Z, a Calendar Year Self-Employed Individual, Had a $1,600 Tax

question 9

Multiple Choice

Z, a calendar year self-employed individual, had a $1,600 tax liability for 2011.Because Z had so many itemized deductions and exemptions, this tax liability was due solely to the self-employment tax.Z's 2011 tax liability, including $3,000 of self-employment taxes, totaled $4,000.Z's 2011 A.G.I.was $22,000.In order to avoid a penalty for her 2011 tax year, Z must have made quarterly estimated tax payments of at least

• A)$200
• B)$400
• C)$750
• D)$1,000
• E)$1,600

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Definitions:

American Put Option

A type of options contract that gives the holder the right, but not the obligation, to sell a specified amount of an underlying asset at a predetermined price before or at a specified expiration date.

Market Interest Rates

The prevailing rate of interest available in the marketplace on investments and borrowing.

Exercise Price

The price at which the holder of an option can buy (for a call option) or sell (for a put option) the underlying asset.

Risk-Free Rate

The theoretical rate of return of an investment with zero risk of financial loss, often represented by the yield on government bonds.