Instructions For Form 2220 - Underpayment Of Estimated Tax By Corporations

2015

Department of the Treasury

Internal Revenue Service

Instructions for Form 2220

Underpayment of Estimated Tax by Corporations

Section references are to the Internal Revenue Code unless

a refund when its return is filed. However, the corporation

otherwise noted.

may be able to reduce or eliminate the penalty by using the

annualized income installment method or the adjusted

Future Developments

seasonal installment method. See the instructions for Part II

for details.

For the latest information about developments affecting Form

Exception to the Penalty

2220 and its instructions, such as legislation enacted after

they were published, go to

A corporation will not have to pay a penalty if the tax shown

on the corporation's 2015 return (the Form 2220, Part I, line 3

General Instructions

amount) is less than $500.

How To Use Form 2220

Purpose of Form

Complete lines 1 through 3 of Part I. If line 3 is $500 or

Corporations (including S corporations), tax-exempt

more, complete the rest of Part I to determine the required

organizations subject to the unrelated business income tax,

annual payment and go to Part II.

and private foundations use Form 2220 to determine:

Check one or more boxes in Part II if the corporation uses

Whether they are subject to the penalty for underpayment

the adjusted seasonal installment method, the annualized

of estimated tax and, if so,

income installment method, or if the corporation is a large

The amount of the underpayment penalty for the period

corporation.

that applies.

If the corporation checked a box in Part II, attach Form

Who Must File

2220 to the income tax return. Be sure to check the box on

Form 1120, page 1, line 33; or the comparable line of any

Generally, the corporation does not have to file this form with

other income tax return the corporation is required to file (for

its income tax return because the IRS will figure the amount

example, Form 1120-C, 1120-L, or 1120S).

of any penalty and notify the corporation of any amount due.

Complete Part III to determine the underpayment for any of

However, even if the corporation does not owe a penalty,

the installment due dates.

complete and attach this form to the corporation's tax return if

the Part I, line 3 amount is $500 or more and any of the

If there is an underpayment on Part III, line 17 (column (a),

following apply.

(b), (c), or (d)), go to Part IV to figure the penalty.

Complete Schedule A if the corporation uses the adjusted

1. The adjusted seasonal installment method is used.

seasonal installment method and/or the annualized income

2. The annualized income installment method is used.

installment method.

3. The corporation is a large corporation (as defined in

the instructions for Part II, line 8) figuring its first required

Specific Instructions

installment based on the prior year's tax.

Part I. Required Annual Payment

Who Must Pay the Underpayment

Penalty

Complete lines 1 through 5 to figure the corporation's

required annual payment.

Generally, a corporation is subject to the penalty if it did not

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

timely pay at least the smaller of:

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

1. The tax shown on its 2015 return, or

that amount includes any tax attributable to a sale described

2. The tax shown on its 2014 return (if it filed a 2014

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

return showing at least some amount of tax and the return

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

was for a full 12 months). However, a large corporation can

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

base only its first required installment on the prior year's tax.

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

made.

In these instructions, “return” generally refers to the

corporation's original return. However, an amended return is

For information on how to figure the total tax for estimated

considered the original return if the amended return is filed by

tax purposes for other entities, see the following forms or

the due date (including extensions) of the original return.

their instructions.

Also, for purposes of determining a required installment, if an

amended return is filed for the prior tax year, then “prior tax

year” includes the amended return, but only if the amended

return is filed before the applicable installment due date.

The penalty is figured separately for each installment due

date. Therefore, the corporation may owe a penalty for an

earlier due date even if it paid enough tax later to make up

the underpayment. This is true even if the corporation is due

Nov 27, 2015

Cat. No. 64293P

Instructions For Form 2220 - Underpayment Of Estimated Tax By Corporations - 2015

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