You are in the business of farming if you cultivate, operate, or manage a farm for profit, either as an owner or a tenant. You are in the business of farming if you harvest fruits and vegetables. In addition, you are considered a farmer if your business includes stock, dairy, poultry and fish. You're considered a farmer if your venture includes plantations, ranches, ranges, orchards, and truck farms. Use this topic to figure your taxes and complete your farm tax return. In this topic you will learn how the federal tax law applies to farming.

Material needed to complete this assignment:

You will need IRS Publication 225 and IRS Publication 538 to complete the questions for this topic.

Please answer the following as accurately as possible.

1. For tax year 2008, farm income averaging may be elected as a tax computation method:

A. Only before March 1 of the year following the end of the tax year.
B. Even if the time for filing a claim has expired for that election year.
C. After the due date of the return, such as an IRS audit adjustment.
D. Only if you were engaged in farming in the election year and all of the base years.

2. Leonard Brown operated a cattle and grain farm in 2008. Leonard sold $42,000 of grain and $23,000 of cattle held for breeding purposes. Leonard also received patronage dividends from the local feed store of $432, feed assistance payments of $1,200, and $1,500 for haying a neighbor's meadow. Leonard should report the following on Schedule F of his federal income tax return for 2008:

A. $45,132.
B. $67,700.
C. $44,700.
D. $66,932.

3. John Jacobsen is a cash basis cattle rancher. In 2008, John sold 12 head of cattle for $9,600. The cattle were born on his ranch in 2005. During the 3 years that John used these cattle in his breeding operation, he spent $10,000 for feed and other expenses related to the cattle. How much is John's gain or loss for 2008, and where should he report the amount on his Federal income tax return?

A. John should report a net gain of $9,600 on Part I, Form 4797.
B. John should report a net loss of $400 on Part I, Form 4797.
C. John should report $9,600 from the sale of the cattle on Part I, Schedule F.
D. John should report a net loss of $400 on Part I, Schedule F.

4. If at least two-thirds of your gross income for 2007 or 2008 was from farming, only one estimated tax payment is due. The required annual payment is the:

A. Larger of two-thirds of your total tax for 2008 or 100% of the total tax shown on your full-year 2007 return.
B. Smaller of two-thirds of your total tax for 2007 or 100% of the total tax shown on your full-year 2008 return.
C. Larger of two-thirds of your tax for 2007 or 100% of the total tax shown on your full-year 2008 return.
D. Smaller of two-thirds of your total tax for 2008 of 100% of the total tax shown on your full-year 2007 return.

5. Farmer Bob sold a breeding cow on March 8, 2008 for $2,500. Expenses related to the sale were $250. Farmer Bob deducted $1,000 in costs of raising the cow during the years the cow was raised. What is Farmer Bob's gain (loss) on the sale of the breeding cow, without regard to the Uniform Capitalization Rules?

A. $(350).
B. $1,150.
C. $2,250.
D. None of the above.

6. Farmer Judy is a calendar-year taxpayer who uses the cash method of accounting. She normally sells 200 head of sheep a year. Because of a drought, she sold 250 head of sheep in 2008. Farmer Judy realized $50,000 from the sale. The affected area was declared a disaster area eligible for federal assistance on March 12, 2008. How much, if any, income can Farmer Judy postpone to 2009?

A. $10,000.
B. $50,000.
C. $12,500.
D. $0, since only sales because of flooding quality for postponement.

7. The receipt of Agricultural Program Payments by a farmer for refraining from growing crops should be reported as:

A. Miscellaneous income on Form 1040.
B. Farm income, not subject to self-employment tax.
C. Rental income, not subject to self-employment tax.
D. Farm income, subject to self-employment tax.

8. In November of 2007, Farmer Smith, a cash basis taxpayer, sells 100 additional beef feeder cattle (raised for resale) due to severe lack of water in his area. Normally, these feeders sell in February 2008. The transaction is correctly reported:

A. In 2007 as a capital gain or loss.
B. In 2008 as a capital gain or loss.
C. Upon election, as ordinary farm income in either 2007 or 2008.
D. Not taxable due to drought conditions.

9. Dan, a calendar year taxpayer, has the following amounts of gross income for 2008:

Dan has tax, including self employment tax, of $20,000, and withholding of $1,000. To avoid any filing or estimated tax penalties, Dan must:

A. File an estimated tax payment by January 15, 2009, and pay 60% of the tax due.
B. File his tax return and pay all tax due by March 2, 2009.
C. File an estimated tax payment by March 1, 2009, and pay 66 2/3% of the tax due.
D. File his tax return and pay all tax due by April 15, 2009.

10. Farm income averaging is computed on Schedule J, which may be filed:

A. For the current year when a taxpayer files Schedule F showing a farm loss.
B. For the current year which includes Schedule F showing net income from farming.
C. Only by IRS after the taxpayer's return is completed and reviewed.
D. On a family farming corporation with less than $25 million in gross receipts.

11. A farmer has the following sources of income:

The income to be reported on Schedule F, "Profit or Loss from Farming", is:

A. $175,000.
B. $156,000.
C. $168,000.
D. $163,000.

12. Section 1245 property includes any property that is or has been subject to an allowance for depreciation or amortization. It includes all of the following types of property, except:

A. Office equipment.
B. Client files.
C. Building elevator.
D. Storage facilities.

13. If you sell more livestock than you normally would in a year because of a drought, flood, or other weather related condition, you may be able to postpone reporting the gain from selling the additional animals until the next year. You must meet all of the following conditions to make the election except:

A. You can show that, under your usual business practices, you would not have sold the animals this year except for the weather-related conditions.
B. The weather-related conditions caused an area to be designed as eligible for assistance by the Federal government.
C. You use the accrual method of accounting.
D. Your principal trade or business is farming.

14. Qualified farmers have the following choices to file their tax return without incurring any penalties:

A. File and pay 100% of the tax due by March 1 each year.
B. File one estimated payment for two-thirds of the tax by January 15 and file and pay the balance by April 15.
C. File and pay the tax due by April 15 each year.
D. Both A and B.

15. A farmer sold a 3-year old raised dairy cow for $600. It cost him $75 for shipping and commissions to sell the cow. He reports this sale as follows on his tax return:

A. A loss of $700 on his Schedule F because he believed it cost him $1,300 to raise the dairy cow.
B. A Section 1245 gain of $525 reported on Form 4797 Part III.
C. A gain of $525 reported on Schedule F as ordinary farm income.
D. A Section 1231 gain of $525 reported on Part I of Form 4797.

16. Sandy had the following total gross income for 2008:

How much of Sandy's gross income qualifies as gross income from farming?

A. $75,000.
B. $80,000.
C. $81,500.
D. $127,500.

------------------

1. You are in the business of farming if you

A. Cultivate a farm for profit.
B. Operate a farm for profit.
C. Manage a farm for profit.
D. Any of the above.

2. Everyone in business, including farmers, must keep appropriate records. Recordkeeping will help you

A. Monitor the progress of your farming business.
B. Prepare your financial statements and tax returns.
C. Identify the source of receipts and keep track of deductible expenses.
D. All of the above.

3. You can choose any recordkeeping system suited to your farming business that clearly shows your income and expenses.

True False

4. Use this Schedule to figure the net profit or loss from regular farming operations. Income from farming includes amounts you receive from cultivating, operating, or managing a farm for gain or profit, either as owner or tenant. Report your farm income on

A. Schedule C (Form 1040).
B. Schedule F (Form 1040).
C. Schedule E (Form 1040).
D. None of the above.

5. You can use income averaging to figure your tax for any year in which you were engaged in a farming business as

A. An individual.
B. A partner in a partnership.
C. A shareholder in an S corporation.
D. Any of the above.

6. The amount of income from your farming business that your elect to have taxed at base year rates is

A. Farmer income averaging (FIA).
B. Elected Farming Income (EFI).
C. Other Source Income (OSI).
D. None of the above.

7. If you (or your partnership or S corporation) liquidate your farming business, gains on property sold within a reasonable time after operations stop can be designate as EFI.

True False

8. Prepaid farm supplies are amounts paid during the tax year for

A. Feed, seed, fertilizer, and similar farm supplies not used or consumed during the year.
B. Poultry (including egg-laying hens and baby chicks) bought for use (or for both use and resale) in your farm business.
C. Poultry bought for resale and not resold during the year.
D. Any of the above.

9. You are a farm-related taxpayer if

A. Your main home is on a farm.
B. Your principal business is farming.
C. A member of your family's main house is on a farm or his or her principal business is farming.
D. Any of the above.

10. If you report your income and expenses under the cash method of accounting, your cannot deduct in the year paid the cost of feed your livestock will consume in a later year unless

A. The payment is for the purchase of feed rather than a deposit.
B. The prepayment has a business purpose and is not merely for tax avoidance.
C. Deducting the prepayment does not result in a material distortion of your income.
D. All of the above.

11. Whether a payment is for the purchase of feed or a deposit depends on the facts and circumstances in each case. It is for the purchase of feed if your can show you made it under a binding commitment to accept delivery of a specific quantity of feed at a fixed price and you are not entitled to a refund or re-purchase. The following can show it is a payment for the purchase of feed.

A. The absence of specific quantity terms.
B. The right to substitute other goods or products for those specified in the contract.
C. The right to a refund on any unapplied payment credit at the end of the contract.
D. None of the above.

12. If you withhold social security, Medicare, and income taxes from your employees' cash wages, you can still deduct the full amount of wages before withholding. Deduct the employer's share of the social security and Medicare taxes you must pay on your employee's  wages as a farm business expense on

A. Schedule C line 2.
B. Schedule F line 31.
C. Form 1040 line 12.
D. None of the above.

13. You can deduct reasonable wages or other compensation you pay to your spouse if a true employer-employee relationship exists between you and your spouse. Wages you pay to your spouse are not subject to social security and Medicare taxes.

True False

14. You can deduct one-half of your self-employment tax in figuring your adjusted gross income on

A. Schedule C, line 2.
B. Schedule F line 31.
C. Form 1040 line 12.
D. None of the above.

15. You generally can deduct the ordinary and necessary cost of insurance for your farm business as a business expense. This does not include

A. Health and accident insurance on your farm employees.
B. A policy on your life or on the life of another person with a financial interest in your farm business to get or protect a business loan.
C. Use and occupancy insurance and business interruption insurance premiums.
D. Fire, storm, crop, theft, liability, and other insurance on farm business assets.

16. If you lease property for use in your farm business, you can generally deduct the rent you pay on Schedule F. However, you cannot deduct rent you pay in crop shares if you deduct the cost of raising the crops as farm expenses.

True False

17. If you rent a farm, do not deduct the part of the rental expenses that represents the fair rental value of the farm home in which you live.

True False

18. You can deduct the actual cost of operating a truck or car in your farm business. Only expenses for business use are deductible. These include such items as gasoline, oil, repairs, license tags, insurance, and depreciation. Instead of using actual costs, under certain conditions you can use the standard mileage rate. For 2008, the rate is 

A. 50.5 cents a mile for all business miles driven for the period January 1 through June 30, 2008.
B. 58.5 cents a mile for all business miles driven for the period July 1 through December 31, 2008.
C. 48.5 cents a mile for all business miles driven.
D. Both A and B above.

19. You can claim 75% of the use of a car or light truck as business use without any records if you used the vehicle during most of the normal business day directly in connection with the business of farming. You choose this method of substantiating business use the first year the vehicle is placed in service. A use directly connected with the business of farming is

A. Cultivating land.
B. Raising or harvesting any agricultural or horticultural commodity.
C. Driving to the feed or supply store.
D. Any of the above.

20. You can claim 75% of the use of a car or light truck as a business use without any records if you used the vehicle during most of the normal business of farming. If you keep records and they show that your business use was more than 75%, you may be able to claim more.

True False

1. For tax year 2008, farm income averaging may be elected as a tax computation method:

A. Only before March 1 of the year following the end of the tax year.
B. Even if the time for filing a claim has expired for that election year.
C. After the due date of the return, such as an IRS audit adjustment.
D. Only if you were engaged in farming in the election year and all of the base years.

2. Leonard Brown operated a cattle and grain farm in 2008. Leonard sold $42,000 of grain and $23,000 of cattle held for breeding purposes. Leonard also received patronage dividends from the local feed store of $432, feed assistance payments of $1,200, and $1,500 for haying a neighbor's meadow. Leonard should report the following on Schedule F of his federal income tax return for 2008:

A. $45,132.
B. $67,700.
C. $44,700.
D. $66,932.

3. John Jacobsen is a cash basis cattle rancher. In 2008, John sold 12 head of cattle for $9,600. The cattle were born on his ranch in 2005. During the 3 years that John used these cattle in his breeding operation, he spent $10,000 for feed and other expenses related to the cattle. How much is John's gain or loss for 2008, and where should he report the amount on his Federal income tax return?

A. John should report a net gain of $9,600 on Part I, Form 4797.
B. John should report a net loss of $400 on Part I, Form 4797.
C. John should report $9,600 from the sale of the cattle on Part I, Schedule F.
D. John should report a net loss of $400 on Part I, Schedule F.

4. If at least two-thirds of your gross income for 2007 or 2008 was from farming, only one estimated tax payment is due. The required annual payment is the:

A. Larger of two-thirds of your total tax for 2008 or 100% of the total tax shown on your full-year 2007 return.
B. Smaller of two-thirds of your total tax for 2007 or 100% of the total tax shown on your full-year 2008 return.
C. Larger of two-thirds of your tax for 2007 or 100% of the total tax shown on your full-year 2008 return.
D. Smaller of two-thirds of your total tax for 2008 of 100% of the total tax shown on your full-year 2007 return.

5. Farmer Bob sold a breeding cow on March 8, 2008 for $2,500. Expenses related to the sale were $250. Farmer Bob deducted $1,000 in costs of raising the cow during the years the cow was raised. What is Farmer Bob's gain (loss) on the sale of the breeding cow, without regard to the Uniform Capitalization Rules?

A. $(350).
B. $1,150.
C. $2,250.
D. None of the above.

6. Farmer Judy is a calendar-year taxpayer who uses the cash method of accounting. She normally sells 200 head of sheep a year. Because of a drought, she sold 250 head of sheep in 2008. Farmer Judy realized $50,000 from the sale. The affected area was declared a disaster area eligible for federal assistance on March 12, 2008. How much, if any, income can Farmer Judy postpone to 2009?

A. $10,000.
B. $50,000.
C. $12,500.
D. $0, since only sales because of flooding quality for postponement.

7. The receipt of Agricultural Program Payments by a farmer for refraining from growing crops should be reported as:

A. Miscellaneous income on Form 1040.
B. Farm income, not subject to self-employment tax.
C. Rental income, not subject to self-employment tax.
D. Farm income, subject to self-employment tax.

8. In November of 2007, Farmer Smith, a cash basis taxpayer, sells 100 additional beef feeder cattle (raised for resale) due to severe lack of water in his area. Normally, these feeders sell in February 2008. The transaction is correctly reported:

A. In 2007 as a capital gain or loss.
B. In 2008 as a capital gain or loss.
C. Upon election, as ordinary farm income in either 2007 or 2008.
D. Not taxable due to drought conditions.

9. Dan, a calendar year taxpayer, has the following amounts of gross income for 2008:

Dan has tax, including self employment tax, of $20,000, and withholding of $1,000. To avoid any filing or estimated tax penalties, Dan must:

A. File an estimated tax payment by January 15, 2009, and pay 60% of the tax due.
B. File his tax return and pay all tax due by March 2, 2009.
C. File an estimated tax payment by March 1, 2009, and pay 66 2/3% of the tax due.
D. File his tax return and pay all tax due by April 15, 2009.

10. Farm income averaging is computed on Schedule J, which may be filed:

A. For the current year when a taxpayer files Schedule F showing a farm loss.
B. For the current year which includes Schedule F showing net income from farming.
C. Only by IRS after the taxpayer's return is completed and reviewed.
D. On a family farming corporation with less than $25 million in gross receipts.

11. A farmer has the following sources of income:

The income to be reported on Schedule F, "Profit or Loss from Farming", is:

A. $175,000.
B. $156,000.
C. $168,000.
D. $163,000.

12. Section 1245 property includes any property that is or has been subject to an allowance for depreciation or amortization. It includes all of the following types of property, except:

A. Office equipment.
B. Client files.
C. Building elevator.
D. Storage facilities.

13. If you sell more livestock than you normally would in a year because of a drought, flood, or other weather related condition, you may be able to postpone reporting the gain from selling the additional animals until the next year. You must meet all of the following conditions to make the election except:

A. You can show that, under your usual business practices, you would not have sold the animals this year except for the weather-related conditions.
B. The weather-related conditions caused an area to be designed as eligible for assistance by the Federal government.
C. You use the accrual method of accounting.
D. Your principal trade or business is farming.

14. Qualified farmers have the following choices to file their tax return without incurring any penalties:

A. File and pay 100% of the tax due by March 1 each year.
B. File one estimated payment for two-thirds of the tax by January 15 and file and pay the balance by April 15.
C. File and pay the tax due by April 15 each year.
D. Both A and B.

15. A farmer sold a 3-year old raised dairy cow for $600. It cost him $75 for shipping and commissions to sell the cow. He reports this sale as follows on his tax return:

A. A loss of $700 on his Schedule F because he believed it cost him $1,300 to raise the dairy cow.
B. A Section 1245 gain of $525 reported on Form 4797 Part III.
C. A gain of $525 reported on Schedule F as ordinary farm income.
D. A Section 1231 gain of $525 reported on Part I of Form 4797.

16. Sandy had the following total gross income for 2008:

How much of Sandy's gross income qualifies as gross income from farming?

A. $75,000.
B. $80,000.
C. $81,500.
D. $127,500.

-----------

1. You are in the business of farming if you

A. Cultivate a farm for profit.
B. Operate a farm for profit.
C. Manage a farm for profit.
D. Any of the above.

2. Everyone in business, including farmers, must keep appropriate records. Recordkeeping will help you

A. Monitor the progress of your farming business.
B. Prepare your financial statements and tax returns.
C. Identify the source of receipts and keep track of deductible expenses.
D. All of the above.

3. You can choose any recordkeeping system suited to your farming business that clearly shows your income and expenses.

True False

4. Use this Schedule to figure the net profit or loss from regular farming operations. Income from farming includes amounts you receive from cultivating, operating, or managing a farm for gain or profit, either as owner or tenant. Report your farm income on

A. Schedule C (Form 1040).
B. Schedule F (Form 1040).
C. Schedule E (Form 1040).
D. None of the above.

5. You can use income averaging to figure your tax for any year in which you were engaged in a farming business as

A. An individual.
B. A partner in a partnership.
C. A shareholder in an S corporation.
D. Any of the above.

6. The amount of income from your farming business that your elect to have taxed at base year rates is

A. Farmer income averaging (FIA).
B. Elected Farming Income (EFI).
C. Other Source Income (OSI).
D. None of the above.

7. If you (or your partnership or S corporation) liquidate your farming business, gains on property sold within a reasonable time after operations stop can be designate as EFI.

True False

8. Prepaid farm supplies are amounts paid during the tax year for

A. Feed, seed, fertilizer, and similar farm supplies not used or consumed during the year.
B. Poultry (including egg-laying hens and baby chicks) bought for use (or for both use and resale) in your farm business.
C. Poultry bought for resale and not resold during the year.
D. Any of the above.

9. You are a farm-related taxpayer if

A. Your main home is on a farm.
B. Your principal business is farming.
C. A member of your family's main house is on a farm or his or her principal business is farming.
D. Any of the above.

10. If you report your income and expenses under the cash method of accounting, your cannot deduct in the year paid the cost of feed your livestock will consume in a later year unless

A. The payment is for the purchase of feed rather than a deposit.
B. The prepayment has a business purpose and is not merely for tax avoidance.
C. Deducting the prepayment does not result in a material distortion of your income.
D. All of the above.

11. Whether a payment is for the purchase of feed or a deposit depends on the facts and circumstances in each case. It is for the purchase of feed if your can show you made it under a binding commitment to accept delivery of a specific quantity of feed at a fixed price and you are not entitled to a refund or re-purchase. The following can show it is a payment for the purchase of feed.

A. The absence of specific quantity terms.
B. The right to substitute other goods or products for those specified in the contract.
C. The right to a refund on any unapplied payment credit at the end of the contract.
D. None of the above.

12. If you withhold social security, Medicare, and income taxes from your employees' cash wages, you can still deduct the full amount of wages before withholding. Deduct the employer's share of the social security and Medicare taxes you must pay on your employee's  wages as a farm business expense on

A. Schedule C line 2.
B. Schedule F line 31.
C. Form 1040 line 12.
D. None of the above.

13. You can deduct reasonable wages or other compensation you pay to your spouse if a true employer-employee relationship exists between you and your spouse. Wages you pay to your spouse are not subject to social security and Medicare taxes.

True False

14. You can deduct one-half of your self-employment tax in figuring your adjusted gross income on

A. Schedule C, line 2.
B. Schedule F line 31.
C. Form 1040 line 12.
D. None of the above.

15. You generally can deduct the ordinary and necessary cost of insurance for your farm business as a business expense. This does not include

A. Health and accident insurance on your farm employees.
B. A policy on your life or on the life of another person with a financial interest in your farm business to get or protect a business loan.
C. Use and occupancy insurance and business interruption insurance premiums.
D. Fire, storm, crop, theft, liability, and other insurance on farm business assets.

16. If you lease property for use in your farm business, you can generally deduct the rent you pay on Schedule F. However, you cannot deduct rent you pay in crop shares if you deduct the cost of raising the crops as farm expenses.

True False

17. If you rent a farm, do not deduct the part of the rental expenses that represents the fair rental value of the farm home in which you live.

True False

18. You can deduct the actual cost of operating a truck or car in your farm business. Only expenses for business use are deductible. These include such items as gasoline, oil, repairs, license tags, insurance, and depreciation. Instead of using actual costs, under certain conditions you can use the standard mileage rate. For 2008, the rate is 

A. 50.5 cents a mile for all business miles driven for the period January 1 through June 30, 2008.
B. 58.5 cents a mile for all business miles driven for the period July 1 through December 31, 2008.
C. 48.5 cents a mile for all business miles driven.
D. Both A and B above.

19. You can claim 75% of the use of a car or light truck as business use without any records if you used the vehicle during most of the normal business day directly in connection with the business of farming. You choose this method of substantiating business use the first year the vehicle is placed in service. A use directly connected with the business of farming is

A. Cultivating land.
B. Raising or harvesting any agricultural or horticultural commodity.
C. Driving to the feed or supply store.
D. Any of the above.

20. You can claim 75% of the use of a car or light truck as a business use without any records if you used the vehicle during most of the normal business of farming. If you keep records and they show that your business use was more than 75%, you may be able to claim more.

True False

21. The value of a dwelling you furnish to a tenant under the usual tenant-farmer arrangement is not taxable income to the tenant.

True False

22. A payment, or a debt incurred, for the acquisition, improvement, or restoration of an asset that is expected to last more than one year is

A. Uniform capitalization.
B. An expense.
C. A capital expense.
D. Depreciable expense.

23. You can deduct as a loss the value of raised livestock that died if you deducted the cost of raising them as an expense.

True False

24. If you do not carry on your farming activity to make a profit, you report the income from the activity on

A. Schedule F.
B. Form 1040 line 21.
C. Schedule C.
D. None of the above.

25. You own a farm in Iowa and live in California. You rent the farm for $125 in cash per acre and do not materially participate in production of the crops grown on the farm. You

A. Cannot deduct your soil conservation expenses for this farm.
B. Can deduct your soil conservation expenses for this farm.
C. Don't capitalize the expenses or add them to the basis of the land.
D. None of the above.

26. You can deduct soil and water conservation expenses only if they are consistent with a plan approved by the Natural Resources Conservation Service (NRCS) of the Department of Agriculture. A conservation plan includes the farming conservation practices approved for the area where your farm land is located. A type of approved plan includes

A. NRCS individual site plans.
B. NRCS county plans.
C. Comparable state agency plans.
D. Any of the above.

27. You may want to use the optional methods when you have a loss or a small net profit and if

A. You want to receive credit for social security benefit coverage.
B. You incurred child and dependent care expenses for which you could claim a credit.
C. You are entitled to the earned income or the additional child tax credits.
D. Any of the above.

28. Use the farm optional method only for self-employment earnings from a farming business. You use this method if

A. Your gross farm income is $6,300 or less.
B. Your net farm profits are less than $4,548.
C. Your earnings are less than $400.  
D. Both A and B above. 

29. If you use both the farm optional method and the non-farm optional methods, the amount you can report as your combined net earnings from self-employment cannot be more than

A. $6,300.
B. $4,200.
C. $4,548.
D. $400.

30. Special estimated tax rules apply if you are a qualified farmer for 2008, such as the following.

A. You do not have to pay estimated tax if you file your 2008 tax return and pay all the tax due by March 3, 2009.
B. You do not have to pay estimated tax if you expect your 2008 income tax withholding (including any amount applied to your 2008 estimated tax from your 2007 return) to be at least 66 2/3% (.6667) of the total tax to be shown on you 2008 tax return or 100% of the total tax shown on your 2007 return.
C. If you must pay estimated tax, you are required to make only one estimated tax payment (your required annual payment) by January 15, 2009, using special rules to figure the amount of the payment.
D. All of the above.