Federal Tax Research 10th Edition by Steven Gill, Gerald Whittenburg, Roby Sawyers, Debra Sanders, William Raabe

Exercise 25

Maris Corporation put into service $100,000 of equipment that qualifies for its state's 10 percent research credit. To the extent that the credit is claimed, no cost-recovery deductions are allowed. Maris is subject to a 14 percent cost of capital. If the credit were not claimed, the property would qualify for cost-recovery deductions using a three-year life, straight line with no salvage value, and a half-year convention. The state has a flat income tax rate of 8 percent. What is the net value of the tax credit to Maris Corporation