Question

1- XPO Corporation has a minimum tax credit of $51,240 from 2017. XPO’s tax liability before any MTC carryover is $35,500. What is XPO’s minimum tax credit carryover to 2019, if any?

• $15,740.

• $7,870.

• $51,240.

• 0

2-

Studios reported a net capital loss of $36,000 in year 5. It reported net capital gains of $26,000 in year 4 and $39,000 in year 6. What is the amount and nature of the book-tax difference in year 6 related to the net capital carryover?

Multiple Choice

• $10,000 favorable.

• $29,000 unfavorable.

• $10,000 unfavorable.

• $29,000 favorable.

Please answer both for a thumbs up!! :)

Answer 1

1. From the facts given above, XPO has a  Minimum tax credit of $51,240 from 2017 and his tax liability is $35,500. Assuming that there is no any MTC carryover in the absence of information regarding the same in the question, Minimum tax credit carryover to 2019 is $15,740 ($51,240-$35,500). Hence , the correct answer is option is Option A.

2. From the given facts, Studios had a capital loss of $ 36,000 in year 5, capital loss of $26000 in year 4 and Capital gain of $39000 in year 6. The capital gain of $ 26000 can be set off aginst capital loss of $36000 in year 5.  Hence, Capital loss of $10000 can be carried forward to Year 6 which can be netted off against capital gain of $ 39000 which in turn results in Favourable balance of $ 29000.