How will Hirsch avoid a penalty for underpayment

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Problem - Hirsch, Incorporated, is a calendar year corporation that has had revenues of less than $500,000 since inception. In 2017, Hirsch had a net operating loss that was able to be used in full via a carryback to 2016. For 2018, Hirsch expects to have taxable income of $100,000. How will Hirsch avoid a penalty for underpayment of estimated Federal taxes in the current year?

a. Hirsch must pay 100% of the tax shown on its 2018 return via estimated taxes to avoid an underpayment penalty.

b. Hirsch must pay the amount of taxes owed on its 2017 return via estimated taxes to avoid an underpayment penalty.

c. Hirsch must pay 90% of the tax shown on its 2018 return via estimated taxes to avoid an underpayment penalty.

d. Hirsch may pay the lower of the amount of taxes owed in 2017 or 100% of the tax shown on the return for 2018 via estimated taxes to avoid an underpayment penalty.

Reference no: EM132661090

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