In the current year, Simon Cho (4588 Norris Avenue, St. Charles, IL 60174) acquires a qualifying historic structure for $250,000 (excluding the cost of the land) and plans to substantially rehabilitate the structure. He is planning to spend either $245,000 or $255,000 on rehabilitation expenditures.
Write a letter to Simon and a memo for the tax files explaining, for the two alternative expenditures,
(1) the computation that determines the rehabilitation expenditures tax credit available to Simon,
(2) the effect of the credit on Simon’s adjusted basis in the property, and (3) the cash-flow differences as a result of the tax consequences related to his expenditure choice. ETHICS AND
Connie has a tentative general business credit of $42,000 for the current year. Her net regular tax liability before the general business credit is $107,000, and her tentative minimum tax is $88,000.
Compute Connie’s allowable general business credit for the year.
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