The Four Square Services Corp. estimates it 2015 taxable income will be $1,000,0

Question

The Four Square Services Corp. estimates it 2015 taxable income will be $1,000,000, so it is subject to a flat 34% income tax rate and incurs a $340,000 liability. For each of the following independent cases, compute Four Square’s minimum quarterly estimated tax payments that will avoid an underpayment penalty.

a. In 2014, taxable income was ($200,000), resulting in a zero income tax liability. Four Square carried back all of this loss to prior years.

b. In 2014, taxable income was $800,000, and tax liability was $272,000.

c. In 2013, taxable income was $2,000,000 and tax liability was $680,000. In 2014, taxable income was $100,000 and tax liability was $22,250.

Explanation / Answer

a As in the previous year theer was no tax, The current Year Tax will be 100% payment so Quarterly payments required=340000/4==                     85,000 per qtr No prior year comparison can be used So min qtrly tax payment to avoid penalty =                     85,000 b 90% of this year tax =                  306,000 110% of Lat years tax actual =                  299,200 So the min qtrly payment required as per   last years tax payment =272000/4=                     74,800 Total yearly paymnets =                  299,200 Remaining $40800 will show due and form 2220 to be attached to avoid penalty c Last Years actual Tax payment = 22250 100% ( as taxable income less than $100000) of the amt =                     22,250 This is lower than 90% of actual liability in 2015 So min required quarterly payment =22250/4= $             5,562.50 Balance $317750 will be shown as due and to be paid   later on with form 2220.

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.