Can the Taxpayer Avoid the Failure to Pay on Time

question 65

Essay

Can the taxpayer avoid the failure to pay on time penalty by just filing an automatic extension to file his or her tax return?
A taxpayer can file an automatic six-month extension of time to file his or her tax return,but this extension will not extend the time to pay the applicable tax.If the taxpayer filing an extension determines that he or she owes additional tax,the payment must accompany the extension request (Form 4868).

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Definitions:

Call Option

A financial contract giving the holder the right, but not the obligation, to buy an asset at a specified price within a specific time period.

Market Value

The current price at which an asset or service can be bought or sold in the marketplace.

Equity

The value of an owner's interest in a property, equal to the property's value minus the amount of existing liens.

Firm's Debt

The total amount of money that a company owes to creditors, including loans, bonds, and other financial liabilities.