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, 2016, her business generates an additional $15,000 general business credit. In 2016, 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 2016 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:
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In the current year, 2016, her business generates an additional $15,000 general business credit. In 2016, 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 2016 is available for future years?

Quizplus · Accepted Answer

Molly can use her carryforward credits and the current year credit to offset $20,000 of her tax liability. Since the carryforward credits total $17,000 ($7,000 + $3,000 + $4,000 + $3,000) and the current year credit is $15,000, she can only utilize $20,000 in credits for the current year. This leaves $9,000 of the current year credit unused. Since general business credits can be carried forward for 20 years, Molly can use the remaining $9,000 credit in future years. Therefore, the answer is (C) $14,000.

Molly Has Generated General Business Credits Over the Years That