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Securities sellers: sidestep a tax pitfall

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in Small Business Tax,Small Business Tax Deduction Strategies

Q. You have advised readers to sell stock this year to realize capital gains. But won’t this trigger an estimated tax penalty for investors? S.F., Bellevue, Wash.

A. Not necessarily. No estimated tax penalty will be imposed if you pay in at least 90% of the current year’s tax liability, or 100% of the prior year’s tax liability,  or 110% if your adjusted gross income for the prior year exceeded $150,000. To avoid any potential problems for 2012, make sure your tax payments equal 100% or 110% (whichever applies) of your liability for 2011.

Tip: Your tax payments for this purpose include in­­come tax amounts withheld from your paychecks as well as any quarterly installment payments.

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