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I am amending a 2016 personal tax return to claim the addl research credit available to ESB resulting from PATH Act. I have a 2015 Gen bus credit (research) carryover of $138K and a 41(G) limited research credit of $68K ($206K combined carryforward.) Question is whether or not that whole amount can be considered for 2016 tentative minimum tax offset? Amended Form 3800 Part III line 4i calc shows $95K, flowing through to Part II line 30, and at bottom of Part II line 38 I am showing a total credit allowable of $124K. I did manual 41G calculation for form 3800 line 4i, and shows that the $95K is correct. Is there a further limitation or some piece I am missing? This seems like a LOT of credit to be able to get refunded. (Initial filed return incorrectly did not show that business was a ESB, and credit was only $31K which was the tax above TMT.
Thank you for any help!
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The same §38(c) limit takes into account c/f and c/b under subsection (a).
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If you have entered the correct c/f details for the respective entities, Lacerte will correctly take into account not only the credit from CY but also c/f (as well as c/b) in determining the allowable credit shown in Part III, subject to §41(g) limitation. The computation for each pass-through entity's §41(g) limitation for the year can be found on the respective Federal Worksheets (which should jive with your offline calculation). The amount(s) would then flow to Part II, with the credit allowed computed in accordance with §38(c)(1) and (4) before it flows to F.1040.
It's working as I expected in my dummy.
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Ah, I see your problem now. For that, I would refer to §38(c)(4)(B)(ii) which stipulates that the credit determined under section 41 ***for the taxable year*** must be with respect to an eligible small business. Furthermore, legislative history is clear clear that this provision is for "research credit determined under section 41 ***for taxable years beginning after December 31, 2015***."
Since credits for each taxable year are first determined under the respective code sections (in this case §41(g)) and then subject to the relevant limitations (in this case §38(c)), I would surmise that carryover from tax year 2015 would not be eligible for §38(c)(4) on the basis the credit was for a taxable year prior to January 1, 2016 (even if it were a ESM in that year).
This essentially means that credits from these carryover from 2015 would be limited to the TMT. To achieve this, you will need to enter the carryover credits on Screen 34 by clicking on the "Elections/Carryovers/Overrides" button instead of the section for Prior Year Unallowed Credit (as Lacerte would treat your entries for §41(g) credit as ***not*** being subject to TMT limit).
The carryforward credits will now show up on a separate Part III with Box C checked and limited on Part II.
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