for $$76,000)$ where he suspected a

magnesium deposit was located. He incurred $$26,000$ of exploration costs related to the development of the magnesium mine in $2019$ and

an additional $$26,000$ of exploration costs in $2020.$ Archie elected to deduct these expenditures for regular tax purposes in both $2019$ and

$2020.$

In $2021,$ given a decline in magnesium prices, Archie chose to sell the property for $$74,000,$ rather than bring the mine to production. What

AMT adjustments are required in $2021$ related to mine exploration expenditures and the sale of the land?

As a result, in $2021$ a $

$x$ J

X AMT adjustment is required for mine exploration expenditures and a

q

x

X AMT adjustment for the sale of the land.