Instructions For Form 2220 - Underpayment Of Estimated Tax By Corporations

Columns (b), (c), and (d). Enter payments made by the

seasonal installment method applies. See the instructions for

date on line 9 for that column and after the date on line 9 of

lines 2, 9b, 21, and 23b, below.

the preceding column.

For more information regarding extraordinary items, see

Regulations section 1.6655-2(f)(3)(ii) and the examples in

Line 17. If any of the columns in line 17 shows an

Regulations section 1.6655-2(f)(3)(vii).

underpayment, complete Part IV to figure the penalty.

Part IV. Figuring the Penalty

Part I. Adjusted Seasonal Installment Method

The corporation can use the adjusted seasonal installment

Complete lines 19 through 38 to determine the amount of the

method only if the corporation's base period percentage for

penalty. The penalty is figured for the period of

any 6 consecutive months of the tax year is 70% or more.

underpayment using the underpayment rate determined

The base period percentage for any period of 6 consecutive

under section 6621. The period of underpayment runs from

months is the average of the 3 percentages figured by

the installment due date to the earlier of the date the

dividing the taxable income for the corresponding

underpayment is actually paid or the 15th day of the third

6-consecutive-month period in each of the 3 preceding tax

month after the close of the tax year. For information on

years by the total taxable income for each of the 3 preceding

obtaining the interest rate on underpayments, see the

tax years, respectively. Figure the base period percentage

footnote on page 2 of Form 2220.

using the 6-month period in which the corporation normally

Line 19. A payment of estimated tax is applied against

receives the largest part of its taxable income.

unpaid required installments in the order in which

Example. An amusement park with a 2014 calendar tax

installments are required to be paid, regardless of the

year receives the largest part of its taxable income during the

installment to which the payment pertains.

6-month period from May through October. To compute its

Example. A corporation with a calendar tax year

base period percentage for this 6-month period in 2014, the

underpaid the April 15 installment by $1,000. The June 15

amusement park figures its taxable income for each May–

installment requires a payment of $2,500. On June 10, the

October period in 2011, 2012, and 2013. It then divides the

corporation deposits $2,500 to cover the June 15 installment.

taxable income for each May–October period by the total

However, $1,000 of this payment is applied against the April

taxable income for that particular tax year. The resulting

15 installment. The penalty for the April 15 installment is

percentages are: 69% (.69) for May–October 2011, 74%

figured from April 15 to June 10 (56 days). The remaining

(.74) for May–October 2012, and 67% (.67) for May–October

$1,500 is applied to the June 15 installment.

2013. Because the average of 69%, 74%, and 67% is 70%,

If the corporation has made more than one payment for a

the base period percentage for May–October 2014 is 70%.

required installment, attach a separate computation for each

Therefore, the amusement park qualifies for the adjusted

payment.

seasonal installment method.

Schedule A

Line 2. If the corporation has certain extraordinary items,

special rules apply. Do not include on line 2 the de minimis

Extraordinary items. Generally, under the annualized

items that the corporation chooses to include on line 9b. See

income installment method, extraordinary items must be

Extraordinary items earlier.

taken into account after annualizing the taxable income for

Line 9b. If the corporation has extraordinary items of

the annualization period. Similar rules apply in determining

$1,000,000 or more, a net operating loss deduction, or a

taxable income under the adjusted seasonal installment

section 481(a) adjustment, special rules apply. Include these

method. An extraordinary item includes:

amounts on line 9b for the appropriate period. Also include

Any item identified in Regulations section

on line 9b the de minimis items that the corporation chooses

1.1502-76(b)(2)(ii)(C)(1), (2),(3),(4), (7) and (8);

to exclude from line 2. See Extraordinary items earlier.

A net operating loss carryover;

A section 481(a) adjustment; and

Line 15. Compute the alternative minimum tax (AMT) on

Form 4626, Alternative Minimum Tax-Corporations, if

Net gain or loss from the disposition of 25% or more of the

applicable. Figure alternative minimum taxable income

fair market value of the corporation's business assets during

(AMTI) based on the corporation's income and deductions

the tax year.

for the months shown in the column headings directly above

These extraordinary items must be accounted for, in the

line 1. For each column, divide the AMTI by the amount

appropriate annualization period. However, a net operating

shown on line 8 before subtracting the AMT exemption

loss deduction and a section 481(a) adjustment (unless the

amount under section 55(d). Enter on line 15, column (d), the

corporation makes the alternative choice under Regulations

AMT determined for column (d). For columns (a) through (c)

section 1.6655-2(f)(3)(ii)(C)) are treated as extraordinary

only, first multiply the AMT determined by the amounts

items occurring on the first day of the tax year in which the

shown in columns (a) through (c) of line 13 and then enter on

item is taken into account in determining taxable income.

line 15 the result for each column.

De minimis rule. Extraordinary items identified above

that are less than $1,000,000 (other than a net operating loss

Line 16. Enter on line 16 any other taxes the corporation

carryover or a section 481(a) adjustment) may be annualized

owed for the months shown in each column heading directly

using the general rules of Regulations section 1.6655-2(f), or,

above line 1. Include the same taxes used to figure Part I,

if the corporation chooses, may be taken into account after

line 1 of Form 2220, but do not include the personal holding

annualizing the taxable income for the annualization period.

company tax and interest due under the look-back method of

section 460(b)(2) for completed long-term contracts or

In Part II of Schedule A, make the appropriate adjustments

section 167(g)(2) for property depreciated under the income

to annualized taxable income before figuring the estimated

forecast method.

tax for each reporting period. Similar adjustments must be

made, if applicable, to Part I of Schedule A, if the adjusted

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Instructions for Form 2220 (2014)

Instructions For Form 2220 - Underpayment Of Estimated Tax By Corporations - 2014 Page 3

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