Instructions For Schedule A (Form 8804) - 2008 (Page 2 of 4) in pdf

Follow the steps below to determine

examples in Regulations section

Part III. Figuring the

which parts of the form have to be

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

Underpayment

completed:

section 1.6655-3(d)(3).

•

If the partnership is using only the

De minimis rule. Extraordinary items

Line 6. Enter the estimated tax

adjusted seasonal installment method,

identified above resulting from a particular

payments made by the partnership for its

check the applicable box in Part I and

transaction that totals less than $1 million

tax year as indicated below. Include any

complete Parts IV and VI of Schedule A

(other than a section 481(a) adjustment)

overpayment from line 13 of the

(Form 8804).

may be annualized using the general

partnership’s 2007 Form 8804 that was

•

If the partnership is using only the

rules of Regulations section 1.6655-2(f),

credited to the partnership’s first

annualized income installment method,

or, if the partnership chooses, may be

installment period on its 2008 Form 8804.

check the applicable box in Part I and

taken into account after annualizing the

If an installment is due on a Saturday,

complete Parts V and VI of Schedule A

ECTI for the annualization period.

Sunday, or legal holiday, payments made

(Form 8804).

on the next day that is not a Saturday,

•

Part IV. Adjusted Seasonal

If the partnership is using both

Sunday, or legal holiday are considered

methods, check both of the boxes in Part

made on the due date to the extent the

Installment Method

I and complete all three parts (Parts IV

payment is applied against that required

through VI) of Schedule A (Form 8804).

installment.

Note. Part IV does not reflect the lower

preferential rates permitted under

Also include on line 6 any:

•

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

Section 1446 tax paid or withheld by

Part II. Current Year and

These were omitted because, for most

another partnership in which the

Prior Year Safe Harbors

taxpayers, the income reported in Part IV

partnership filing this Schedule A (Form

will be predominantly (or exclusively)

8804) was a partner during the tax year.

Line 2 (prior year safe harbor). Enter

ordinary income. If the partnership wishes

See the instructions for Form 8804, line

the total section 1446 tax that would have

to consider lower preferential rates for

6b, in the Instructions for Forms 8804,

been due for 2007, without regard to

Part IV (and if the requirements outlined

8805, and 8813.

reductions for certified foreign

•

in the third paragraph of the line 31

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

partner-level items on the ECTI allocable

instructions are met), it must attach a

withheld from or paid by the partnership

to foreign partners for 2007.

schedule which appropriately expands

filing this Schedule A (Form 8804) during

lines 15 and 22 through 25 to show the

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

The partnership may generally use the

applicable special types of income or gain

property interest. See the instructions for

prior year safe harbor only if it paid the

and the applicable percentages (see, for

Form 8804, line 6c, in the Instructions for

required amount using that method for

example, lines 33 and 34 of this

Forms 8804, 8805, and 8813.

each of its installment payments of

schedule).

section 1446 tax during the tax year.

Column (a). Enter payments made by

However, see Regulations section

the date on line 4, column (a).

The partnership may use the adjusted

1.1446-3(b)(3)(ii) for an exception. Also,

seasonal installment method only if the

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

see the Note below. In addition, the

partnership’s base period percentage for

payments made on or before the date on

partnership may only use the prior year

any 6 consecutive months of the tax year

line 4 for that column and after the date

safe harbor if all of the following apply:

is 70% or more. The base period

on line 4 of the preceding column.

•

Each installment payment that was

percentage for any period of 6

Line 12. If any of the columns in line 12

made during the tax year, when averaged

consecutive months is the average of the

shows an underpayment, complete Part

with all prior installment payments, must

three percentages figured by dividing the

VII to figure the penalty.

have been 25% of the partnership’s total

ECTI for the corresponding 6 consecutive

section 1446 tax liability under the prior

month period in each of the 3 preceding

Parts IV Through VI

year safe harbor,

tax years by the ECTI for each of their

•

Extraordinary items. Generally, under

respective tax years. Figure the base

The prior tax year consisted of 12

the annualized income installment

period percentage using the 6-month

months,

•

method, extraordinary items must be

period in which the partnership normally

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

ECTI for the annualization period. Similar

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

Example. An amusement park with a

rules apply in determining ECTI under the

year, and

2008 calendar tax year receives the

adjusted seasonal installment method. An

•

largest part of its taxable income during a

The amount of ECTI for the prior tax

extraordinary item includes:

6-month period, May through October. To

year is not less than 50% of the ECTI

•

Any item identified in Regulations

compute its base period percentage for

shown on the current year Form 8804 that

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

this 6-month period, the amusement park

is (or will be) timely filed.

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

figures its ECTI for each May – October

•

If the partnership is not permitted to

A section 481(a) adjustment; and

period in 2005, 2006, and 2007. It then

•

use the prior year safe harbor method

Net gain or loss from the disposition of

divides the ECTI for each May – October

because any of the necessary conditions

25% or more of the fair market value of

period by the total ECTI for that particular

described above is not met, skip line 2

the partnership’s business assets during

tax year. The resulting percentages are:

and enter on line 3 the amount from line

the tax year.

69% (.69) for May – October 2005, 74%

(.74) for May – October 2006, and 67%

These extraordinary items must be

(.67) for May – October 2007. Because the

accounted for in the appropriate

Note. If the partnership qualifies for and

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

annualization period. However, a section

uses the exception under Regulations

the base period percentage for May

481(a) adjustment (unless the partnership

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

through October 2008 is 70%. Therefore,

makes the alternative choice under

standard option annualization method

the amusement park qualifies for the

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

during the tax year, the partnership

adjusted seasonal installment method.

is treated as an extraordinary item

should include on line 2 the total of all

occurring on the first day of the tax year in

installment payments that were made

Line 15. If the partnership has certain

which the item is taken into account in

during the tax year under both the prior

extraordinary items, special rules apply.

determining ECTI.

year safe harbor method and the

Do not include on line 15 the de minimis

standard option annualization method.

For more information regarding

extraordinary items that the partnership

Attach a schedule that explains the

extraordinary items, see Regulations

chooses to include on line 22b. See

computation.

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

Extraordinary items above.

-2-

Instructions For Schedule A (Form 8804) - 2008 Page 2

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