Tungsten Corporation,a Calendar Year Cash Basis Taxpayer,made Estimated Tax Payments

question 105

Multiple Choice

Tungsten Corporation,a calendar year cash basis taxpayer,made estimated tax payments of $800 each quarter in 2017,for a total of $3,200.Tungsten filed its 2017 tax return in 2018 and the return showed a tax liability $4,200.At the time of filing,March 15,2018,Tungsten paid an additional $1,000 in Federal income taxes.How does the additional payment of $1,000 impact Tungsten's E & P?

• A)Increase by $1,000 in 2017.
• B)Increase by $1,000 in 2018.
• C)Decrease by $1,000 in 2017.
• D)Decrease by $1,000 in 2018.
• E)None of the above.

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Definitions:

Cashier's Check

A check issued by a bank, drawn on its own funds rather than that of a personal account, and signed by a cashier.

Drawer's Liability

Refers to the obligation of the drawer (the person who writes a cheque or draft) to ensure the availability of funds in the account for the amount specified for payment to the payee.

Misrepresentation Claim

A legal assertion that one party has made false statements that another party relied on to their detriment.

Stop-Payment Order

A request made to a financial institution to cancel payment on a check or payment request before it has been processed.