Instructions For Form 2220 - Underpayment Of Estimated Tax By Corporations

both of these methods may reduce or eliminate the penalty

Specific Instructions

for those due dates.

Use Schedule A (Form 2220, pages 3 and 4) to figure one

Part I. Required Annual Payment

or more required installments. If Schedule A is used for any

Complete lines 1 through 5 to figure the corporation's

payment due date, it must be used for all payment due dates.

required annual payment.

To arrive at the amount of each required installment,

Schedule A automatically selects the smallest of:

Line 1. Generally, enter the tax from Form 1120, line 31; or

The adjusted seasonal installment (if applicable),

the applicable line for other income tax returns. However, if

The annualized income installment (if applicable), or

that amount includes any tax attributable to a sale described

The regular installment under section 6655(d)(1)

in section 338(a)(1), do not include that tax on line 1. Instead,

(increased by any recapture of a reduction in a required

write “Sec. 338 gain” and show the amount of tax in brackets

installment under section 6655(e)(1)(B)).

on the dotted line next to line 1. This exclusion from the line 1

Follow the steps below to determine which parts of the

amount does not apply if a section 338(h)(10) election is

form have to be completed.

made.

If the corporation is using only the adjusted seasonal

For information on how to figure the total tax for estimated

installment method, check the box in Part II, line 6, and

tax purposes for other entities, see the following forms or

complete Schedule A, Parts I and III.

their instructions.

If the corporation is using only the annualized income

installment method, check the box on Part II, line 7, and

complete Schedule A, Parts II and III.

• 990-PF

• 1120-FSC

• 1120-REIT

If the corporation is using both methods, check the boxes

• 990-T

• 1120-L

• 1120-RIC

in Part II, lines 6 and 7, and complete all three parts of

• 1120-C

• 1120-ND

• 1120S

Schedule A.

• 1120-F

• 1120-PC

• 1120-SF

Line 8. Large corporations. A large corporation is a

corporation (other than an S corporation) that had, or whose

predecessor had, taxable income (defined below) of $1

million or more for any of the 3 tax years immediately

Line 2c. Enter the amount from Form 1120, Schedule J,

preceding the 2016 tax year, or if less, the number of years

Line 19b, or the applicable line for other income tax returns.

the corporation has been in existence. See Regulations

Line 4. All filers (other than S corporations). Figure the

section 1.6655-4.

corporation's 2015 tax the same way the amount on line 3 of

Taxable income, for this purpose, is modified to exclude

this form was determined, using the taxes and credits from its

net operating loss and capital loss carrybacks and

2015 tax return. However, skip line 4 and enter on line 5 the

carryovers. Members of a controlled group, as defined in

amount from line 3 if either of the following applies.

section 1563, must divide the $1 million amount among

The corporation did not file a tax return for 2015 that

themselves under rules similar to those in section 1561.

showed a liability for at least some amount of tax.

If the corporation is a large corporation, check the box on

The corporation had a 2015 tax year of less than 12

Part II, line 8, and, if applicable, check the box(es) on Part II,

months.

line 6 and/or line 7. Also, if applicable, complete Schedule A,

Parts I, II, and III, as discussed below in the instructions for

S corporations. Enter on line 4 the sum of:

line 10.

1. The total of the investment credit recapture tax and the

Part III. Figuring the Underpayment

built-in gains tax shown on the return for the 2016 tax year

and

Line 9. The corporation is generally required to enter the

2. Any excess net passive income tax shown on the S

15th day of the 4th (Form 990-PF filers use the 5th month),

corporation's return for the 2015 tax year.

6th, 9th, and 12th months of its tax year.

If the 2015 tax year was less than 12 months, skip line 4

Line 10. If multiple columns have the same due date, see

and enter on line 5 the amount from line 3.

the instructions for line 9.

Part II. Reasons for Filing

Large corporations. Large corporations, follow the

instructions below.

Lines 6 and 7. Adjusted seasonal installment method

1. If the box on line 8 (but not line 6 or line 7) is checked

and/or annualized income installment method. If the

and line 3 is smaller than line 4, enter 25% of line 3 in

corporation's income varied during the year because, for

columns (a) through (d) of line 10.

example, it operated its business on a seasonal basis, it may

2. If the box on line 8 (but not line 6 or line 7) is checked

be able to lower or eliminate the amount of one or more

and line 4 is smaller than line 3, enter 25% of line 4 in column

required installments by using the adjusted seasonal

(a) of line 10. In column (b), figure the amount to enter as

installment method and/or the annualized income installment

follows:

method.

a. Subtract line 4 from line 3,

Example. A ski shop, which receives most of its income

b. Add the result to the amount on line 3, and

during the winter months, may benefit from using one or both

of these methods to figure its required installments. The

c. Multiply the total in item b above by 25%, and enter the

annualized income installment or adjusted seasonal

result in column (b).

installment may be less than the required installment under

In columns (c) and (d), enter 25% of line 3.

the regular method for one or more due dates. Using one or

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Instructions for Form 2220 (2016)

Instructions For Form 2220 - Underpayment Of Estimated Tax By Corporations - 2016 Page 2

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