Which of the Following Statements About Estimated Tax Payments and Underpayment

question 64

Multiple Choice

Which of the following statements about estimated tax payments and underpayment penalties is true for individual taxpayers?

• A)Taxpayers who have paid their full tax liability by the original tax return due date are protected from underpayment penalties.
• B)Taxpayers who have paid their full tax liability by the extended tax return due date are protected from underpayment penalties.
• C)Taxpayers who have uneven income streams can pay estimated tax quarterly in uneven amounts and not be susceptible to underpayment penalties.
• D)Taxpayers who have paid their required amount of estimated tax, even though not on time, are protected from underpayment penalties.

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Definitions:

Current Rate Method

A method of foreign currency translation where all financial statement line items are translated at the current exchange rate at the date of the balance sheet.

Comprehensive Income

The change in equity of a company during a period from transactions and other events, excluding any changes resulting from investments by and distributions to equity claimholders.

GAAP

Generally Accepted Accounting Principles, a collection of standardized guidelines and practices for financial accounting in the United States to ensure consistency and transparency.

Comparative Financial Statements

These are financial statements that present data for multiple periods side by side to facilitate comparison and analysis of financial performance over time.