Bass Corp., a calendar-year C corporation, made qualifying 2010 estimated tax deposits based on its actual 2010 tax
liability. On March 15, 2011, Bass filed a timely automatic extension request for its 2010 corporate income tax return.
Estimated tax deposits and the extension payment totaled $7,600. This amount was 95% of the total tax shown on
Bass’s final 2010 corporate income tax return. Bass paid $400 additional tax on the final 2010 corporate income tax
return filed before the extended due date. For the 2010 calendar year, Bass was subject to pay
I. Interest on the $400 tax payment made in 2011
II. A tax delinquency penalty
A. Both I and II.
B. II only.
C. I only.
D. Neither I nor II.
Answer (C) is correct. Interest accrues from the date the payment was due until it is received by the IRS.
Extension requests only lengthen the filing deadline (i.e., taxes still must be paid by the due date). No estimated
tax underpayment penalty is imposed on a corporation if qualifying estimated tax payments were made.
Aren't Corporation required to pay 100% of the current or prior year tax in order to avoid a penalty?? In this question, they only paid 95%. So, why no penalty???
AUD: 47, 87
BEC: 80
REG: 64, 74, 84
DONE!!!!
