Instructions For Form 1120-W - Estimated Tax For Corporations

If the corporation uses the annualized income installment

Net gain or loss from the disposition of 25% or more of the fair

method and/or the adjusted seasonal installment method, or is a

market value of the corporation's business assets during the tax

"large corporation," see the instructions below.

year.

These extraordinary items must be accounted for in the

Annualized income installment method and/or adjusted

appropriate annualization period. However, a net operating loss

seasonal installment method. If the corporation's income is

deduction and a section 481(a) adjustment (unless the

expected to vary during the year because, for example, it

corporation makes the alternative choice under Regulations

operates its business on a seasonal basis, it may be able to

section 1.6655-2(f)(ii)(C)) are treated as extraordinary items

lower the amount of one or more required installments by using

occurring on the first day of the tax year in which the item is

the annualized income installment method and/or the adjusted

taken into account in determining taxable income.

seasonal installment method. For example, a ski shop, which

receives most of its income during the winter months, may be

De minimis rule. Extraordinary items identified above that

are less than $1,000,000 (other than a net operating loss

able to benefit from using one or both of these methods in

carryover or a section 481(a) adjustment) may be annualized

figuring one or more of its required installments.

using the general rules of Regulations section 1.6655-2(f), or if

To use one or both of these methods, complete Schedule A.

the corporation chooses, may be taken into account after

If Schedule A is used for any payment date, it must be used for

annualizing the taxable income for the annualization period.

all payment due dates. To get the amount of each required

For more information regarding extraordinary items, see

installment, Schedule A automatically selects the smallest of (a)

Regulations section 1.6655-2(f)(ii) and the examples in

the annualized income installment (if applicable), (b) the

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

adjusted seasonal installment (if applicable), or (c) the regular

installment under section 6655(d)(1) (increased by any

section 1.6655-3(d)(3).

recapture of a reduction in a required installment under section

Part I. Adjusted Seasonal

6655(e)(1)(B)).

Installment Method

Large corporations. A large corporation is a corporation that

had, or whose predecessor had, taxable income of $1 million or

Complete this part only if the corporation's base period

more for any of the 3 tax years immediately preceding the 2014

percentage for any 6 consecutive months of the tax year equals

tax year, or if less, the number of years the corporation has been

or exceeds 70% (.70). Figure the base period percentage using

in existence. For this purpose, taxable income is modified to

the 6-month period in which the corporation normally receives

exclude net operating loss and capital loss carrybacks or

the largest part of its taxable income. The base period

carryovers. Members of a controlled group, as defined in section

percentage for any period of 6 consecutive months is the

1563, must divide the $1 million amount among themselves

average of the three percentages figured by dividing the taxable

according to rules similar to those in section 1561.

income for the corresponding 6-consecutive-month period in

Large corporations figure the amount to enter on line 25 as

each of the 3 preceding tax years by the taxable income for each

follows. If Schedule A is used, also follow these instructions to

of their respective tax years.

figure the amounts to enter on Schedule A, Part III, line 35.

Example. An amusement park with a calendar year as its tax

If line 22 is smaller than line 23a: Enter 25% of line 22 in

year receives the largest part of its taxable income during the

columns (a) through (d) of line 25.

6-month period from May through October. To compute its base

If line 23a is smaller than line 22: Enter 25% of line 23a in

period percentage for this 6-month period in 2014, the

column (a) of line 25. In column (b), determine the amount to

amusement park figures its taxable income for each May–

enter as follows:

October period in 2011, 2012, and 2013. It then divides the

1. Subtract line 23a from line 22,

taxable income for each May–October period by the total taxable

income for that particular tax year. The resulting percentages are

2. Add the result to the amount on line 22, and

69% (.69) for May–October 2011, 74% (.74) for May–October

3. Multiply the result in 2 above by 25% and enter the result

2012, and 67% (.67) for May–October 2013. Because the

in column (b). Enter 25% of line 22 in columns (c) and (d).

average of 69%, 74%, and 67% is 70%, the base period

percentage for May through October 2014 is 70%. Therefore,

Schedule A

the amusement park qualifies for the adjusted seasonal

If only the adjusted seasonal installment method (Part I) is used,

installment method.

complete Parts I and III of Schedule A. If only the annualized

Line 2

income installment method (Part II) is used, complete Parts II

and III. If both methods are used, complete all three parts. Enter

If the corporation has certain extraordinary items, special rules

in each column on page 1, Part I, line 25, the amounts from the

apply. Do not include on line 2 the de minimis extraordinary

corresponding column of line 38. If Schedule A is used for any

items that the corporation chooses to include on line 9b. See

payment date, it must be used for all payment dates.

Extraordinary items above.

Do not figure any required installment until after the end

Line 9b

of the month preceding the due date for that installment.

If the corporation has extraordinary items of $1,000,000 or more,

CAUTION

a net operating loss deduction, or a section 481(a) adjustment,

Extraordinary items. Generally, under the annualized income

special rules apply. Include these amounts on line 9b for the

installment method, extraordinary items must be taken into

appropriate period. Also include on line 9b the de minimis items

account after annualizing the taxable income for the

that the corporation chooses to exclude from line 2. See

annualization period. Similar rules apply in determining taxable

Extraordinary items above.

income under the adjusted seasonal installment method. An

extraordinary item includes:

Line 10

Any item identified in Regulations section 1.1502-76(b)(2)(ii)

Figure the tax on the amount on line 9c by following the same

(C)(1), (2), (3), (4), (7), and (8);

steps used to figure the tax on Form 1120-W, page 1, line 14.

A net operating loss carryover;

A section 481(a) adjustment; and

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Instructions for Form 1120-W (2014)

Instructions For Form 1120-W - Estimated Tax For Corporations - 2014 Page 3

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