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Technology Stocks : EMC How high can it go? -- Ignore unavailable to you. Want to Upgrade?

To: R. Ramesh who wrote (6569)	5/28/1999 12:44:00 AM
From: Jet.Screamer	Read Replies (1) \| Respond to of 17183

It may have changed and I could be wrong but there used to be a safe harbor regarding withholding tax. As long as you have paid(i.e. have had withheld) the IRS 90% of your previous years tax liability(it may now be 100%)there were no penalties for underwithholding. In a simplified manner you have to look at the situation from the perspective an ordinary taxpayer who does not need to file quarterly. Said taxpayer has a capital gain windfall and knows nothing about quarterly withholding. It is irrational to impose a penalty in this situation since it is out of the ordinary. Since no one can predict how they will ultimately profit or take a loss from trading stocks in a given year to ask a taxpayer to withhold more than they had the previous year is unfair. For example-in the first quarter you had large profits from trading although this may not be the case for the subsequent three quarters. Is it fair to ask you to pay quarterly taxes based on the first quarter alone when you may have a net loss for the year? Realistically no. Ergo the IRS is satisfied with regard to penalties if your withholding is equal to 90% of the previous years tax liability since there is unpredictability. As I said it may now be 100%. Hope this makes sense all that you really need to know is that if you pay quarterly you are only required to equal the previous years liability.