Prior to the effect of the tax credits, Justin's regular income tax liability is $200,000, and his tentative minimum tax is $195,000.Justin reports the following credits. $\begin{array}{llcc}
\text { Child tax credit } &\$1,000\
\text {Adoption expenses credit } &5,000\
\end{array}$
Calculate Justin's tax liability after credits.
A)$190,000
B)$194,000
C)$195,000
D)$200,000

Question

Prior to the effect of the tax credits, Justin's regular income tax liability is $200,000, and his tentative minimum tax is $195,000.Justin reports the following credits. $\begin{array}{llcc}
  \text { Child tax credit } &\$1,000\
 \text {Adoption expenses credit  } &5,000\
\end{array}$
 Calculate Justin's tax liability after credits.
A)$190,000
B)$194,000
C)$195,000
D)$200,000

Quizplus · Accepted Answer

To calculate Justin's tax liability after credits, we need to compare his regular income tax liability and his tentative minimum tax, and choose the lower amount. 
In this case, Justin's tentative minimum tax is lower at $195,000, so his tax liability after credits would also be $195,000. 
Therefore, the correct answer is B) $194,000.

Prior to the Effect of the Tax Credits, Justin's Regular Child tax credit $1,000Adoption expenses credit 5,000\begin{array}{llcc} \text { Child tax credit } &\$1,000\\ \text {Adoption expenses credit } &5,000\\\end{array} Child tax credit Adoption expenses credit ​$1,0005,000​

Prior to the Effect of the Tax Credits, Justin's Regular $\begin{array}{llcc} \text { Child tax credit } &\$1,000\\ \text {Adoption expenses credit } &5,000\\\end{array}$