Discuss the treatment of unused general business credits
Unused general business credits are initially carried back one year and applied to reduce the income tax liability during that year. Thus, the taxpayer may receive a tax refund as a result of the carryback. Any remaining unused credits are then carried forward 20 years.
A FIFO method is applied to the carrybacks, carryovers, and utilization of credits earned during a particular year. This procedure minimizes the potential for loss of a general business credit benefit. The oldest credits are used first in determining the amount of the general business credit. The FIFO method minimizes the potential for loss of a general business credit benefit due to the expiration of credit carryovers, because the earliest years are used before the current credit for the taxable year.
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Answer the following statement true (T) or false (F)
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