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XYZ made four equal estimated tax payments totaling $400,000 ($100,000 per quarter). For purposes of estimated tax liabilities, assume XYZ was in existence in 2022 and that in 2022 it reported a tax liability of $556,000. During 2023, XYZ determined its taxable income at the end of each of the first three quarters as follows: Quarter-end First Second Third Cumulative taxable income (loss) $440,000 $ 1,140,000 $ 1,575,000 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. e. Determine the quarters for which XYZ is subject to underpayment of estimated tax penalties.

XYZ made four equal estimated tax payments totaling $400,000 ($100,000 per quarter). For purposes of estimated tax liabilities, assume XYZ was in existence in 2022 and that in 2022 it reported a tax liability of $556,000. During 2023, XYZ determined its taxable income at the end of each of the first three quarters as follows: Quarter-end First Second Third Cumulative taxable income (loss) $440,000 $ 1,140,000 $ 1,575,000 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. e. Determine the quarters for which XYZ is subject to underpayment of estimated tax penalties.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Estimated tax information: XYZ made four equal estimated tax payments totaling $400,000 ($100,000 per quarter). For purposes of estimated tax liabilities, assume XYZ was in existence in 2022 and that in 2022 it reported a tax liability of $556,000. During 2023, XYZ determined its taxable income at the end of each of the first three quarters as follows: Quarter-end First Second Third Cumulative taxable income (loss) $ 440,000 $ 1,140,000 $ 1,575,000 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. e. Determine the quarters for which XYZ is subject to underpayment of estimated tax penalties. Installment (1) Required cumulative payment (per quarter) under (2) Estimated tax payment under annualized prior year tax method method 1st quarter $ 2nd quarter 3rd quarter 4th quarter SSSS 139,000 $ 92,400 $ 278,000 $ 184,800 $ 417,000 $ 359,100 $ 556,000 $ 441,000 Answer is not complete. (3) Required payment based on current year tax liability (4) Required cumulative (5) Actual payments payment Underpayment penalty 92,400 $ 184,800 $ 100,000 200,000 No No $ 300,000 Yes $ 400,000 Yes
Transcribed Image Text:Estimated tax information: XYZ made four equal estimated tax payments totaling $400,000 ($100,000 per quarter). For purposes of estimated tax liabilities, assume XYZ was in existence in 2022 and that in 2022 it reported a tax liability of $556,000. During 2023, XYZ determined its taxable income at the end of each of the first three quarters as follows: Quarter-end First Second Third Cumulative taxable income (loss) $ 440,000 $ 1,140,000 $ 1,575,000 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. e. Determine the quarters for which XYZ is subject to underpayment of estimated tax penalties. Installment (1) Required cumulative payment (per quarter) under (2) Estimated tax payment under annualized prior year tax method method 1st quarter $ 2nd quarter 3rd quarter 4th quarter SSSS 139,000 $ 92,400 $ 278,000 $ 184,800 $ 417,000 $ 359,100 $ 556,000 $ 441,000 Answer is not complete. (3) Required payment based on current year tax liability (4) Required cumulative (5) Actual payments payment Underpayment penalty 92,400 $ 184,800 $ 100,000 200,000 No No $ 300,000 Yes $ 400,000 Yes
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