Last year, Cougar Corp. (CC) reported a net operating loss of $25,000. In the current year, CC
Question:
Last year, Cougar Corp. (CC) reported a net operating loss of $25,000. In the current year, CC expected its current year tax liability to be $300,000, so it made four equal estimated tax payments of $75,000 each. Cougar closed its books at the end of each quarter. The following schedule reports CC’s taxable income at the end of each quarter:
Quarter-End.............Cumulative taxable income
First...........................$300,000
Second......................$700,000
Third..........................$1,000,000
Fourth........................$1,470,588
CC’s current-year tax liability on $1,470,588 of taxable income is $308,823. Does CC owe underpayment penalties on its estimated tax payments? If so, for which quarters does it owe the penalty?
Step by Step Answer:
CC is not allowed to rely on the prior year tax to determine its minimum estimated tax payments CC m...View the full answer
Essentials Of Federal Taxation 2019
ISBN: 9781260190045
10th Edition
Authors: Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver
