Printer Friendly

Backending estimated payments.

The increase in corporate estimated tax payments for the 1992 tax year makes it even more advantageous to "backend" estimated tax payments as much as the rules allow. Most corporations use annualized or adjusted seasonal installments under Sec. 6655(e) to minimize early installments. However, some taxpayers with net operating losses (NOLs) or credit carryovers may be able to use an even greater backending of payments.

Rev. Rul. 67-93 allowed a deduction of an entire NOL amount prior to annualization. The ruling stated that, for underpayment of estimated income tax by a corporation, "the entire amount of a net operating loss carryover should be deducted from the income for the appropriate period . . . prior to annualization of the income for such period."

The significance of this ruling is best illustrated in the example above. It is apparent from this simple example that the results of using the NOL prior to annualization are significant. First quarter estimated taxes are significantly reduced.

Rev. Rul. 79-179 provided a simplar rule for investment tax credits (ITCs). ITCs are not annualized for purposes of determining whether the exception of Sec. 6655(d)(3) has been met; only actual credits are allowed. However, the credit limitation should be computed on the annualized tax. The result is to allow more ITC carryovers to be used in earlier quarters. although this ruling specifically applies

[TABULAR DATA OMITTED]

to ITCs, it would appear to apply to any credit whose limitation is based on tax.
COPYRIGHT 1992 American Institute of CPA's
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
Printer friendly Cite/link Email Feedback
Author:Fletcher, Steven
Publication:The Tax Adviser
Article Type:Brief Article
Date:Mar 1, 1992
Words:244
Previous Article:Shifting income among family members.
Next Article:The loss disallowance rule - round three; is this the final chapter?
Topics:


Related Articles
New estimated income tax rules for 1992.
New rules for estimated tax payments.
Corporate estimated tax payments.
Physician financial relationships in the new regulatory environment.
Recent tax treaty developments.
Environmental remediation liabilities.
Estimating certainty: Property Taxes, Corporate dissolution and more.

Terms of use | Privacy policy | Copyright © 2021 Farlex, Inc. | Feedback | For webmasters |