Form 990-W - Estimated Tax On Unrelated Business Taxable Income For Tax-Exempt Organizations - 2016 Page 6
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Form 990-W (Worksheet) 2016
Line 11
Do not figure any required installment until after the end of the
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month immediately preceding the due date for that installment.
Calendar year taxpayers. Enter 4-18-2016 (5-16-2016 for private
foundations), 6-15-2016, 9-15-2016, and 12-15-2016, respectively, in
CAUTION
columns (a) through (d).
For each part that applies to you, complete each column in its entirety
Fiscal year taxpayers. Enter the 15th day of the 4th (5th for private
before going to the next column. For example, if Parts I and III are required,
foundations), 6th, 9th, and 12th months of your tax year in columns (a)
complete column (a), lines 1 through 13, and lines 36 through 40, before
through (d).
starting column (b).
If any date falls on a Saturday, Sunday, or legal holiday, substitute the next
Extraordinary items. Generally, under the annualized income installment
business day.
method, extraordinary items must be taken into account after annualizing the
Line 12
taxable income for the annualization period. Similar rules apply in
determining taxable income under the adjusted seasonal installment method.
Annualized income installment method and/or adjusted seasonal
An extraordinary item includes:
installment method. If the organization’s income is expected to vary during
• Any item identified in Regulations section 1.1502-76(b)(2)(ii)(C)(1), (2), (3),
the year because, for example, it operates its business on a seasonal basis, it
(4), (7), and (8);
may be able to lower the amount of one or more required installments by
using the annualized income installment method and/or the adjusted
• A net operating loss carryover;
seasonal installment method. For example, a shop operated by a museum,
• A section 481(a) adjustment; and
which because of its location in an area frequented by tourists receives most
• Net gain or loss from the disposition of 25% or more of the fair market
of its income during the summer months, may be able to benefit from using
value of the corporation’s business assets during the tax year.
one or both of these methods in figuring one or more of its required
installments.
These extraordinary items must be accounted for in the appropriate
annualization period. However, a net operating loss deduction and a section
To use one or both of these methods, complete Schedule A. If you use
481(a) adjustment (unless the corporation makes the alternative choice under
Schedule A for any payment due date, you must use it for all payment due
Regulations section 1.6655-2(f)(3)(ii)(C)) are treated as extraordinary items
dates. To arrive at the amount of each required installment, Schedule A
occurring on the first day of the tax year in which the item is taken into
selects the smallest of: (a) the annualized income installment (if applicable),
account in determining taxable income.
(b) the adjusted seasonal installment (if applicable), or (c) the regular
installment under section 6655(d)(1) (increased by any reduction recapture
De minimis rule. At the option of the corporation, extraordinary items
under section 6655(e)(1)(B)).
identified earlier that are less than $1 million (other than a net operating loss
carryover or a section 481(a) adjustment) may be annualized using the
Large organization. A “large organization” is any tax-exempt corporation or
general rules of Regulations section 1.6655-2(f), rather than being treated
other organization subject to the tax on unrelated business income or any
under the special rules for extraordinary items.
private foundation subject to the section 4940 tax on net investment income,
that had, or whose predecessor had, taxable income (net investment income
For more information regarding extraordinary items, see Regulations
for purposes of the section 4940 tax) of $1 million or more for any of the 3 tax
section 1.6655-2(f)(3)(ii) and the examples in Regulations section 1.6655-2(f)
years immediately preceding the 2016 tax year, or if less, the number of
(3)(vii). Also see Regulations section 1.6655-3(d)(3).
years the corporation has been in existence.
In Schedule A, Part I, make the appropriate adjustments to annualized
For this purpose, taxable income is modified to exclude net operating loss
taxable income before figuring the estimated tax for each reporting period.
and capital loss carrybacks or carryovers. Members of a controlled group, as
Similar adjustments must be made, if applicable, to Schedule A, Part II, if the
defined in section 1563, must divide the $1 million amount among
adjusted seasonal installment method applies.
themselves in accordance with rules similar to those in section 1561. For
Part I—Annualized Income Installment Method
more details, see sections 6655(g)(2) and (3).
A large organization not using Schedule A figures the amounts to enter on
Line 1
Form 990-W, line 12, as follows.
Enter on line 1, in columns (a) through (d), respectively, the annualization
• If line 10a is smaller than line 10b: Enter 25% (0.25) of line 10a in columns
period that the organization is using, based on the options described below.
(a) through (d) of line 12.
You may elect option 1 separately for each installment.
• If line 10b is smaller than line 10a: In column (a) of line 12, enter 25% (0.25)
of line 10b. In column (b), determine the amount to enter by:
1st
2nd
3rd
4th
Installment
Installment
Installment
Installment
(i) subtracting line 10b from line 10a,
(ii) adding the result to the amount on line 10a, and
Standard Option
2
3
6
9
(iii) multiplying the total by 25% (0.25). In columns (c) and (d), enter 25%
(0.25) of line 10a.
Option 1
2
4
7
10
A large organization using Schedule A follows the foregoing instructions to
Line 2
figure the amounts to enter on Schedule A, line 37.
If the corporation has certain extraordinary items, special rules apply. See
Line 13
Extraordinary items, earlier. In general, extraordinary items are not included
on line 2, except for certain de minimis items at the option of the corporation.
Enter any 2015 overpayment that the organization chose to credit against its
See De minimis rule, earlier.
2016 tax. The overpayment is credited against unpaid required installments
in the order in which the installments are required to be paid.
If an organization has controlled foreign corporation income under section
951(a), it must take such income (and allocable credits) into account as the
Line 14
income is earned. The amounts are figured in a manner similar to the way
partnership income inclusions (and allocable credits) are taken into account
See Federal Tax Deposits Must be Made by Electronic Funds Transfer,
to figure a partner’s annualized income installments as provided in
earlier, for the required method for making the line 14 payments.
Regulations section 1.6654-2(d)(2).
Schedule A
Safe harbor election. Organizations may be able to make a prior year safe
harbor election. Under the election, an eligible organization is treated as
If you are using only the annualized income installment method (Part I),
having received controlled foreign corporation income (and allocable credits)
complete Parts I and III. If you are using only the adjusted seasonal
ratably during the tax year equal to 115% (100% for a noncontrolling
installment method (Part II), complete Parts II and III. If you are using both
shareholder) of the amounts shown on the organization’s return for the first
methods, complete all three parts. Enter in each column on Form 990-W, line
preceding tax year (the second preceding tax year for the first and second
12, the amounts from the corresponding column of Schedule A, line 40.
required installments).
For more information, see section 6655(e)(4), Regulations section
1.6655-2(f)(3)(v)(B)(2), and Rev. Proc. 95-23, 1995-1 C.B. 693.
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