Harmon, Inc. was incorporated and began business on January 1, 2017. Its tax liability for 2017 was $36,000. Its tax liability for 2018 was $50,000. Which of the following is a correct statement concerning the payment of estimated taxes for 2018?

Question

Quizplus · Accepted Answer

The payment of estimated taxes for 2018 is calculated based on the lesser of 100% of the prior year's tax liability or 90% of the current year's tax liability. 
For 2018, 90% of the tax liability of $50,000 is $45,000. Since the prior year's tax liability was $36,000, the lesser amount is $36,000. 
Therefore, Harmon must pay 4 equal installments of $9,000 on the 15th day of April, June, September, and December. The remaining balance of $14,000 is payable by April 15, 2019.