Instructions For Schedule A (Form 8804) - 2010 (Page 2 of 4) in pdf

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Line 12. If any of the columns in line 12

Each installment payment that was

consecutive months is the average of the

made during the tax year, when averaged

shows an underpayment, complete Part

three percentages figured by dividing the

with all prior installment payments, must

VII to figure the penalty.

ECTI for the corresponding 6 consecutive

have been 25% of the partnership’s total

month period in each of the 3 preceding

Parts IV Through VI

section 1446 tax liability under the prior

tax years by the ECTI for each of their

year safe harbor,

respective tax years. Figure the base

Extraordinary items. Generally, under

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The prior tax year consisted of 12

period percentage using the 6-month

the annualized income installment

months,

period in which the partnership normally

method, extraordinary items must be

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The partnership timely files (including

receives the largest part of its ECTI.

taken into account after annualizing the

extensions) a U.S. return of partnership

Example. An amusement park with a

ECTI for the annualization period. Similar

income (e.g., Form 1065) for the prior tax

2010 calendar tax year receives the

rules apply in determining ECTI under the

year, and

largest part of its taxable income during a

adjusted seasonal installment method. An

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The amount of ECTI for the prior tax

6-month period, May through October. To

extraordinary item includes:

year is not less than 50% of the ECTI

compute its base period percentage for

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Any item identified in Regulations

shown on the current year Form 8804 that

this 6-month period, the amusement park

section 1.1502-76(b)(2)(ii)(C)(1), (2), (3),

is (or will be) timely filed.

figures its ECTI for each May – October

(4), (7), and (8);

If the partnership is not permitted to

period in 2007, 2008, and 2009. It then

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A section 481(a) adjustment; and

use the prior year safe harbor method

divides the ECTI for each May – October

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Net gain or loss from the disposition of

because any of the necessary conditions

period by the total ECTI for that particular

25% or more of the fair market value of

described above is not met, skip line 2

tax year. The resulting percentages are:

the partnership’s business assets during

and enter on line 3 the amount from line

69% (.69) for May – October 2007, 74%

the tax year.

(.74) for May – October 2008, and 67%

These extraordinary items must be

(.67) for May – October 2009. Because the

Note. If the partnership qualifies for and

accounted for in the appropriate

average of 69%, 74%, and 67% is 70%,

uses the exception under Regulations

annualization period. However, a section

the base period percentage for May

section 1.1446-3(b)(3)(ii) to switch to the

481(a) adjustment (unless the partnership

through October 2010 is 70%. Therefore,

standard option annualization method

makes the alternative choice under

the amusement park qualifies for the

during the tax year, the partnership

Regulations section 1.6655-2(f)(3)(ii)(C))

adjusted seasonal installment method.

should include on line 2 the total of all

is treated as an extraordinary item

installment payments that were made

Line 15. If the partnership has certain

occurring on the first day of the tax year in

during the tax year under both the prior

extraordinary items, special rules apply.

which the item is taken into account in

year safe harbor method and the

Do not include on line 15 the de minimis

determining ECTI.

standard option annualization method.

extraordinary items that the partnership

For more information regarding

Attach a schedule that explains the

chooses to include on line 22b. See

extraordinary items, see Regulations

computation.

Extraordinary items above.

section 1.6655-2(f)(3)(ii) and the

examples in Regulations section

Line 22b. If the partnership has certain

Part III. Figuring the

1.6655-2(f)(3)(vii). Also see Regulations

extraordinary items of $1 million or more

Underpayment

section 1.6655-3(d)(3).

from a transaction, or a section 481(a)

adjustment, special rules apply. Include

De minimis rule. Extraordinary items

Line 6. Enter the estimated tax

these amounts on line 22b for the

identified above resulting from a particular

payments made by the partnership for its

appropriate period. Also include on line

transaction that totals less than $1 million

tax year as indicated below. Include any

22b the de minimis extraordinary items

(other than a section 481(a) adjustment)

overpayment from line 13 of the

that the partnership chooses to exclude

may be annualized using the general

partnership’s 2009 Form 8804 that was

from line 15. See Extraordinary items

rules of Regulations section 1.6655-2(f),

credited to the partnership’s first

above.

or, if the partnership chooses, may be

installment period on its 2010 Form 8804.

taken into account after annualizing the

Line 23. Enter the amount by which line

If an installment is due on a Saturday,

ECTI for the annualization period.

22c is being reduced for state and local

Sunday, or legal holiday, payments made

taxes under Regulations section

on the next day that is not a Saturday,

Part IV. Adjusted Seasonal

1.1446-6(c)(1)(iii) and for certified foreign

Sunday, or legal holiday are considered

Installment Method

partner-level items submitted using Form

made on the due date to the extent the

8804-C. See Reductions for State and

payment is applied against that required

Note. Part IV does not reflect the lower

Local Taxes and Certification of

installment.

preferential rates permitted under

Deductions and Losses in the Instructions

Also include on line 6 any:

Regulations section 1.1446-3(a)(2).

for Forms 8804, 8805, and 8813 for

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Section 1446 tax paid or withheld by

These were omitted because, for most

additional information.

another partnership in which the

taxpayers, the income reported in Part IV

partnership filing this Schedule A (Form

will be predominantly (or exclusively)

Part V. Annualized Income

8804) was a partner during the tax year.

ordinary income. If the partnership wishes

See the instructions for Form 8804, line

Installment Method

to consider lower preferential rates for

6b, in the Instructions for Forms 8804,

Part IV (and if the requirements outlined

Line 30. Annualization periods. Enter

8805, and 8813.

in the third paragraph of the line 31

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on line 30, columns (a) through (d),

Section 1445(a) or 1445(e)(1)(B) tax

instructions are met), it must attach a

respectively, the annualization periods for

withheld from or paid by the partnership

schedule which appropriately expands

the option listed below. For example, if

filing this Schedule A (Form 8804) during

lines 15 and 22 through 25 to show the

the partnership elected Option 1, enter on

the tax year for a disposition of a U.S. real

applicable special types of income or gain

line 30 the annualization periods 2, 4, 7,

property interest. See the instructions for

and the applicable percentages (see, for

and 10, in columns (a) through (d),

Form 8804, line 6c, in the Instructions for

example, lines 33 and 34 of this

respectively.

Forms 8804, 8805, and 8813.

schedule).

Column (a). Enter payments made by

The partnership may use the adjusted

Use Option 1 or Option 2 only if

the date on line 4, column (a).

seasonal installment method only if the

the partnership elected to do so by

Columns (b), (c), and (d). Enter

partnership’s base period percentage for

filing Form 8842, Election To Use

CAUTION

payments made on or before the date on

any 6 consecutive months of the tax year

Different Annualization Periods for

line 4 for that column and after the date

is 70% or more. The base period

Corporate Estimated Tax, by the due date

on line 4 of the preceding column.

percentage for any period of 6

of the first required installment payment.

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Instructions for Schedule A (Form 8804) (2010)

Instructions For Schedule A (Form 8804) - 2010 Page 2

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