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LSN 90-2

Special Notice Concerning Capital Gains and
Dividends and Interest Taxes

This LSN is obsoleted by AN 94(2)

The Department of Revenue Services will not credit an overpayment of Capital Gains and Dividends and Interest tax liability for a preceding tax year against the current estimated tax liability unless a completed tax return (and not a tentative tax return) disclosing the overpayment has been filed.

Example 1: A calendar year taxpayer has an estimated dividends and interest tax liability for 1990 equaling $10,000. The taxpayer has filed a tentative tax return but has not yet filed a completed tax return for 1989. The taxpayer must pay an Installment of Estimated Tax equaling $5,000 on June 15, 1990. If the taxpayer has not filed a completed tax return for 1989 on or before June 15, 1990, the taxpayer cannot credit an overpayment for 1989 against the payment of the Installment of Estimated tax for 1990.

Example 2: A calendar year taxpayer has an estimated capital gains tax liability for the first five full months of 1990 equaling $10,000. The taxpayer has filed a tentative tax return but has not yet filed a completed tax return for 1989. The taxpayer must pay an Installment of Estimated Tax equaling $10,000 on June 15, 1990. If the taxpayer has not filed a completed tax return for 1989 on or before June 15, 1990, the taxpayer cannot credit an overpayment for 1989 against the payment of the Installment of Estimated Tax for 1990.

Interest and penalties will be imposed on an underpayment of the current estimated tax liability if a taxpayer attempts to credit an overpayment not disclosed by the filing of a completed tax return against an Installment of Estimated Tax.


LSN 90-2 (New 4/90)