Prior to the effect of the tax credits, Justin's regular income tax liability is $200,000.and his tentative minimum tax is $195,000.Justin reports the following credits. Calculate Justin's tax liability after credits.

Question

Prior to the effect of the tax credits, Justin's regular income tax liability is $200,000.and his tentative minimum tax is $195,000.Justin reports the following credits.  Calculate Justin's tax liability after credits.

Quizplus · Accepted Answer

We need to subtract the tax credits from the regular income tax liability and the tentative minimum tax to find the final tax liability:

$200,000 (regular income tax liability) 
- $195,000 (tentative minimum tax) 
- credits (unknown) 
= final tax liability

The question does not provide the amount of credits reported by Justin, so we cannot calculate the final tax liability exactly. However, the answer choices allow us to make an educated guess.

Option A is lower than Justin's regular income tax liability, which means that he received enough tax credits to reduce his liability below what he would normally owe. This seems unlikely because his tentative minimum tax is only $5,000 less than his regular income tax liability.

Option B is slightly higher than Justin's tentative minimum tax, which means that he may have received some tax credits but not enough to fully offset his tax liability. This seems like a reasonable possibility because his tentative minimum tax is already quite close to his regular income tax liability.

Option C is the same as Justin's tentative minimum tax, which means that he received credits equal to his tentative minimum tax and was able to eliminate that part of his liability. However, this still leaves his regular income tax liability of $200,000.

Option D is the same as Justin's regular income tax liability, which means that he did not receive any tax credits and owes the full amount. This seems unlikely given that the question specifies that he reported some credits.

Overall, option B seems like the most reasonable choice given the information provided.

Prior to the Effect of the Tax Credits, Justin's Regular