Backending estimated payments.

• Author: Fletcher, Steven
• Position: Brief Article

The increase in corporate estimated tax payments for the 1992 tax year makes it even more advantageous to "backend" estimated tax payments as much as the rules allow. Most corporations use annualized or adjusted seasonal installments under Sec. 6655(e) to minimize early installments. However, some taxpayers with net operating losses (NOLs) or credit carryovers may be able to use an even greater backending of payments.

Rev. Rul. 67-93 allowed a deduction of an entire NOL amount prior to annualization. The ruling stated that, for underpayment of estimated income tax by a corporation, "the entire amount of a net operating loss carryover should be deducted from the income for the appropriate period . . . prior to annualization of the income for such period."

The significance of this ruling is best illustrated in the example above. It is apparent from this simple example that the...