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2016

Department of the Treasury

Internal Revenue Service

Instructions for Schedule A

(Form 8804)

Penalty for Underpayment of Estimated Section 1446 Tax for Partnerships

Section references are to the Internal Revenue

Form 8804 if the Part II, line 1 amount

instructions for Parts IV and V for

Code unless otherwise noted.

on page 1 is $500 or more and any of

details.

the following apply.

Future Developments

Exception to the Penalty

1. The adjusted seasonal

For the latest information about

installment method is used.

A partnership won’t have to pay a

developments related to Schedule A

penalty if the tax shown on line 5f of its

2. The annualized income

(Form 8804) and its instructions, such

2016 Form 8804 is less than $500.

installment method is used.

as legislation enacted after they were

published, go to

IRS.gov/uac/About-

How To Use Schedule A

Who Must Pay the

Schedule-A-Form-8804.

Complete this schedule as follows.

Underpayment Penalty

What's New

Check one or both of the boxes in

Generally, a partnership is subject to the

Part I that apply. If the partnership

penalty if it didn’t timely pay in

New filing date. For partnership tax

checks a box in Part I, attach

installments at least the smaller of:

years beginning after December 31,

Schedule A (Form 8804) to Form 8804.

1. The tax shown on line 5f of its

2015, the due date for Form 8804

Be sure to check the box on Form 8804,

2016 Form 8804; or

(without an extension) has changed

line 8.

from the 15th day of the 4th month

2. The total section 1446 tax that

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

following the close of the tax year to the

would have been due for 2015, without

complete the rest of page 1 to

15th day of the 3rd month following the

regard to reductions for certified foreign

determine the underpayment for any of

close of the tax year. See Part VII.

partner-level items, on the ECTI

the installment due dates.

Figuring the Penalty, later.

allocable to foreign partners for 2015,

If there is an underpayment on line 12

provided that (1) this amount is at least

(column (a), (b), (c), or (d)), go to Part

Large partnerships. Partnerships with

50% of the sum of the amounts shown

VII to figure the penalty.

assets of $1 billion or more (determined

on lines 4d, 4h, 4l, 4p, and 4t of its 2016

Complete Parts IV through VI as

as of the end of the preceding tax year)

Form 8804; and (2) the tax year was for

appropriate if the partnership uses the

must increase the required installment

a full 12 months. See the instructions for

adjusted seasonal installment method

of estimated tax due in July, August, or

line 2 below for more details.

and/or the annualized income

September of 2017 by 0.25% of the

installment method.

amount that otherwise would have been

In these instructions, “Form 8804”

due for that installment. The amount of

generally refers to the partnership's

Specific Instructions

the next required installment would be

original Form 8804. However, an

decreased by an equal amount to reflect

amended Form 8804 is considered the

the increase in the previous installment.

Part I. Reasons for Filing

original Form 8804 if the amended Form

8804 is filed by the due date (including

General Instructions

Adjusted seasonal installment meth

extensions) of the original Form 8804.

od and/or annualized income install

Also, for purposes of determining a

ment method. If the partnership's

Purpose of Form

required installment, if an amended

income varied during the year because,

Partnerships that have effectively

Form 8804 is filed for the prior tax year,

for example, it operated its business on

connected taxable income (ECTI)

then “prior tax year” includes the

a seasonal basis, it may be able to

allocable to foreign partners use

amended Form 8804, but only if the

lower or eliminate the amount of one or

Schedule A (Form 8804) to determine:

amended Form 8804 is filed before the

more required installments by using the

Whether they are subject to the

applicable installment due date.

adjusted seasonal installment method

penalty for underpayment of estimated

and/or the annualized income

The penalty is figured separately for

tax and, if so,

installment method.

each installment due date. Therefore,

The amount of the underpayment

the partnership may owe a penalty for

penalty.

Example. A ski shop, which

an earlier due date even if it paid

receives most of its income during the

Who Must File

enough tax later to make up the

winter months, may benefit from using

underpayment. This is true even if the

one or both of these methods to figure

Generally, the partnership doesn’t have

partnership is due a refund when its

its required installments. The

to file this schedule because the IRS will

return is filed. However, the partnership

annualized income installment or

figure the amount of the penalty and

may be able to reduce or eliminate the

adjusted seasonal installment may be

notify the partnership of any amount

penalty by using the annualized income

less than the required installment under

due. However, even if the partnership

installment method or the adjusted

the current year safe harbor (increased

doesn’t owe a penalty, complete and

seasonal installment method. See the

by any reduction recaptured under

attach this schedule to the partnership's

section 6655(e)(1)(B)) for one or more

Jan 12, 2017

Cat. No. 36325U

Instructions For Schedule A (Form 8804) - Penalty For Underpayment Of Estimated Section 1446 Tax For Partnerships - 2016

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