Here's the answer:
1. (N) The dividends received deduction is not an adjustment in computing AMTI before the ACE adjustment. However, note that the 70% dividends received deduction is an increase adjustment in computing a corporation's ACE.
2. (N) The tax-exempt interest on a state's general obligation bonds is not an adjustment is computing AMTI before the ACE adjustment.
3. (I) Generally for seven-year property, the 200% declining balance method would be used under MACRS for regular tax purposes, while the 150% declining balance method must be used for AMT purposes, resulting in an increase adjustment in computing AMTI prior to the ACE adjustment for the year placed in service.
4. (N) For real property placed in service after December 31, 1998, the AMT adjustment has been eliminated because for AMT purposes, the recovery period is the same as that used for regular tax MACRS depreciation (e.g., 39 years or 27 1/2 years). On the other hand, for real property that was placed in service before January 1, 1999, an AMT adjustment is necessary because for AMT purposes, real property must be depreciated using the straight-line method over a 40-year recovery period, rather than the 39-year or 27 1/2-year period used for regular tax purposes.
5. (N) Allowable charitable contributions do not result in an adjustment in computing AMTI or ACE.
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