Weston Corporation has accumulated minimum tax credits of $134,000 from tax years prior to 2018. If 2018 regular tax before credits is $47,000, Jackson qualifies for general business credits of $14,000, and it does NOT make the quickie refund election provided by the CARES Act, its allowable minimum tax credit for 2018 is:

Question

Quizplus · Accepted Answer

The allowable minimum tax credit for 2018 is the greater of:

1. The excess of the minimum tax credit over the regular tax liability for prior years, which is $134,000 minus $47,000 =$87,000

2. 25% of the excess of the regular tax liability over $25,000, which is 25% x ($47,000 - $25,000) = $5,500

Therefore, the allowable minimum tax credit for 2018 is the greater of $87,000 and $5,500, which is $87,000. However, the available minimum tax credit is limited to the amount of regular tax liability reduced by the general business credit. Therefore, the allowable minimum tax credit for 2018 is $47,000 - $14,000 (general business credit) + $83,500 (minimum tax credit) = $116,500. However, since the question asks for the amount of allowable minimum tax credit, the answer is $83,500.

Weston Corporation Has Accumulated Minimum Tax Credits of $134,000 from Tax