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, 2012, her business generates an additional $30,000 general business credit.In 2012, based on her tax liability before credits, she can utilize a general business credit of up to $40,000.After utilizing the carryforwards and the current year credits, how much of the general business credit generated in 2012 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, 2012, her business generates an additional $30,000 general business credit.In 2012, based on her tax liability before credits, she can utilize a general business credit of up to $40,000.After utilizing the carryforwards and the current year credits, how much of the general business credit generated in 2012 is available for future years?

Quizplus · Accepted Answer

Molly can utilize a general business credit of up to $40,000 before the 2012 credits. She has carryforwards from previous years that have not been utilized, but their amounts are not given. Therefore, we can assume that Molly has used up all of her carryforward credits, leaving her with only the $30,000 general business credit generated in 2012.

Since her tax liability before credits allowed her to utilize a general business credit of up to $40,000 and she only utilized $30,000, the remaining $10,000 can be carried forward to future years. Therefore, the general business credit available for future years is $10,000. The correct answer is C) $28,000.

Molly Has Generated General Business Credits Over the Years That