Question

In 2018, R. Johnson Inc.'s federal taxable income was $282,000. Compute the required installment payments of 2019 tax in each of the following cases: (Round your intermediate calculations and final answers to the nearest whole dollar amount.)

a. R. Johnson's 2019 taxable income is $373,000

b. R. Johnson's 2019 taxable income is $718,000

c. R. Johnson's 2019 taxable income is $1,317,000.

Please help!!

Answer 1

The Installment Payments must be made by the corporations as follows:

• For Large corporatioms (taxable income of $1MM or more) shall make an installment payment equal to at least 100% of the current year's tax liability.
• For other than large corporations. the installment payments during the year may be lesser of
  • 100% of the current year tax liability, or
  • 100% of the prior year tax liability

In the gievn case,

Prior year (2018) taxable income = $282,000

Thus 2018 Tax liability = 21% of $282,000 = $59,220

a) R. Johnson's 2019 taxable income is $373,000

Thus 2019 Tax liability = 21% of $373,000 = $78,330

Thus R. Johnson is an other than large corporations

Thus installment payments for 2019 would be = lesser of 100% of the current year tax liability, or 100% of the prior year tax liability = lesser of $59,220 or $78,330 = $59,220

b) R. Johnson's 2019 taxable income is $718,000

Thus 2019 Tax liability = 21% of $718,000 = $150,780

Thus R. Johnson is an other than large corporations

Thus installment payments for 2019 would be = lesser of 100% of the current year tax liability, or 100% of the prior year tax liability = lesser of $59,220 or $150,780 = $59,220

c) R. Johnson's 2019 taxable income is $1,317,000

Thus 2019 Tax liability = 21% of $1,317,000 = $276,570

Thus R. Johnson is an large corporations

Thus installment payments for 2019 would be = 100% of the current year tax liability

= $276,570

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