Cloud Corporation has a taxable income of $100,000 in 2019 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% of ($100,000 - $25,000)) = $100,000 - $18,750 = $81,250. Thus, the credit used is $30,000, but the limit is $18,750, so the carryover is $30,000 - $18,750 = $9,000. The carryover can be used for up to 20 years, making the last year 2039.

Cloud Corporation Has a Taxable Income of $100,000 in 2019