Molly has generated general business credits over the years that have not been utilized.The amounts generated and not utilized follow: In the current year, 2018, her business generates an additional $15,000 general business credit.In 2018, based on her tax liability before credits, she can utilize a general business credit of up to $20,000.After utilizing the carryforwards and the current year credits, how much of the general business credit generated in 2018 is available for future years?

Question

Molly has generated general business credits over the years that have not been utilized.The amounts generated and not utilized follow:   In the current year, 2018, her business generates an additional $15,000 general business credit.In 2018, based on her tax liability before credits, she can utilize a general business credit of up to $20,000.After utilizing the carryforwards and the current year credits, how much of the general business credit generated in 2018 is available for future years?

Quizplus · Accepted Answer

Molly has carryforward general business credits from previous years that were not utilized. The total amount generated and not utilized is not given, but it is certain that these carryforward credits, plus the $15,000 credit generated in 2018, cannot exceed $20,000 (which is the maximum general business credit that her tax liability before credits can absorb in 2018). Therefore, she must have at least $5,000 in carryforward credits that she can use in 2018. If she uses all $5,000 carryforwards and also the $15,000 2018 credit, then there is no general business credit remaining for Molly to carry forward to future years ($20,000 limit is already reached). Therefore, the answer is (C) $14,000.

Molly Has Generated General Business Credits Over the Years That