# Annualizing

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## Annualize

To express a variable in yearly terms even though the variable does not directly apply to a year. That is, an annualized variable has been mathematically converted to yearly terms. For example, if the return rate on an investment is 2% after one month, one computes the annualized return by multiplying by 12, resulting in a 24% return rate. An annualized variable is often theoretical; there is no guarantee that the return rate in the example above will be 12% if it is calculated after a month or two. Annualizing usually does not take into account the effects of compounding.
References in periodicals archive ?
Observation: Corporations that receive subpart F income in the final month of their tax years should consider annualizing their income for their estimated tax payments.
For an individual using the annualization method, the quarterly payments must be at least 90% of the tax due determined by annualizing taxable income for "the months in the taxable year ending before the due date of the installment" (Sec.
However, even if a tax return covers a short period only for the initial year, the taxpayer must computer its alternative minimum tax (AMT) by annualizing its short period AMT income (Sec.
an amount equal to 93% of the tax for the current year computed by placing the actual taxable income as earned during the period prior to each quarterly estimated payment date on an annualized basis, or if smaller, 93% of the tax determined by annualizing current year-to-date income, using a percentage derived from the ratio of the prior three years' quarterly income to total income.

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