Assume it is 4/15/17. Your friend, Bob, recently lost his corporate job. He got a job at McDonalds. He also started his own business which has done quite well. He has continued to work at the local McDonalds because he enjoys it. Bob knew he needed to make estimated tax payments for his business, in addition to the withholding on his McDonalds pay. He made the following payments:

4/15/16 $1,000

6/16/16 500

9/15/16 500

1/15/17 5,000

Bob fears he is going to owe underpayment penalties. He has asked you to compute the amount of the underpayment (not the actual penalty) for him.

Bob provides the following, relevant information:

2015 taxes paid $15,000

2016 taxes calculated 17,500

Total withholding 5,000

Compute the underpayment amount for EACH quarter and the period upon which the penalty will be computed. Note: Bobs AGI is $98,000. You DO NOT need to calculate the interest Bob must pay!

Please show work.