Instructions For Form 2220 - Underpayment Of Estimated Tax By Corporations

and enter 80% and 20% of the required installment

of their respective tax years. Figure the base period

amount in the first and second columns, respectively.

percentage using the 6-month period in which the

corporation normally receives the largest part of its

Line 11. Enter the estimated tax payments made by the

taxable income.

corporation for its tax year as indicated below. Include

any overpayment from the corporation’s 2003 tax return

Example. An amusement park with a 2004

that was credited to the corporation’s 2004 estimated tax.

calendar tax year receives the largest part of its taxable

If an installment is due on a Saturday, Sunday, or legal

income during a 6-month period, May through October.

holiday, payments made on the next day that is not a

To compute its base period percentage for this 6-month

Saturday, Sunday, or legal holiday are considered made

period, the amusement park figures its taxable income for

on the due date to the extent the payment is applied

each May-October period in 2001, 2002, and 2003. It

against that required installment.

then divides the taxable income for each May-October

Column (a). Enter payments made by the date on

period by the total taxable income for that particular tax

line 9, column (a).

year. The resulting percentages are: 69% (.69) for

May-October 2001, 74% (.74) for May-October 2002, and

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

67% (.67) for May-October 2003. Because the average of

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

69%, 74%, and 67% is 70%, the base period percentage

line 9 of the preceding column.

for May through October 2004 is 70%. Therefore, the

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

amusement park qualifies for the adjusted seasonal

underpayment, complete Part III to figure the penalty.

installment method.

Part III. Figuring the Penalty

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

Form 4626, Alternative Minimum Tax-Corporations, if

Complete lines 19 through 38 to determine the amount of

applicable. Figure alternative minimum taxable income

the penalty. The penalty is figured for the period of

(AMTI) based on the corporation’s income and

underpayment using the underpayment rate determined

deductions for the months shown in the column headings

under section 6621(a)(2). The period of underpayment

directly above line 1. For each column, divide the AMTI

runs from the installment due date to the earlier of the

by the amount shown on line 8 before subtracting the

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

AMT exemption amount under section 55(d). For

the third month after the close of the 2004 tax year. For

columns (a) through (c) only, multiply the AMT

information on obtaining the interest rate on

determined by the amounts shown on line 13.

underpayments paid after March 31, 2005, see the

footnote on page 2 of Form 2220.

Line 16. Enter any other taxes the corporation owed for

Line 19. A payment of estimated tax is applied against

the months shown in each column heading directly above

underpayments of required installments in the order that

line 1. Include the same taxes used to figure line 4, Part

installments are required to be paid, regardless of the

II, of Form 2220, but do not include the personal holding

installment to which the payment pertains.

company tax or interest due under the look-back method

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

Example. A corporation underpaid the April 15

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

installment by $1,000. The June 15 installment requires a

income forecast method.

payment of $2,500. On June 11, the corporation deposits

$2,500 to cover the June 15 installment. However,

Line 18. Enter the credits the corporation is entitled to

for the months shown in each column heading above line

$1,000 of this payment is applied against the April 15

installment. The penalty for the April 15 installment is

figured to June 11 (57 days). The remaining $1,500 is

Part II. Annualized Income Installment

applied to the June 15 installment as if it were made on

June 15.

Method

If the corporation has made more than one payment

Line 20. Annualization periods. Enter on line 20,

for a required installment, attach a separate computation

columns (a) through (d), respectively, the annualization

for each payment.

periods for the option listed below. For example, if the

corporation elected Option 1, enter on line 20 the

Schedule A

annualization periods 2, 4, 7, and 10, in columns (a)

through (d), respectively.

Part I. Adjusted Seasonal Installment

Use Option 1 or Option 2 only if the corporation

Method

elected to do so by filing Form 8842, Election To

The corporation may use the adjusted seasonal

Use Different Annualization Periods for Corporate

CAUTION

installment method only if the corporation’s base period

Estimated Tax, by the due date of the first required

percentage for any 6 consecutive months of the tax year

installment payment. Once made, the election is

is 70% or more. The base period percentage for any

irrevocable for the particular tax year.

period of 6 consecutive months is the average of the 3

percentages figured by dividing the taxable income for

Option 2 is not available to tax-exempt organizations

the corresponding 6 consecutive month period in each of

and private foundations. See the options listed on page 4

the 3 preceding tax years by the taxable income for each

for these entities.

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Instructions For Form 2220 - Underpayment Of Estimated Tax By Corporations - 2004 Page 3

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