Molly has generated general business credits over the years that have not been utilized.The amounts generated and not utilized follow: 2011 $2,500 2012 7,500 2013 5,000 2014 4,000 In the current year,2015,her business generates an additional $15,000 general business credit.In 2015,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 2015 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: 2011 $2,500 2012 7,500 2013 5,000 2014 4,000 ​ In the current year,2015,her business generates an additional $15,000 general business credit.In 2015,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 2015 is available for future years?

Quizplus · Accepted Answer

Molly can utilize the carryforward credits from the previous years, totaling $19,000 ($2,500 + $7,500 + $5,000 + $4,000) plus the current year credit of $15,000 for a total of $34,000. However, her tax liability before credits is only $20,000, so she can only use $20,000 of the credits. This means that $14,000 ($34,000 - $20,000) of the general business credit generated in 2015 is available for future years. Therefore, the correct choice is C.

Molly Has Generated General Business Credits Over the Years That