To calculate payments on account, how should the total income tax be modified?

The correct approach to calculating payments on account involves modifying the total income tax by adding the income tax that has already been paid at the source. This process ensures that any taxes withheld from income, such as those from employment or investment distributions, are accounted for in the calculation of what is still owed.

When individuals or entities receive income that has taxes withheld, these amounts reduce the overall tax liability because they represent prepayments toward the total tax owed for the year. By adding the income tax paid at source to the total income tax, taxpayers can appropriately assess the balance that remains and determine the correct amount to pay in their payments on account.

The other options do not accurately pertain to the appropriate adjustment for payments on account. Subtracting trading expenses is relevant in determining net income but does not directly impact the calculation of total income tax for payments on account. Dividing the sum by 3 would be an arbitrary adjustment that doesn't relate to the tax calculation process in this context. Considering only investment income disregards other income sources that contribute to total income tax, leading to an incomplete and misleading calculation.