Given the following information applicable to 2017 what is t

Given the following information applicable to 2017, what is the maximum alternative tax credit that can be used in 2017?

Minimum tax credit: $10,000

Regular tax liability: $50,000

Tentative minimum tax: $46,000

a) $0

b) $4,000

c) $10,000

d) $12,000

Solution

Solution:

Regular tax liability for 2017 = $50,000

TMT for 2017 = $46,000

MTC avaiable = $10,000

Maximum alternative tax credit can be used for 2017 = MTC available or Excess of regular tax liability over TMT whichever is lower

Therefore maximum alternative tax credit that can be used in 2017 = $50,000 - $46,000 = $4,000

Hence option b is correct.