California Form 5806 - Underpayment Of Estimated Tax By Corporations - 2012 Page 4
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5Instructions for Form FTB 5806
Underpayment of Estimated Tax by Corporations
Important Information
Specific Line Instructions
A second form FTB 5806, clearly marked “Second
form FTB 5806”, may be used to show the
Corporations are required to pay the following
Part I Figure the Underpayment
computation of the penalty not related to the law
percentages of the estimated tax liability during the
change.
Generally, an underpayment is the difference
taxable year:
California does not conform to the change in timing
between the amount due for each installment
•
30% for the first required installment
of certain corporate estimated tax installment
of estimated tax and the amount actually paid
•
40% for the second required installment
payments under the Federal Tax Increase
or credited on or before the due date of that
•
No estimated tax payment is required for the
Prevention and Reconciliation Act of 2005.
installment.
third installment
For taxable years beginning on or after
Line 1 – Enter the total tax from Form 100, line 31;
•
30% for the fourth required installment
January 1, 2006, California conformed to federal
Form 100W, line 31; Form 100S, line 30; or
General Information
tax law in excluding the annual payments of
Form 109, line 14. Also include any add-on taxes
the LIFO recapture tax from the computation
(except interest computed under the look-back
See California Revenue and Taxation Code
of “estimated tax.” Therefore, LIFO recapture
method for completed long-term contracts and
(R&TC) Section 19011, Section 19021 through
amounts are not included in the computation of an
the increase in tax for the deferral of installment
Section 19027, and Section 19142 through
estimated tax underpayment penalty.
sale income) or credits recaptured from Form 100,
Section 19161 to determine the estimated tax
Form 100W, or Form 100S, Schedule J; or Form 109,
Purpose
requirement for California.
Schedule K.
The term corporation, as used in form FTB 5806,
Use form FTB 5806 to determine if the corporation:
Line 2 – Enter in column (a) through column (d) the
Underpayment of Estimated Tax by Corporations,
•
Paid the correct estimated tax.
estimated tax installment due dates that correspond
and in these instructions, includes banks, financial
to the 15th day of the 4th, 6th, 9th, and 12th months
corporations, regulated investment companies,
•
Is subject to the penalty for underpayment of
of the taxable year.
estimated tax, and to figure the amount of the
real estate investment trusts, exempt organizations
with unrelated business taxable income in excess
penalty.
Line 3 – Short period filers. Use the table below to
*
of $1,000, exempt homeowners’ associations with
determine the required percentage.
Estimated tax is a corporation’s expected tax
non-exempt function taxable income in excess of
liability after credits.
Newly formed or qualified corporations are not
$100, limited liability companies and partnerships
subject to the minimum franchise tax for the first
Newly Formed or Qualified Corporations: A
classified as corporations, and S corporations.
taxable year.
corporation subject to the franchise tax must always
An S corporation that is a parent of a Qualified
pay at least the required minimum franchise tax and
Line 4, column (a) – Enter 30% of the amount
Subchapter S Subsidiary (QSub) is required
any QSub annual tax if applicable, by the 15th day of
on line 1. Do not enter an amount less than the
to pay an $800 annual tax for each QSub. The
the 4th month of the taxable year.
minimum franchise tax for the taxable year and any
QSub annual tax is due and payable on the
QSub annual tax, if applicable.
For corporations that incorporate or qualify to do
S corporation’s first estimate installment due date.
business in California on or after January 1, 2000,
Or, if the prior year’s tax was the minimum franchise
The QSub annual tax is subject to the estimated tax
the prepayment of the minimum franchise tax to
tax and the corporation is a regular corporation,
rules and penalties.
the California Secretary of State (SOS) is no longer
enter the minimum franchise tax.
If an S corporation acquires a QSub during the
required. For the first taxable year the corporation
Exception:
taxable year, but after the due date of the first
will compute its tax liability by multiplying its
estimate installment, then the QSub annual tax is
The corporation can enter an amount less than
state net income by the appropriate tax rate and
due with the next required estimate installment
the minimum franchise tax if it is a newly formed
will not be subject to the minimum franchise tax.
after the acquisition of the QSub.
or qualified corporation, has been granted a tax
However, the corporation will be required to make
exemption by the Franchise Tax Board (FTB), or is
Tax, for purposes of estimates, includes alternative
estimated tax payments for its first taxable year.
subject to income tax only under Chapter 3 of the
The estimated payments will be based on the
minimum tax, taxes from Schedule D (100S), excess
California Corporation Tax Law (i.e., corporations
net passive income tax, QSub annual tax, and the
corporation’s expected tax liability after credits for
that are not doing business within California but
minimum franchise tax. This definition differs from
its first taxable year. The corporation will become
derive income from sources within California.)
subject to minimum franchise tax beginning in its
federal law.
second taxable year.
Line 4, column (b) – Enter 70% of the amount on
For taxable years beginning on or after January 1, 2005,
line 1 minus the amount entered in column (a).
the underpayment of estimated tax penalty shall not
Attach form FTB 5806 to the back of Form 100,
apply to the extent the underpayment of an installment
California Corporation Franchise or Income Tax
Line 4, column (c) – Enter 70% of the amount on
Return; Form 100W, California Corporation Franchise
was created or increased by any provision of law that is
line 1 minus the total of the amounts entered on
chaptered during and operative for the taxable year of
or Income Tax Return – Water’s-Edge Filers;
line 4, column (a) and column (b).
the underpayment.
Form 100S, California S Corporation Franchise or
Line 4, column (d) – Enter 100% of the amount
Income Tax Return; or Form 109, California Exempt
To request a waiver of underpayment of estimated
on line 1 minus the total of the amounts entered on
Organization Business Income Tax Return, only if
tax penalty:
line 4, column (a), column (b), and column (c).
the corporation uses Exception B or Exception C in
•
Complete form FTB 5806 to compute the full
figuring or eliminating the estimate penalty. Be sure
Line 5a – The overpayment from a prior year return,
penalty, which would normally be due.
backup withholding, resident and nonresident
to check the applicable penalty box on the tax return.
•
Write the word ‘’Waiver,’’ in red, across the top of
withholding, and real estate withholding are credited
Also see Specific Line Instructions, Part II, Exceptions
form FTB 5806.
to the Penalty.
as of the first estimate installment due date or the
•
Attach an explanation to form FTB 5806 that
date of payment, whichever is later.
provides the specific law changes that caused the
For more information, get federal Rev. Rul. 99-40,
underpayment, the computation and the amount
Internal Revenue Code Section 6513 (b) (1)
of penalty to be waived.
and (2), IRS Internal Revenue Manual 20.2.4.3
•
Attach form FTB 5806 to the back of the return.
(03-01-2002) and FTB Notice 2003-1.
*
Accounting Period Less Than 12 Months (Short Period) Fiscal year corporations, adjust dates accordingly.
Number of
Percentage of Estimated Tax Due On or Before the 15th Day of
If taxable year (calendar year) begins:
Installments Due
April
June
September
December
January 1 through January 16
4
30%
70%
70%
100%
January 17 through March 16
3
60%
60%
100%
March 17 through June 15
2
70%
100%
June 16 through September 15
1
100%
September 16 through December 31
None
FTB 5806 Instructions 2012 Page 1
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