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Author: mcarso1 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121219  
Subject: Quarterly Taxes Date: 8/15/1997 7:47 PM
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Hey guys, need a tax expert -

One of my relatives is getting ready to sell a large chunk of stock. They are going to be hit with about 20K in long term capital gains and their current annual income is about $140K. Since I am sure that this will wake up quite a few people at the IRS, what is the obligations for paying taxes? Do they need to pay taxes immediately or within the quarter?

Also, they were flagged several years ago for under-withholding because they sold some stock. Since the IRS seemed to have difficulting understanding that this was a one time gain, a hub-bub insued.

In otherwords, what is the best way to handle this whole mess?

Mark

PS: If you can recommend some IRS pubs we can look this up in, I would appreciate it. 550 and 590 don't seem to cover it (or I am blind)
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Author: MostCurious Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 186 of 121219
Subject: Re: Quarterly Taxes Date: 8/15/1997 8:08 PM
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I'm no expert, so double check this.
If the 140k income comes from salaries/wages, let the employer withhold enough at the end of the calendar year, from the last few paychecks, to cover the estimated tax liability.
Otherwise follow the instructions for the estimated tax payments, i.e. if the gain was realized in this quarter,
make the estimated payments in October and January, as per 1040ES instructions.
Hope this helps.


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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 203 of 121219
Subject: Re: Quarterly Taxes Date: 8/20/1997 11:16 AM
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<<One of my relatives is getting ready to sell a large chunk of stock. They are going to be hit with about 20K in long term capital gains and their current annual income is about $140K. Since I am sure that this will wake up quite a few people at the IRS, what is the obligations for paying taxes? Do they need to pay taxes immediately or within the quarter?>>

Yo!! Mark!!

Check out post #202 on this folder entitled "Estimated Taxes" for a more detailed reply. Estimated taxes can get very tricky, so I have tried to lay out an overview in that post to give you a little more understanding. Check it out and see what you think. You parents MAY have to make an estimated tax payment now, or they MAY, given certain circumstances, be able to pay the tax on April 15th 1998 without any penalty or interest. Post #202 gives you some options.

<<Also, they were flagged several years ago for under-withholding because they sold some stock. Since the IRS seemed to have difficulting understanding that this was a one time gain, a hub-bub insued.>>

As post #202 points out, the IRS doesn't care about "one shot" deals. They only want their taxes on a timely basis or will assess an underpayment penalty. If you can beat the system, you can avoid the penalty. If not, a penalty will be assessed. Makes no difference if this is a "one shot" deal or not.

<<In otherwords, what is the best way to handle this whole mess?>>

Read post #202 for the details.

<<PS: If you can recommend some IRS pubs we can look this up in, I would appreciate it. 550 and 590 don't seem to cover it (or I am blind)>>

Nope, you're not blind. You won't find anything substantial about estimated taxes in these Pubs. Check out IRS Publication 505 for additional information regarding estimated taxes. Again, this is pointed out in post #202.

Good Luck
TMF Taxes
Roy


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