Form 8804-W - Instruction For Form 1446 - 2008 printable pdf download

Form 8804-W (WORKSHEET) 2008

Page

General Instructions

Specific Instructions

Section references are to the Internal Revenue Code unless

Part I—Determination of Installment

otherwise noted.

Payments

Regulations section 1.1446-6T sunsets in May 2008.

Complete Form 8804-W for each installment payment of section

At the time these instructions went to print, the IRS

1446 tax based on the information available at the time of the

was contemplating issuing final regulations under

installment payment.

section 1.1446-6. Before completing Form 8804-W,

CAUTION

please check the Internal Revenue Bulletin or the Federal Register

Lines 1 through 6—Current Year Safe Harbor

to see if these regulations have been issued. If so, you must take

Lines 1a, 1d, 1g, and 1j. To determine the foreign partner’s

the final regulations into account before completing Form 8804-W.

allocable share of ECTI, see Effectively Connected Taxable

Income in the Instructions for Forms 8804, 8805, and 8813. With

What’s New

respect to lines 1d, 1g, and 1j, enter the specified types of ECTI if

such partner would be entitled to use a preferential rate on such

Final regulations under section 6655 provide guidance with

income or gain (see Regulations section 1.1446-3(a)(2)).

respect to estimated tax requirements. These regulations are

If the partnership has net ordinary loss, net short-term capital

applicable for tax years beginning after September 6, 2007.

loss, or net 28% capital loss, each net loss should be netted

For partnerships that elect to use the annualized income

against the appropriate categories of income and gain to

installment method, extraordinary items (as defined in Regulations

determine the amounts of income and gain to be entered on lines

section 1.6655-2(f)(3)(ii)) generally must be taken into account

1d, 1g, and 1j, respectively. See section 1(h) and Notice 97-59,

after annualizing the effectively connected taxable income for the

1997-45 I.R.B. 7, for rules for netting gains and losses. In addition,

annualization period. Similar rules apply if the partnership uses

if the partnership has received any certificates under Regulations

the adjusted seasonal installment method. See the instructions for

section 1.1446-6T, then the netting rules of section 1(h) and

Parts II through IV.

Notice 97-59 must be considered in determining the category of

income such items offset.

Who Must Make Estimated Section 1446

Lines 1b, 1e, 1h, and 1k. Enter the reduction amounts by reason

Tax Payments

of valid certificates received from foreign partners under

Regulations section 1.1446-6T. See Certification of Deductions

Partnerships generally must make installment payments of

and Losses in the Instructions for Forms 8804, 8805, and 8813 for

estimated section 1446 tax if they expect the aggregate tax on the

additional information. Also see the last sentence of the

effectively connected taxable income (ECTI) that is allocable to all

instructions for lines 1a, 1d, 1g, and 1j above for additional

foreign partners to be $500 or more.

information.

When To Make Estimated Section 1446

Line 7—Prior Year Safe Harbor

Tax Payments

Enter the total section 1446 tax that would be due for 2008,

without regard to partner certificates, computed using the ECTI

The installments are due by the 15th day of the 4th, 6th, 9th, and

allocable to foreign partners for 2007. With respect to the

12th months of the partnership’s tax year. If any date falls on a

partnership’s first installment payment, if the 2007 Form 8804 has

Saturday, Sunday, or legal holiday, the installment is due on the

not yet been filed, an estimate is acceptable. However, if the

next regular business day.

partnership later determines that this estimate is incorrect, see

Underpayment of Estimated Section

Refiguring Estimated Section 1446 Tax above.

1446 Tax

Complete line 7 only if all of the following apply:

A partnership that does not make estimated section 1446 tax

The prior tax year consisted of 12 months,

payments when due may be subject to an underpayment penalty

The partnership timely files (including extensions) a U.S. return

for the period of underpayment. See Schedule A (Form 8804) for

of partnership income (e.g., Form 1065) for the prior year, and

details.

The amount of ECTI for the prior tax year is not less than 50%

How To Make Estimated Section 1446

of the ECTI expected for the current tax year. Furthermore, the

Form 8804 on which the current year ECTI will be reported must

Tax Payments

be timely filed.

A partnership that is required to make an installment payment of

If any of the above does not apply, skip line 7 and enter the

section 1446 tax must file Form 8813, Partnership Withholding

amount from line 6 on line 8.

Tax Payment Voucher (Section 1446). Furthermore, the

If the partnership qualifies to use the prior year safe harbor and

partnership is generally required to notify each foreign partner of

chooses that method, it must use that method to pay each of its

the section 1446 tax paid on the partner’s behalf within 10 days of

installments during the tax year. Furthermore, for each installment

the installment payment due date. See Regulations section

payment, the average of that installment and prior installments

1.1446-3(d) and the Instructions for Forms 8804, 8805, and 8813

during the tax year must be at least 25% of the amount that

for more information.

satisfies the partnership’s section 1446 tax liability under the prior

Refiguring Estimated Section 1446 Tax

year safe harbor. If the partnership does not satisfy both of these

requirements, it will not qualify for the prior year safe harbor when

If, after the partnership figures and pays estimated section 1446

determining any penalty due on Schedule A (Form 8804).

tax, it finds that its section 1446 tax liability for the year will be

If the partnership begins using the prior year safe harbor

more or less than originally estimated, it may have to refigure its

method and it determines later in the tax year (based upon the

required installments. If earlier installments were underpaid, the

standard option annualization method described later in these

partnership may owe a penalty for underpayment of estimated

instructions) that it will not meet the 50% of ECTI requirement

tax.

described in the last bulleted item above, it may make all

An immediate catch-up payment should be made to reduce the

subsequent installment payments using the standard option

amount of any penalty resulting from the underpayment of any

annualization method and it will not be subject to the penalty

earlier installments, whether caused by a change in estimate,

determined on Schedule A (Form 8804). This change in method

failure to make a payment, or a mistake.

must be disclosed in a statement attached to the Form 8804 the

Form 8804-W - Instruction For Form 1446 - 2008

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