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due dates. Using one or both of these

income (for example, Form 1065) for the

Section 1445(a) or 1445(e) tax

methods may reduce or eliminate the

prior tax year.

withheld from or paid by the partnership

penalty for those due dates.

The amount of ECTI for the prior tax

filing this Schedule A (Form 8804)

year isn’t less than 50% of the ECTI

during the tax year for a disposition of a

Use Parts IV through VI of

shown on the current year Form 8804

U.S. real property interest. See the

Schedule A (Form 8804) to figure one or

that is (or will be) timely filed.

instructions for Form 8804, lines 6d and

more required installments. If Parts IV

6e, in the Instructions for Forms 8804,

through VI are used for any payment

If the partnership isn’t permitted to

8805, and 8813.

due date, those Parts must be used for

use the prior year safe harbor method

all subsequent payment due dates. To

Column (a). Enter payments made by

because any of the necessary

arrive at the amount of each required

the date on line 4, column (a).

conditions described above isn’t met,

installment, Part VI uses the smallest of:

skip line 2 and enter on line 3 the

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

The adjusted seasonal installment (if

amount from line 1.

payments made on or before the date

applicable),

on line 4 for that column and after the

Note. If the partnership qualifies for and

The annualized income installment (if

date on line 4 of the preceding column.

uses the exception under Regulations

applicable), or

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

The current year safe harbor

Line 12. If any of the columns in line 12

the standard option annualization

(increased by any reduction recaptured

shows an underpayment, complete Part

method during the tax year, the

under section 6655(e)(1)(B)).

VII to figure the penalty.

partnership should include on line 2 the

Follow the steps below to determine

total of all installment payments that

Parts IV Through VI

which parts of the form have to be

were made during the tax year under

completed.

both the prior year safe harbor method

Extraordinary items. Generally, under

If the partnership is using only the

and the standard option annualization

the annualized income installment

adjusted seasonal installment method,

method. Attach a statement that

method, extraordinary items must be

check the applicable box in Part I and

explains the computation.

taken into account after annualizing the

complete Parts IV and VI of Schedule A

ECTI for the annualization period.

Part III. Figuring the

(Form 8804).

Similar rules apply in determining ECTI

If the partnership is using only the

under the adjusted seasonal installment

Underpayment

annualized income installment method,

method. An extraordinary item includes:

check the applicable box in Part I and

Line 5. Large partnerships with assets

Any item identified in Regulations

complete Parts V and VI of Schedule A

of $1 billion or more (determined as of

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

(Form 8804).

the end of the preceding tax year) must

(3), (4), (7), and (8);

If the partnership is using both

increase the required installment of

A section 481(a) adjustment; and

methods, check both of the boxes in

estimated tax otherwise due in July,

Net gain or loss from the disposition

Part I and complete all three parts (Parts

August, or September of 2017 by 0.25%

of 25% or more of the fair market value

IV through VI) of Schedule A (Form

of the amount that otherwise would

of the partnership's business assets

8804).

have been due for that installment. The

during the tax year.

amount of the next required installment

Part II. Current Year and

These extraordinary items must be

would be decreased by an equal

accounted for in the appropriate

Prior Year Safe Harbors

amount to reflect the increase in the

annualization period. However, a

previous installment.

section 481(a) adjustment (unless the

Line 2 (prior year safe harbor). Enter

Line 6. Enter the estimated tax

partnership makes the alternative

the total section 1446 tax that would

payments made by the partnership for

choice under Regulations section

have been due for 2015, without regard

its tax year as indicated below. Include

1.6655-2(f)(3)(ii)(C)) is treated as an

to reductions for certified foreign

any overpayment from line 13 of the

extraordinary item occurring on the first

partner-level items on the ECTI

partnership's 2015 Form 8804 that was

day of the tax year in which the item is

allocable to foreign partners for 2015.

credited to the partnership's first

taken into account in determining ECTI.

The partnership can generally use

installment period on its 2016 Form

the prior year safe harbor only if it paid

For more information regarding

8804. If an installment is due on a

the required amount using that method

extraordinary items, see Regulations

Saturday, Sunday, or legal holiday,

for each of its installment payments of

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

payments made on the next day that

section 1446 tax during the tax year.

examples in Regulations section

isn’t a Saturday, Sunday, or legal

However, see Regulations section

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

holiday are considered made on the due

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

section 1.6655-3(d)(3).

date to the extent the payment is

see the Note below. In addition, the

applied against that required

De minimis rule. Extraordinary

partnership can only use the prior year

installment.

items identified above resulting from a

safe harbor if all of the following apply.

particular transaction that totals less

Also include on line 6 any of the

Each installment payment that was

than $1 million (other than a section

following.

made during the tax year, when

481(a) adjustment) can be annualized

Section 1446 tax paid or withheld by

averaged with all prior installment

using the general rules of Regulations

another partnership in which the

payments, must have been 25% of the

section 1.6655-2(f), or, if the partnership

partnership filing this Schedule A (Form

partnership's total section 1446 tax

chooses, can be taken into account

8804) was a partner during the tax year.

liability under the prior year safe harbor.

after annualizing the ECTI for the

See the instructions for Form 8804, lines

The prior tax year consisted of 12

annualization period.

6b and 6c, in the Instructions for Forms

months.

8804, 8805, and 8813.

The partnership timely files (including

extensions) a U.S. return of partnership

Instructions for Schedule A (Form 8804) (2016)

Instructions For Schedule A (Form 8804) - Penalty For Underpayment Of Estimated Section 1446 Tax For Partnerships - 2016 Page 2

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