Cranston Corporation has accumulated minimum tax credits of $924,000 from tax years prior to 2018. If 2018 regular tax before credits is $152,000, Cranston's allowable minimum tax credit for 2018 is:

Question

Quizplus · Accepted Answer

The allowable minimum tax credit for 2018 is the greater of the current year minimum tax credit or 25% of the excess of the regular tax over $25,000. The current year minimum tax credit is equal to the minimum tax credit carryforward from prior years ($924,000 in this case). 25% of the excess of the regular tax over $25,000 is ($152,000-$25,000) x 25% = $31,750. The allowable minimum tax credit is the greater of these two amounts, which is $538,000 (the carryforward from prior years). Therefore, the answer is D.

Cranston Corporation Has Accumulated Minimum Tax Credits of $924,000 from Tax