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2013

Department of the Treasury

Internal Revenue Service

Instructions for Schedule A

(Form 8804)

Penalty for Underpayment of Estimated Section 1446 Tax for Partnerships

Exception to the Penalty

2. The annualized income

Section references are to the Internal

Revenue Code unless otherwise noted.

installment method is used.

A partnership will not have to pay a

penalty if the tax shown on line 5f of

Future Developments

Who Must Pay the

its 2013 Form 8804 is less than $500.

For the latest information about

Underpayment Penalty

developments related to Schedule A

How To Use Schedule A

Generally, a partnership is subject to

(Form 8804) and its instructions, such

the penalty if it did not timely pay in

Complete this schedule as follows:

as legislation enacted after they were

installments at least the smaller of:

published, go to

Check one or both of the boxes in

1. The tax shown on line 5f of its

About-Schedule-A-Form-8804.

Part I that apply. If the partnership

2013 Form 8804 or

checks a box in Part I, attach

What's New

2. The total section 1446 tax that

Schedule A (Form 8804) to Form

would have been due for 2012,

For tax years beginning after

8804. Be sure to check the box on

without regard to reductions for

December 31, 2012, the American

Form 8804, line 8.

certified foreign partner-level items,

Taxpayer Relief Act of 2012,

If Part II, line 1 is $500 or more,

on the ECTI allocable to foreign

increased the maximum tax rate for

complete the rest of page 1 to

partners for 2012, provided that (1)

individuals to 39.6%, and the

determine the underpayment for any

this amount is at least 50% of the sum

maximum tax rate on capital gains to

of the installment due dates.

of the amounts shown on lines 4d, 4h,

20%. Therefore, under Regulations

If there is an underpayment on

4l, 4p, and 4t of its 2013 Form 8804

section 1.1446-3(a)(2), Schedule A

line 12 (column (a), (b), (c), or (d)), go

and (2) the tax year was for a full 12

(Form 8804) has been modified to

to Part VII to figure the penalty.

months. See the instructions for line 2

reflect the highest tax rates for these

Complete Parts IV through VI as

below for more details.

two types of income. As a result,

appropriate if the partnership uses the

substantial changes have been made

In these instructions, “Form 8804”

adjusted seasonal installment method

to the 2013 Schedule A (Form 8804).

generally refers to the partnership's

and/or the annualized income

original Form 8804. However, an

installment method.

General Instructions

amended Form 8804 is considered

the original Form 8804 if the amended

Specific Instructions

Purpose of Form

Form 8804 is filed by the due date

Partnerships that have effectively

(including extensions) of the original

Part I. Reasons for Filing

connected taxable income (ECTI)

Form 8804.

allocable to foreign partners use

Adjusted seasonal installment

Also, for purposes of determining a

Schedule A (Form 8804) to

method and/or annualized income

required installment, if an amended

determine:

installment method. If the

Form 8804 is filed for the prior tax

Whether they are subject to the

partnership's income varied during the

year, then “prior tax year” includes the

penalty for underpayment of

year because, for example, it

amended Form 8804, but only if the

estimated tax and, if so,

operated its business on a seasonal

amended Form 8804 is filed before

The amount of the underpayment

basis, it may be able to lower or

the applicable installment due date.

penalty.

eliminate the amount of one or more

The penalty is figured separately

required installments by using the

for each installment due date.

Who Must File

adjusted seasonal installment method

Therefore, the partnership may owe a

and/or the annualized income

Generally, the partnership does not

penalty for an earlier due date even if

installment method.

have to file this schedule because the

it paid enough tax later to make up the

IRS will figure the amount of the

Example. A ski shop, which receives

underpayment. This is true even if the

penalty and notify the partnership of

most of its income during the winter

partnership is due a refund when its

any amount due. However, even if the

months, may benefit from using one

return is filed. However, the

partnership does not owe a penalty,

or both of these methods to figure its

partnership may be able to reduce or

complete and attach this schedule to

required installments. The annualized

eliminate the penalty by using the

the partnership's Form 8804 if the Part

income installment or adjusted

annualized income installment

II, line 1 amount on page 1 is $500 or

seasonal installment may be less than

method or the adjusted seasonal

more and any of the following apply:

the required installment under the

installment method. See the

1. The adjusted seasonal

current year safe harbor (increased by

instructions for Parts IV and V for

installment method is used.

any reduction recaptured under

details.

Dec 18, 2013

Cat. No. 36325U

Instructions For Schedule A (Form 8804) - Penalty For Underpayment Of Estimated Section 1446 Tax For Partnerships - 2013

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