Instructions For Form 2220 - 2009

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2 0 09
Department of the Treasury
Internal Revenue Service
Instructions for Form 2220
Underpayment of Estimated Tax by Corporations
The penalty is figured separately for each installment due
Section references are to the Internal Revenue Code unless
otherwise noted.
date. Therefore, the corporation may owe a penalty for an
earlier due date even if it paid enough tax later to make up
General Instructions
the underpayment. This is true even if the corporation is due
a refund when its return is filed. However, the corporation
What’s New
may be able to reduce or eliminate the penalty by using the
annualized income installment method or the adjusted
The special rules that applied to certain installments due in
seasonal installment method. See the instructions for Part II
2010 are no longer applicable. Section 401 of the Tax
for details.
Increase Prevention and Reconciliation Act of 2005 (and
any modification of this section contained in any other
Exception to the Penalty
provision of law) does not apply to corporate estimated tax
installment payments, which, without regard to that section,
A corporation will not have to pay a penalty if the tax shown
would otherwise be due after December 31, 2009.
on the corporation’s 2009 return (the Part I, line 3 amount) is
less than $500.
Purpose of Form
Corporations (including S corporations), tax-exempt
How To Use Form 2220
organizations subject to the unrelated business income tax,
and private foundations use Form 2220 to determine:
Complete lines 1 through 3 of Part I. If line 3 is $500 or
Whether they are subject to the penalty for underpayment
more, complete the rest of Part I to determine the required
of estimated tax and, if so,
annual payment and go to Part II.
The amount of the underpayment penalty for the period
Check one or more boxes in Part II if the corporation uses
that applies.
the adjusted seasonal installment method, the annualized
income installment method, or if the corporation is a large
Who Must File
corporation.
If the corporation checked a box in Part II, attach Form
Generally, the corporation does not have to file this form
2220 to the income tax return. Be sure to check the box on
with its income tax return because the IRS will figure the
line 33, page 1 of Form 1120; or the comparable line of any
amount of any penalty and notify the corporation of any
other income tax return the corporation is required to file (for
amount due. However, even if the corporation does not owe
example, Form 1120-C, 1120-L, or 1120S).
a penalty, complete and attach this form to the corporation’s
tax return if the Part I, line 3 amount on page 1 is $500 or
Complete Part III to determine the underpayment for any
more and any of the following apply.
of the installment due dates.
1. The adjusted seasonal installment method is used.
If there is an underpayment on Part III, line 17 (column
2. The annualized income installment method is used.
(a), (b), (c), or (d)), go to Part IV to figure the penalty.
3. The corporation is a large corporation (as defined in
Complete Schedule A if the corporation uses the adjusted
the instructions for Part II, line 8, on page 2) figuring its first
seasonal installment method and/or the annualized income
required installment based on the prior year’s tax.
installment method.
Who Must Pay the Underpayment
Specific Instructions
Penalty
Generally, a corporation is subject to the penalty if it did not
Part I. Required Annual Payment
timely pay at least the smaller of:
1. The tax shown on its 2009 return, or
Complete lines 1 through 5 to figure the corporation’s
2. The tax shown on its 2008 return (if it filed a 2008
required annual payment.
return showing at least some amount of tax and the return
was for a full 12 months). However, a large corporation can
Line 1. Generally, enter the tax from Form 1120, line 31; or
base only its first required installment on the prior year’s tax.
the applicable line for other income tax returns. However, if
that amount includes any tax attributable to a sale described
in section 338(a)(1), do not include that tax on line 1.
In these instructions, “return” generally refers to the
corporation’s original return. However, an amended return is
Instead, write “Sec. 338 gain” and show the amount of tax in
considered the original return if the amended return is filed
brackets on the dotted line next to line 1. This exclusion
by the due date (including extensions) of the original return.
from the line 1 amount does not apply if a section 338(h)(10)
Also, for purposes of determining a required installment, if
election is made.
an amended return is filed for the prior tax year, then ‘‘prior
For information on how to figure the total tax for
tax year’’ includes the amended return, but only if the
estimated tax purposes for other entities, see the following
amended return is filed before the applicable installment due
date.
forms or their instructions.
Cat. No. 64293P

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