Layla earned $20,000 of general business credits from her sole proprietorship. Her regular tax liability is $45,000, and her tentative minimum tax is $49,000. During the current year Layla will apply general business credits of

Question

Quizplus · Accepted Answer

Layla cannot apply any general business credits because her tentative minimum tax ($49,000) is higher than her regular tax liability ($45,000), which means she is subject to the alternative minimum tax (AMT) and cannot use the credits to offset her tax liability.

Layla Earned $20,000 of General Business Credits from Her Sole