XYZ made four equal estimated tax payments totaling $360,000 ($90,000 per quarter). For purposes of estimated tax liabilities, assume XYZ was in existence in 2021 and that in 2021 it reported a tax liability of $500,000. During 2022, XYZ determined its taxable income at the end of each of the four quarters as follows: Quarter-end First Second Third Finally, assume that XYZ is not a large corporation for purposes of estimated tax calculations. Note: Do not round intermediate calculations. Round your answers to the nearest dollar amount. Installment Comprehensive Problem 05-65 Part e (Static) e. Determine the quarters for which XYZ is subject to underpayment of estimated tax penalties. Note: Round "Annualization Factor" for Fourth quarter to 2 decimal places. 1st quarter 2nd quarter Cumulative taxable income (loss) $ 400,000 3rd quarter 4th quarter $ 1,100,000 $ 1,400,000 (1) Required cumulative payment (per quarter) under prior year tax method $ $ $ $ 125,000 250,000 375,000 500,000✔ (2) Estimated tax payment under annualized method $ $ $ 84,000✔ 168,000 346,500✔ Answer is not complete. (3) Required payment based on current year tax liability (4) Required cumulative payment $ $ $ $ (5) Actual payments Underpayment penalty 90,000✔ No 180,000✔ No 270,000 Yes 360,000 Yes ✓ ✓ ✓ ✓
XYZ made four equal estimated tax payments totaling $360,000 ($90,000 per quarter). For purposes of estimated tax liabilities, assume XYZ was in existence in 2021 and that in 2021 it reported a tax liability of $500,000. During 2022, XYZ determined its taxable income at the end of each of the four quarters as follows: Quarter-end First Second Third Finally, assume that XYZ is not a large corporation for purposes of estimated tax calculations. Note: Do not round intermediate calculations. Round your answers to the nearest dollar amount. Installment Comprehensive Problem 05-65 Part e (Static) e. Determine the quarters for which XYZ is subject to underpayment of estimated tax penalties. Note: Round "Annualization Factor" for Fourth quarter to 2 decimal places. 1st quarter 2nd quarter Cumulative taxable income (loss) $ 400,000 3rd quarter 4th quarter $ 1,100,000 $ 1,400,000 (1) Required cumulative payment (per quarter) under prior year tax method $ $ $ $ 125,000 250,000 375,000 500,000✔ (2) Estimated tax payment under annualized method $ $ $ 84,000✔ 168,000 346,500✔ Answer is not complete. (3) Required payment based on current year tax liability (4) Required cumulative payment $ $ $ $ (5) Actual payments Underpayment penalty 90,000✔ No 180,000✔ No 270,000 Yes 360,000 Yes ✓ ✓ ✓ ✓
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
vnt.1
Transcribed Image Text:XYZ made four equal estimated tax payments totaling $360,000 ($90,000 per quarter). For purposes of estimated tax
liabilities, assume XYZ was in existence in 2021 and that in 2021 it reported a tax liability of $500,000. During 2022, XYZ
determined its taxable income at the end of each of the four quarters as follows:
Quarter-end
First
Second
Third
Finally, assume that XYZ is not a large corporation for purposes of estimated tax calculations.
Note: Do not round intermediate calculations. Round your answers to the nearest dollar amount.
Comprehensive Problem 05-65 Part e (Static)
e. Determine the quarters for which XYZ is subject to underpayment of estimated tax penalties.
Note: Round "Annualization Factor" for Fourth quarter to 2 decimal places.
Installment
Cumulative taxable
income (loss)
$ 400,000
$ 1,100,000
$ 1,400,000
1st quarter
2nd quarter
3rd quarter
4th quarter
(1) Required
cumulative
payment (per
quarter) under
prior year tax
method
$
$
$
$
(2) Estimated
tax payment
under
annualized
method
125,000 $
84,000✔
250,000 $
168,000✔
375,000 $ 346,500✔
500,000✔
X Answer is not complete.
(3) Required
payment based
on current year
tax liability
(4) Required
cumulative
payment
$
$
$
$
(5) Actual
payments
90,000
180,000
270,000
360,000
33
Underpayment
penalty
No
No
Yes
Yes
✓
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