Bert Logan's daughter Amanda is an accounting student. After a brief review of Bert's previous tax returns she advised him that he would likely have to begin making income tax installments for 2013; however, she was uncertain about how these installments were to be calculated and the consequences of making inadequate installments. Amanda called one of the tax specialists at her employer firm, First and Partners, for assistance.
Amanda provided the following information:
(a) 2011 actual tax liability was $8,750;
(b) 2012 actual tax liability was $7,640; and
(c) 2013 estimated tax liability is $5,520.
REQUIRED
You are the tax specialist. Write a memo; in point form, for partner review explaining the options available to calculate installment payments for Bert Logan and the consequences if incorrect installments are made.