Question

Carlson's general business credit for the current year is $84,000. His net income tax is $190,000, tentative minimum tax is $175,000, and net regular tax liability is $185,000. He has no other Federal income tax credits. Determine Carlson's general business credit for the year.

Answer 1

$15,000

Step-by-step explanation:

The general business credit is given by the taxpayer’s net income tax reduced by the greater of either The tentative minimum tax or 25 percent of net regular tax liability that exceeds $25,000

Tax payers net income tax = $190,000

Tentative minimum tax = $175,000

(25% × (185,000 - 25,000)) = $40,000

Therefore $175,000> $40,000

The credit = $190,000 - $175,000 =$15,000