27. In calculating the tax of a corporation for a short period, which of the following processes is correct? a. Divide current-year income by prior-year income, then multiply the result by prior-year tax. b. Compute tax on short-period income, then multiply the result by 12 divided by the number of months in the short period. c. Determine the average taxable income for the past three years, then multiply the result by the number of months in the short period divided by 12. d. Annualize income and calculate the tax on annualized income, then multiply the computed tax by the number of months in the short period divided by 12. Solution: Choice "d" is correct. Corporations are required to pay estimated taxes on the fifteenth day of the fourth, sixth, ninth, and twelfth months of their tax year. One-fourth of the estimated tax is due with each payment. Unequal quarterly payments may be made using the annualized income method. Choice "a" is incorrect. The annualized income method should be used. Choice "b" is incorrect. The annualized income method should be used. Choice "c" is incorrect. Using the past three years could yield an estimated tax liability lower than required.
2011 AICPA Newly Released Questions – Regulation 29 28. Which of the following costs are subject to the Uniform Capitalization Rules of Code Sec. 263A for manufactured tangible personal property?
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