Question

Carlson's general business credit (before limitations) for the current year is $158,150. His net income tax is $347,930, tentative minimum tax is $313,137, and net regular tax liability is $330,534. He reports no other Federal income tax credits for the year. Compute Carlson's general business credit allowed for the year, and any amounts that can be carried back and forward

Answer 1

Carlson's general business credit allowed for the year = 123,357 USD

Step-by-step explanation:

Let's first arrange the data given:

Business Credit for the current year = 158,150 USD

Net Income Tax = 347,930 USD

TMT = Tentative Maximum Tax = 313,137 USD

Net Regular Tax liability = 330,534 USD

Solution:

330,534 - 25000 = 305,534

305,534 x 25% = 76,383.5

TMT 313,137 > 76,383.3

So,

Net income tax - TMT = 347,930 - 313,137

Net income tax - TMT = 34,793

Now, the current Carlson's general business credit allowed for the year will be :

Current Business Credit - 34,793

158,150 - 34,793 = 123,357 USD

Carlson's general business credit allowed for the year = 123,357 USD