The Alpha-Beta affiliated group has consolidated taxable income of $400,000 and tentative general business credit of $80,000 in the current year. The maximum general business credit that can be used on the consolidated return is
A)$69,250.
B)$14,750.
C)$80,000.
D)$64,000.

Question

Quizplus · Accepted Answer

The maximum 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 that exceeds $25,000. Here, $400,000 - $25,000 = $375,000; 25% of $375,000 = $93,750. The net income tax is $400,000, so $400,000 - $93,750 = $306,250. The tentative credit is $80,000, but the maximum allowable is $69,250.

The Alpha-Beta Affiliated Group Has Consolidated Taxable Income of $400,000