Taxes: Business Tax Credits

Question 1

Taxes:
Business Tax Credits
Foreign Tax Credit

Answer 1

Foreign Tax Credit
- prevent double taxation
- limit: lower of foreign tax paid, or proportion of us tax allocable to foreign sourced income
- US Tax X (Foreign Income/Total Income)
- excess is back 1, forward 10
Other Options
1. claim foreign taxes as itemized deduction
2. exclude income earned while foreign resident, max $100,800 if physically present 330 days in 12 months

Question 2

Taxes:
Business Tax Credits
General Business Credit

Answer 2

General Business Credit
- combination of credits
- limited to "net regular" tax: regular tax - personal credits
Limit
net regular liability
plus AMT less nonrefundable credits
less 25% liability over $25k
- cannot offset all tax liability if over $25k
- back 1 and forward 20
- cant reduce below TMT

Question 3

Taxes:
Business Tax Credits
General Business Credit
Rehabilitation Credit

Answer 3

General Business Credit
Rehabilitation Credit
- % depends on type of expenditure
- property in service before 1936 = 10%
- certified historic structures = 20%
- adj basis of property reduced by credit
- recaptured if held less than 5 years

Question 4

Taxes:
Business Tax Credits
General Business Credit
Small Employer Health Insurance Credit

Answer 4

General Business Credit
Small Employer Health Insurance Credit
- must be eligible small employer (ESE):
- contribute 50% of cost of employees health insurance premiums
- 10 or fewer full time equivalent employees, avg annual wages less than $25.8
- phaseout 25 full time employees and/or avg wages $51.6
- owner and relatives not treated as employees
- carried back or forward

Question 5

Taxes:
Business Tax Credits
General Business Credit
Work Opportunity Credit

Answer 5

General Business Credit
Work Opportunity Credit
- first year of employment, 40% qualified wages with max credit of $2.4k