Final answer:
Estimated tax liabilities are not calculated by simply applying the assumed tax rate to before-tax cash flows (BTCFs) because the calculation involves considering various factors and elements of the tax code, such as deductions, exemptions, and different tax rates for different types of income.
Step-by-step explanation:
Estimated tax liabilities are not calculated by applying the assumed tax rate to the BTCFs (before-tax cash flows) because the calculation of tax liabilities involves considering various factors and elements of the tax code.
For example, the tax code may include deductions, exemptions, and tax credits that can affect the final amount of tax owed. Additionally, different tax rates may apply to different types of income, such as capital gains or ordinary income.
As a result, estimating tax liabilities requires a more comprehensive analysis that takes into account all relevant provisions of the tax code and the specific circumstances of the taxpayer.