[Anonymous]

Bass Corp., a calendar-year C corporation, made qualifying 2010 estimated tax deposits based on its actual 2010 tax

liability. On March 15, 2011, Bass filed a timely automatic extension request for its 2010 corporate income tax return.

Estimated tax deposits and the extension payment totaled $7,600. This amount was 95% of the total tax shown on

Bass’s final 2010 corporate income tax return. Bass paid $400 additional tax on the final 2010 corporate income tax

return filed before the extended due date. For the 2010 calendar year, Bass was subject to pay

I. Interest on the $400 tax payment made in 2011

II. A tax delinquency penalty

A. Both I and II.

B. II only.

C. I only.

D. Neither I nor II.

Answer (C) is correct. Interest accrues from the date the payment was due until it is received by the IRS.

Extension requests only lengthen the filing deadline (i.e., taxes still must be paid by the due date). No estimated

tax underpayment penalty is imposed on a corporation if qualifying estimated tax payments were made.

Aren’t Corporation required to pay 100% of the current or prior year tax in order to avoid a penalty?? In this question, they only paid 95%. So, why no penalty???

[MAXX]

@CPAMAN: First of all I don't exactly remembered but I guess if your tax liability differences under $1000 you don't have to pay penalty…I am not sure and i don't have book with me to give you 100% confident answer. let see what other thinking.

[jomarie]

That is right MAXX!!

Started sitting in May 2002, on and off. But since 2008 I've been nonstop and my scores are....
AUD - 39, 48, 56, 65, 68, 73, 76!!! (Finally passed in Oct 2011!!!) Becker, NINJA, & Wiley
REG - 75 (Lost Credit) 72, 68, 73, 75 (Passed again in Aug 2011) Becker, NINJA, & Wiley
FAR - 65, 68, 75 (Lost Credit) 68, 73, 73, 80 (Passed again in May 2012) Roger, NINJA, & Wiley
BEC - 65, 68, 71, 72, 72, 71, 76 (Lost Credit)- 70, 76!!!! I AM DONE!!! - Roger, NINJA, & Wiley
After 10 long years of studying, I AM DONE!!!! Finally a Licensed CPA in the State of New York!!

[Anonymous]

Wow, you would think the solution would say that! That's a pretty important exception to remember. I'll do some research on this because I don't see this stated in my book.

Thanks!

[jdj017400]

The amount is $500, not $1000.

Becker 2011 – Page R3-36:

“An underpayment penalty will be assessed if these payments are not made and the amount owed on the return is $500 or more.”

$500 is the amount for Corporations.

$1000 is the amount for Individuals.

BEC - 80 (11/30/2010), Lost Credit - Retake 11/30/2012, 80 (FINISHED!)
AUD - 71 (05/31/2011), 79 (08/28/2011)
REG - 70 (11/30/2011), 87 (02/09/2012)
FAR - 61 (5/31/2012), 80 (08/31/2012)

[hopeful_cpa]

jdj is correct, the penalty threshold for corporations is $500 and $1000 for individuals.

BEC: Done
REG: Done
AUD: Done
FAR: Done

I'M DONE!!!!!! AAAAAAAAAAAAAAAAAAAAAAHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHH!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

[Anonymous]

Thank you, jdj017400. I found that in my book. Learn something new everyday. Heh!

[jdj017400]

No problem, good luck on the studying, you're almost there!

BEC - 80 (11/30/2010), Lost Credit - Retake 11/30/2012, 80 (FINISHED!)
AUD - 71 (05/31/2011), 79 (08/28/2011)
REG - 70 (11/30/2011), 87 (02/09/2012)
FAR - 61 (5/31/2012), 80 (08/31/2012)

[Author]

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