California Form 5806 - Underpayment Of Estimated Tax By Corporations

Part II Exceptions to the Penalty

Installments 3 and 4 – Because Exception A

Line 19 – Divide the number of days shown on

for large corporations can only be used for the

line 14 by the number of days in the taxable year.

Check the applicable boxes to indicate if the

1st installment (assuming it also meets the

Multiply the result by 3% and by the underpaid

corporation qualifies for an exception to the

recapture requirement in its 2nd installment), the

amount shown on line 7.

penalty.

corporation must use the amounts computed in

Line 20 – Divide the number of days shown on

Part I or Exception B or Exception C, column (c)

The FTB will not assess a penalty if all of the

line 15 by the number of days in the taxable year.

and column (d) for the corporation’s remaining

estimated tax was paid on time and the payments

Multiply the result by 3% and by the underpaid

installments.

satisfied the exception rules. A corporation may

amount shown on line 7.

qualify for more than one exception. Complete

Exception B – Tax on Annualized Current Year

Line 21 and Line 22 – Divide the number of days

Part IV, Exceptions Worksheets, to see if the

Income

shown on line 16 or line 17 by the number of

corporation qualifies to use any of the exceptions.

days in the taxable year. Multiply the result by the

This exception applies if the estimated tax paid on

California difference – Under California law, the

percentage, which the FTB will determine at a later

or before the installment due date was equal to or

exceptions are computed on a cumulative basis. This

date. Then multiply the result by the underpaid

more than the amount the corporation would owe

differs from federal law which requires only 25% of

amount shown on line 7.

if its estimated tax was computed on annualized

the annual payment for each installment.

taxable income for the months preceding an

Penalty Rates – To get updated penalty rates, go to

Part III Figure the Penalty

installment due date.

ftb.ca.gov and search for penalty rates or call the

FTB automated phone system using the telephone

For each period, in column (a) through column (d),

If line 7 shows an underpayment for any

number listed below.

enter the number of months for the annualization

installment and the corporation did not meet any

method used based on the table below. For

For the interest rate for line 21, call after

of the exceptions in Part II, complete the penalty

example, if a Form 100 is filed and the Standard

March 2015. For the interest rate for line 22, call

computation on line 11 through line 22.

Option was used, enter 3 in column (a), 3 in

after September 2015.

Figure the penalty on the underpayment on line 7,

column (b), 6 in column (c), and 9 in column (d).

How to Use the Automated Phone System

from the installment due date to the return due date

Annualization Periods and Options

(excluding extension of time) or to the payment

The system is available in English and Spanish to

date, whichever is earlier.

callers with touch-tone telephones.

Installment

1st

2nd

3rd

4th

Additional Payments – If the corporation made

General tax information is available 24 hours a day,

Standard Option

additional payments for an installment, figure the

seven days a week.

Option 1

penalty on the revised underpaid amount (amount

Telephone: 800.338.0505 from within

on line 7 minus the amount of the last payment)

Option 2

the United States

from the last payment date to the return due date

Corporations can use the Standard Option or

916.845.6500 from outside

(excluding extension of time) or to the date of

must elect to use Option 1 or Option 2. Exempt

the United States

the next payment, whichever is earlier. Attach a

organizations use Option 1 (the Standard Option

separate computation for each additional payment.

After you reach the number, select business entity

for exempt organizations) or elect to use Option 2.

information, then frequently asked questions,

Line 11 – Enter the date payment was made or

The election to use an expanded option must be

follow the recorded instructions, and enter code

the return due date (excluding extension of time),

made on or before the due date of the first required

number 403 to get the updated estimated penalty

whichever is earlier.

installment payment. Get the instructions for the

rate.

2014 Form 100-ES for more information.

Form 109 Filers – Enter the date payment was made,

or the 15th day of the 5th month after the close of

Part IV Exceptions Worksheets

Line 32 – Enter on line 32, column (a) through

the taxable year, whichever is earlier.

column (d), the annualization amounts for the option

Attach form FTB 5806 to the back of Form 100,

used. For example, if a Form 100 is filed and the

When the due date falls on a weekend or holiday,

California Corporation Franchise or Income Tax

Standard Option was used, on line 32, enter 4 in

the deadline to file and pay without penalty is

Return; Form 100W, California Corporation Franchise

column (a), 4 in column (b), 2 in column (c), and

extended to the next business day.

or Income Tax Return

–

Water’s-Edge Filers;

1.33333 in column (d). (Exempt organizations use

Days means calendar days unless otherwise noted.

Form 100S, California S Corporation Franchise or

the annualization amounts for the Standard Option

Income Tax Return; or Form 109, California Exempt

Line 12 – Enter the number of days from the

or Option 1.) See the instructions at the beginning

Organization Business Income Tax Return, only if

installment due date (line 2) to the date shown on

of Part IV for information on where to attach form

the corporation uses Exception B or Exception C in

line 11.

FTB 5806.

figuring or eliminating the estimate penalty. Be sure

Line 13 – Enter the number of days on line 12 that

to check the applicable penalty box on the tax return.

Annualization Amounts

are before 7/01/14 or the payment date, whichever

Also see Specific Line Instructions, Part II, Exceptions

is earlier.

Installment

1st 2nd

3rd

4th

to the Penalty.

Line 14 – Enter the number of days on line 12 that

Standard Option

1.33333

Exception A – Prior Year’s Tax

fall within the period after 6/30/14 and before 1/01/15

Option 1

1.71429

1.2

Regular Corporations – Generally, this exception

or the payment due date, whichever is earlier.

applies if the amount paid or credited on or before

Option 2

2.4

1.5

1.09091

Line 15 – Enter the number of days on line 12 that

the installment due date equals or exceeds the

fall within the period after 12/31/14 and before

Exception C – Tax on Annualized Seasonal Income

tax shown on the return for the preceding year,

7/01/15 or the payment due date, whichever is earlier.

prorated to each installment. For banks and

This exception applies if the estimated tax paid on

Calendar year corporations – Enter the number

financial corporations, the tax shown on the return

or before the installment due date was equal to or

of days on line 12 that fall within the period after

includes the amount of the bank and financial tax

more than the amount the corporation would owe

6/30/14 and before 3/15/15 or the payment date,

rate adjustment. The return for the preceding year

if its estimated tax was computed on annualized

whichever is earlier. The total of line 13 through

must have covered a full 12 months.

seasonal taxable income for the months preceding

line 15 cannot be more than the number of days

an installment due date. Use Exception C only if

Large Corporations – A large corporation is any

shown on line 12. Skip line 16 and line 17 and

the corporation’s base period percentage for any

corporation, including a predecessor corporation,

proceed to line 18.

six consecutive months of the taxable year equals

that had California net income (computed without

Line 16 – For fiscal year corporations only, enter

or exceeds 70%. Get the instructions for federal

regard to the net operating loss deduction) of

Form 2220, Underpayment of Estimated Tax by

the number of days on line 12 that fall within the

$1 million or more for any taxable year during the

period after 6/30/15 and before 1/01/16 or the

Corporations, for more information on the base

three taxable years immediately preceding the

payment date, whichever is earlier.

period percentage. See the instructions at the

current taxable year.

beginning of Part IV for information on where to

Line 17 – For fiscal year corporations only, enter

Installments 1 and 2 – This exception allows a

attach form FTB 5806.

the number of days on line 12 that fall within the

large corporation to use prior year’s tax for the 1st

period after 12/31/15 and before 2/15/16 or the

installment only. The difference between using the

payment date, whichever is earlier. The total days

prior year’s tax and the current year’s tax for the

on line 13 through line 17 cannot be more than the

1st installment must have been added to the 2nd

number of days shown on line 12.

installment (calculated using current year’s tax) to

meet the exception.

Line 18 – Divide the number of days shown on

line 13 by the number of days in the taxable year.

Multiply the result by 3% and by the underpaid

amount shown on line 7.

Page 2 FTB 5806 Instructions 2014

California Form 5806 - Underpayment Of Estimated Tax By Corporations - 2014 Page 5

Related Articles

Related forms

Related Categories