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,2010,her business generates an additional $30,000 general business credit.In 2010,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 2010 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,2010,her business generates an additional $30,000 general business credit.In 2010,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 2010 is available for future years?

Quizplus · Accepted Answer

First, we need to add up the general business credits generated in previous years:

$20,000 + $15,000 + $5,000 = $40,000 (carryforwards)

Then, we add the current year credit of $30,000:

$40,000 (carryforwards) + $30,000 (current year) = $70,000 (total credits available)

Since Molly can only utilize up to $40,000 of credits for the current year, she can only use $40,000 - $30,000 (current year credit) = $10,000 of carryforwards.

Therefore, the remaining credits available for future years would be:

$40,000 (carryforwards) - $10,000 (utilized in current year) = $30,000

So, the answer is D) $28,000. (Note: $2,000 is not a possible answer since that amount was already utilized in the current year).

Molly Has Generated General Business Credits Over the Years That