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:

Gross Margin

The difference between sales revenue and the cost of goods sold, usually expressed as a percentage of sales revenue.

Net Operating Income

Income generated from regular business operations, excluding deductions for interest and taxes.

Manufacturing Overhead

All indirect costs associated with the manufacturing process, including costs related to factory equipment maintenance, factory management salaries, and utilities.

Period Cost

Expenses that are not directly tied to the production process and are charged to the period in which they occur, such as selling and administrative expenses.