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Business Tax Credits Questions
What are business tax credits?
credits that are given to a business as an
to invest in properties or to operate in certain areas. The business tax credits may be offered towards income or
. These credits are generally nonrefundable due to the fact they may exceed the taxes otherwise due. The types of business credits that are generally available vary by jurisdiction. For more information about business credits read below where Experts have answered these questions.
If a person has general business tax credits and wanted to sell them, how much could they get out of them?
When it comes to general business credits, they are generally nontransferable. There may be some exceptions under certain circumstances; they may be transferred, with limitations, from one party to another through various means. Theses means may be through the sale of property that is generating the credit. In most cases, the property being sold to a business or company, then there may be business credits that the buyer can claim.
When a person is filling out Internal Revenue Service (IRS) Form 3800, the person can deduct unused business credits, would they place this on Schedule A or on Form 1040 as an Adjustment to Gross Income?
The person would need to look into the IRS Codes that are listed below when filling out their tax return.
According to IRS Code Section 38(c) (1);
“The amount of the general business credit may not exceed the
, less the greater of: (1) the taxpayer's tentative minimum tax, or (2) 25 percent of the taxpayer's net regular tax liability over $25,000.”
According to IRS Code Section 39(a) (2);
“The entire amount of the unused credit is carried back; the amount carried forward to each of the following 20 years depends on the amount that is not used in each of those years.”
According to IRS Code Section 196(a), 196(b), and 196(c);
"Any qualified general business credits that remain unused after the end of the 20-year carry forward period (or when a taxpayer dies or goes out of business) may be taken as a
in the first tax year after the end of the 20-year carry forward period (or in the year of the taxpayer's death or cessation of business).”
Can a person use their $30,000 in unused low income housing tax credits before the 20 year mark or would the person loose them entirely?
Generally the business credits that are used are able to be carried forward for 20 years following the year they were available. The following links will explain the qualified credits and how to fill out the form,
If a person owns a small Limited Liability Company (LLC) with only one member, is there any type of business credits that the person can claim for business expenses?
In most cases when the IRS looks at a single member LLC, they consider it to be a disregarding entity. This means that the owner would report all of their business and expenses for the business as a solo proprietorship when the person is filling out the schedule C. The person would need to look at their
, because these expenses may be able to be deducted. Since the business income would be included in the individual income, the person’s business income or loss would affect the person’s overall tax liability. The person may also be able to claim the following credits;
earned income tax credit
, credit for estimate tax payments, credit for excess Social Security being held out, tax withheld from salary or wages, first time homebuyer,
alternative minimum tax
, and there may be a small return that the person can get if they provide health insurance to the employees.
When a person owns a business, then they may be able to get the business tax credit. When the owner is filling out their taxes they may run I to questions about what qualifies for the business credit and what
they need to go by when applying for the business credits. When these questions arise, then the business owner would need to consult an Expert.
Recent Business Credits Questions
I left a job after one year for a better opportunity and had
I left a job after one year for a better opportunity and had to repay half of my moving allowance. Moving allowance was on w2 for 2013. Repayment in 2014. They withheld from my check once I gave notice. To my surprise they used net instead of gross pay for repayment, so I was taxed twice on $2527.50. I self-prepare and they money involved isn't huge but I am puzzled. Employee Tax Assistance hotline at former employer said I could use line 28 of schedule A for 2014 but instructions don't list my scenario. That also wouldn't help with SS and medicare withholding. Employer mailed me instructions to form 1045 when acknowledging payment, but 1045 is all about NOL and business credits which also don't apply.
Form 982 question: We had a second mortgage (home equity loan
Form 982 question:
We had a second mortgage (home equity loan - not used for improvement) that was forgiven. I completed the insolvency worksheet and found that the amount of our insolvency was greater than the amount forgiven, so the entire amount can be excluded from our income.
I am confused about what, if anything, I need to fill in on part 2 of the form. Some have suggested to leave them blank, but I wan to be sure. It doesn't seem like they apply to us (no business loss, farm loss, loss carryover, etc.) but the IRS instructions mention something about calculating the basis of everything in the following year or something, which totally confused me.
All we have for assets are:
Home $165K (with mortgage - underwater)
2 vehicles $24K (no loan)
Household goods $8K
So, does any of that have to be included in Part II or not?
Regarding post on tax attributes (Form 982 with COD on rental
Regarding post on tax attributes (Form 982 with COD on rental property). My situation is similar expect I have NOL & Loss Carryover on rental (my income was too high take them). My COD is $290,926 (I added to the amount on 1099C for portion of the loan not related to the rental), insolvent to the extent of $197,126 with the rest $93,800 I can take as discharge of qualified real property indebtedness.
My NOL was $44,179 and loss carryforward $74,705. What do I do with these items on 982?
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