1 2018 Department of the Treasury Internal Revenue Service Instructions for Schedule A. (Form 8804). Penalty for Underpayment of Estimated Section 1446 Tax for Partnerships Section references are to the Internal Revenue Code unless otherwise noted. Who Must Pay the How To Use Schedule A. Underpayment Penalty Complete this Schedule as follows. Future Developments Generally, a partnership is subject to the Check one or both of the boxes in penalty if it didn't timely pay in Part I that apply. If the partnership For the latest information about installments at least the smaller of: checks a box in Part I, attach developments related to Schedule A. 1. The tax shown on line 5f of its Schedule A (Form 8804) to Form 8804.
2 (Form 8804) and its Instructions , such 2018 Form 8804; or Be sure to check the box on Form 8804, as legislation enacted after they were 2. The total section 1446 tax that line 8. published, go to About- Schedule -A-Form-8804. would have been due for 2017, without If the total section 1446 tax, shown on regard to reductions for certified foreign Part II, line 1 is $500 or more, complete the rest of page 1 to determine the What's New partner-level items, on the ECTI. underpayment for any of the installment allocable to foreign partners for 2017, New tax rates for 2018. For tax years provided that (1) this amount is at least due dates. beginning after 2017, the maximum tax 50% of the sum of the amounts shown If there is an underpayment on line 12.
3 Rate for non-corporate foreign partners on lines 4d, 4h, 4l, 4p, and 4t of its 2018 (column (a), (b), (c), or (d)), go to Part has decreased from to 37%. Form 8804; and (2) the tax year was for VII to figure the penalty. Also, for tax years beginning after 2017, a full 12 months. See the Instructions for Complete Parts IV through VI as the maximum tax rate for corporate line 2, later, for more details. appropriate if the partnership uses the foreign partners has decreased from adjusted seasonal installment method 35% to 21%. In these Instructions , Form 8804 and/or the annualized income generally refers to the partnership's installment method. General Instructions original Form 8804. However, an amended Form 8804 is considered the original Form 8804 if the amended Form Specific Instructions Purpose of Form 8804 is filed by the due date (including Partnerships that have effectively extensions) of the original Form 8804.
4 Part I. Reasons for Filing connected taxable income (ECTI). allocable to foreign partners use Also, for purposes of determining a Adjusted seasonal installment meth- Schedule A (Form 8804) to determine: required installment, if an amended od and/or annualized income install- Form 8804 is filed for the prior tax year, ment method. If the partnership's Whether they are subject to the income varied during the year because, penalty for underpayment of estimated then prior tax year includes the tax and, if so, amended Form 8804, but only if the for example, it operated its business on amended Form 8804 is filed before the a seasonal basis, it may be able to The amount of the underpayment lower or eliminate the amount of one or penalty.
5 Applicable installment due date. more required installments by using the The penalty is figured separately for adjusted seasonal installment method Who Must File each installment due date. Therefore, and/or the annualized income Generally, the partnership doesn't have the partnership may owe a penalty for installment method. to file this Schedule because the IRS will an earlier due date even if it paid figure the amount of the penalty and enough tax later to make up the Example. A ski shop, which notify the partnership of any amount underpayment. This is true even if the receives most of its income during the due. However, even if the partnership partnership is due a refund when its winter months, may benefit from using doesn't owe a penalty, complete and return is filed.
6 However, the partnership one or both of these methods to figure attach this Schedule to the partnership's may be able to reduce or eliminate the its required installments. The Form 8804 if the Part II, line 1 amount penalty by using the annualized income annualized income installment or on page 1 is $500 or more and any of installment method or the adjusted adjusted seasonal installment may be the following apply. seasonal installment method. See the less than the required installment under 1. The adjusted seasonal Instructions for Parts IV and V for the current year safe harbor (increased installment method is used. details. by any reduction recaptured under section 6655(e)(1)(B)) for one or more 2. The annualized income installment method is used.
7 Exception to the Penalty due dates. Using one or both of these A partnership won't have to pay a methods may reduce or eliminate the penalty if the tax shown on line 5f of its penalty for those due dates. 2018 Form 8804 is less than $500. Use Parts IV through VI of Schedule A (Form 8804) to figure one or more required installments. If Parts IV. Dec 03, 2018 Cat. No. 36325U. through VI are used for any payment If the partnership isn't permitted to installment to which the payment due date, those Parts must be used for use the prior year safe harbor method pertains. See the Example under Part all subsequent payment due dates. To because any of the necessary VII. Figuring the Penalty, later. arrive at the amount of each required conditions described above isn't met, Line 12.
8 If any of the columns in line 12. installment, Part VI uses the smallest of: skip line 2 and enter on line 3 the shows an underpayment, complete Part The adjusted seasonal installment (if amount from line 1. VII to figure the penalty. applicable), Note. If the partnership qualifies for and The annualized income installment (if uses the exception under Regulations Parts IV Through VI. applicable), or section (b)(3)(ii) to switch to The current year safe harbor the standard option annualization Extraordinary items. Generally, under (increased by any reduction recaptured the annualized income installment method during the tax year, the under section 6655(e)(1)(B)). method, extraordinary items must be partnership should include on line 2 the total of all installment payments that taken into account after annualizing the Follow the steps below to determine ECTI for the annualization period.
9 Which parts of the form have to be were made during the tax year under both the prior year safe harbor method Similar rules apply in determining ECTI. completed. under the adjusted seasonal installment If the partnership is using only the and the standard option annualization method. Attach a statement that method. An extraordinary item includes: adjusted seasonal installment method, check the applicable box in Part I and explains the computation. Any item identified in Regulations complete Parts IV and VI of Schedule A section (b)(2)(ii)(C)(1), (2), (Form 8804). Part III. Figuring the (3), (4), (7), and (8);. If the partnership is using only the Underpayment A section 481(a) adjustment; and annualized income installment method, Net gain or loss from the disposition check the applicable box in Part I and Line 6.
10 Enter the estimated tax of 25% or more of the fair market value complete Parts V and VI of Schedule A payments made by the partnership for of the partnership's business assets (Form 8804). its tax year as indicated below. Include during the tax year. any overpayment from line 13 of the If the partnership is using both These extraordinary items must be methods, check both of the boxes in partnership's 2017 Form 8804 that was accounted for in the appropriate Part I and complete all three parts (Parts credited to the partnership's first annualization period. However, a IV through VI) of Schedule A (Form installment period on its 2018 Form section 481(a) adjustment (unless the 8804). 8804. If an installment is due on a partnership makes the alternative Saturday, Sunday, or legal holiday, choice under Regulations section payments made on the next day that Part II.)