Not As Bad As We Think

We can't file our tax return on time this year because one of our investments, a Subchapter S corporation, hasn't issued last year's Form 1120S K-1. No big deal: the S corp. sent us an estimate of its result--a small loss--that will be the result for 2010. But we'll have to go on extension for both Federal (Form 4868) and California (Form 3519) returns.

I found the California form particularly amusing. The space provided for "amount of payment" had nine significant digits, which allows for a payment of up to $999,999,999. Even if we assume that no estimated taxes were paid in 2010 so that robust amount would be the taxpayer's entire balance due, that would mean his taxable income at California's top rate of 9.55% would be about $10.5 billion. That's income, mind, not total wealth, which would be a multiple of the $10.5 billion. If we have residents who need those nine significant digits, then California's financial shape may not be as bad as we think.

BTW, I needed only three significant digits for myself.