CPA Tcp Question of the Day

1. Results in no required estimated payments - provided the prior year covered a full 12-month period and the taxpayer was a U.S. citizen or resident for the entire prior year: 100% of $0 prior year tax =$0 required. (correct answer)
2. Still requires estimated payments of $1,000 as a minimum.
3. Does not apply - taxpayers with zero prior-year liability must use the 90% of current year safe harbor.
4. Requires estimated payments based on the current year projected income.

Explanation: Under Section 6654(e)(2), if the prior year's tax was $0, the prior-year safe harbor is fully met with no estimated payments - but this exception applies only if the prior year was a full 12-month period and the taxpayer was a U.S. citizen or resident throughout that prior year. If either condition is not met, the taxpayer cannot rely on the zero-prior-year exception and must use the 90$1,000 is required under the prior-year safe harbor when prior-year tax was zero (B). The prior-year safe harbor remains available with a zero result (C). Current-year projections are not required under this safe harbor (D).