Discussion:5 year eligible small business credit carryback

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Discussion Forum Index --> Advanced Tax Questions --> 5 year eligible small business credit carryback


Discussion Forum Index --> Tax Questions --> 5 year eligible small business credit carryback

Dbd4 (talk|edits) said:

8 March 2011
I've got a client with a large amount of tip tax credit generated in 2010. They are an eligible small business, and the credit qualifies as an eligible small business credit under section 38. My question has to do with the new 5 year carryback under section 39. When you carry the credit back 5 years, is it subject to the AMT limitation on credits that was in place in prior years, or can it offset AMT if carried back to say 2005? My reading of the code sections is that the credit generated in 2010 is not limited by AMT, regardless of which year the credit is used in, so if I carried it back to 2005, it would offset AMT in that year. However, I am dealing with $200,000 in credits, so I want to be careful. I appreciate any help.

Dave

DaveFogel (talk|edits) said:

8 March 2011
You’re right. The carryback credit may be used against AMT in the carryback years. See section 2013 of the Small Business Jobs Act of 2010 (P.L. 111-240), which became effective for credits determined in taxable years beginning after 12/31/09 and to carrybacks of such credits (page 53 of 102 of the PDF file).

Dbd4 (talk|edits) said:

8 March 2011
Thanks! That's the piece I was missing. One item I failed to mention in the original post is that the form 3800 instructions have you input the carryback on the alcohol fuel tax credits form (regardless of which credit you are carrying back), which is not subject to the AMT limitation. So all signs were pointing that way--I just wanted some solid authority. Thanks again.

Wiles (talk|edits) said:

4 April 2011
Wait a minute!! I have a 2010 R&D credit that is of no use on the 2010 return. I can carry this sucker back to 2009 and get it there even though my client was in AMT in 2009?

Wiles (talk|edits) said:

4 April 2011
Crap! The client did not have this business in 2009. Therefore, won't the Sec 41(g) limitation disallow the credit in 2009?

Jaclack (talk|edits) said:

25 January 2012
I have an R&D credit in 2010 too. But this client (a partnership) had never taken the credit before. I did my homework on the calculation (base period etc) but I can't imagine trying to determine the Sec 41(g) limit in each of the past 5 years on the pass through returns. Do I have to carryback? This company/partners will use the entire credit in 2011 if I can carryforward.

Pegatha (talk|edits) said:

5 June 2012
Is the 5-year carryback mandatory, or can we choose to just do 1 year? If we can choose 1 year, can we still apply the rule of not being limited by AMT?

We're amending 2010 to generate an R&D credit, there's a carryover. For practicality's sake it'd be better to just carry it back to 2009, and either (1) follow the other part of the ESBC rules and be able to take it against AMT and utilize it fully in 2009, or (2) opt out of the ESBC rules, carry it back to 2009, limited by AMT, then carry the rest to 2011. Easier to amend an extra year than pull out a copy of the 2005 return.

Wiles (talk|edits) said:

9 October 2012
The ability to offset AMT for an ESB credit only existed for tax years beginning in 2010. Right?

The Form 3800 Instructions for 2011 still speak to this credit, but I assume this would only apply if the credit is coming from a pass-through with a fiscal year that included 2010.

Captcook (talk|edits) said:

9 October 2012
That is correct, Wiles. I just did this for a client last week. Damn AMT suspended $6K of credit in 2010.

Wiles (talk|edits) said:

9 October 2012
Thanks! Yep. I have the same thing happening here to a $15K R&D credit. I got excited when the 2011 instructions talked about ESB. I thought they extended this another year and you all forgot to tell me. :)

Taxdr1965 (talk|edits) said:

12 October 2012
I have a client who has unused fica tip credit from his 2010 tax return. I amended his 2005 and 2006 1040 per IRS instructions using the form 6478 so it was not limited by amt. Did this have to be done in a certain time period? I would assume he had 3 years from the filing of his 2010 return. Funny thing is they tell you to write sbja 2012. He has the sametuation in 2011 unused fica tip credit. Can we continue to carry it back 5 years? The 2011 from 3800 instructions refer to carrying back to 2006. The 2010 form 3800 instructions refer to carrying back to 2005? So in another words if a client filed his 2011 return but never did the carryback. Do i use the 2011 form 3800 instructions to amend back to 2006. I do alot of restaurant work and meet many people who filed there 2011 taxes and carried the 2010 credit forwards instead of backwards. So can I still go back on this??

Taxdr1965 (talk|edits) said:

16 October 2012
Anyone?

MollyRaabe (talk|edits) said:

19 December 2012
Have been struggling with carrying back small business tax credit (health insurance credit) unused in 2011. I see others are asking about carryback of credit to 2006 as Form 3800 says. I looked at actual act and it just says for years beginning after 12/31/09 (effective date) but see another place on IRS website that this was only for one year. Does anyone know where we can get clarification on this? I am inclined to go ahead and file carrying back to 2006. Should be able to get filed before 12/31/2012 so am doing on Form 1045 and see if IRS accepts or declines.

Captcook (talk|edits) said:

19 December 2012
It was just 2010. One year carryback applies for HI credit in 2011.

Wiles (talk|edits) said:

17 March 2013
Why does 2012 Form 3800 still have checkboxes for Eligible Small Business Credits?

Wiles (talk|edits) said:

18 March 2013
I am bumping this up. Are there still ESB Credits that are exempt from the TMT limitation? I thought this was just for the 2010 year?

Ckenefick (talk|edits) said:

18 March 2013
(5) Special rules for eligible small business credits in 2010.

(A) In general. In the case of eligible small business credits determined in taxable years beginning in 2010—

Wiles (talk|edits) said:

18 March 2013
So I guess the purpose of the checkboxes on the 2012 Form 3800 would be from credits that went through 2 layers of pass-through entities.

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