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I beg to differ with you BladeXrunners. You said:

Income & deductions are calculated per period, so this won't
work. If you owe penalty for the previous period, there is nothing
you can do to reduce those penalty. Of course, by paying the
correct amount this period for this period tax & previous period
underpayment, you won't be penalized this period.

Here's a contrite example. On Jan 01, you have $30k in capital
gain. On Apr 01, you have $30k in capital gain. On Aug 01, you
have $30k in capital gain. On Dec 31, you have $90k in capital
lost. So your tax liability for the year is $0. However, you still
owe penalty because you didn't pay estimated tax for the first 3
periods. (Tax is a pay-as-you-go).

However, that $0 liability is spread evenly over the 4 quarters using the Regular Method so there is no penalty. Even if you do the AI Annualized Method, there's no penalty because this year's tax is $0 and your withholding was obviously enough to cover 90% of that.

If you don't meet a safe harbor and have to file a Form 2210 note that your income is averaged, but you payments are as you paid them. Your withholding is normally averaged, but you can elect to apply it as withheld. Ed
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