Cloud Corporation has a taxable income of $100,000 in 2018 along with a $30,000 general business credit. What is the amount of its credit carryover and the last year to which the carryover could be used?

Question

Quizplus · Accepted Answer

The general business credit is limited to the net income tax minus the greater of the tentative minimum tax or 25% of the net regular tax liability above $25,000. For Cloud Corporation, the limit is $100,000 - $25,000 = $75,000, 25% of which is $18,750. Thus, the credit is limited to $100,000 - $18,750 = $81,250. Since the credit is $30,000, the carryover is $30,000 - $21,000 = $9,000. The carryover can be used for up to 20 years, making the last year 2038.

Cloud Corporation Has a Taxable Income of $100,000 in 2018