Instructions For Form 2220 - 2002 printable pdf download

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Department of the Treasury

Internal Revenue Service

Instructions for Form 2220

Underpayment of Estimated Tax by Corporations

Section references are to the Internal Revenue Code unless otherwise noted.

eliminate the penalty by using the annualized income

General Instructions

installment method or the adjusted seasonal installment

method. See the Part I instructions for details.

Purpose of Form

How To Use Form 2220

Corporations (including S corporations), tax-exempt

•

organizations subject to the unrelated business income

Check one or more boxes in Part I if the corporation

tax (tax-exempt organizations), and private foundations

uses the annualized income installment method, the

use Form 2220 to determine:

adjusted seasonal installment method, or if the

•

Whether they are subject to the penalty for

corporation is a large corporation.

underpayment of estimated tax and, if so,

•

If the corporation checked a box in Part I, attach Form

The amount of the underpayment penalty.

2220 to the income tax return. Be sure to check the box

on line 33, page 1, of Form 1120; line 29 of Form 1120-A;

Who Must File

or the comparable line of any other income tax return the

Generally, the corporation does not have to file this form

corporation is required to file (e.g., Form 990-C, 1120-L,

with its income tax return because the IRS will figure the

1120S, etc.).

•

amount of any penalty and notify the corporation of any

Complete Part II to determine the underpayment for

amount due. However, even if the corporation does not

any of the four installment due dates.

•

owe a penalty, complete and attach this form to the

If there is an underpayment on line 17, Part II (column

corporation’s tax return if:

(a), (b), (c), or (d)), go to Part III to figure the penalty.

•

1. The annualized income installment method is used,

Complete Schedule A if the corporation uses the

2. The adjusted seasonal installment method is used,

annualized income installment method and/or the

adjusted seasonal installment method.

3. The corporation is a large corporation (as defined in

the instructions for Part I, line 3, on page 2) figuring its

first required installment based on the prior year’s tax.

Specific Instructions

Who Must Pay the Underpayment

Part I—Reasons for Filing

Penalty

Generally, a corporation is subject to the penalty if the tax

Lines 1 and 2. Annualized income installment method

shown on its 2002 return is $500 or more and it did not

and/or adjusted seasonal installment method. If the

timely pay at least the smaller of:

corporation’s income varied during the year because, for

example, it operated its business on a seasonal basis, it

1. The tax shown on its 2002 return or

may be able to lower or eliminate the amount of one or

2. The tax shown on its 2001 return (if it filed a 2001

more required installments by using the annualized

return showing at least some amount of tax and the

income installment method and/or the adjusted seasonal

return was for a full 12 months). However, a large

installment method.

corporation may base only its first required installment on

the prior year’s tax.

Example. A ski shop, which receives most of its

income during the winter months, may benefit from using

Note: In these instructions, “return” generally refers to

one or both of these methods to figure its required

the corporation’s original return. However, an amended

installments. The annualized income installment or

return is considered the original return if the amended

adjusted seasonal installment may be less than the

return is filed by the due date (including extensions) of

required installment under the regular method for one or

the original return.

more due dates. Using one or both of these methods

The penalty is figured separately for each installment

may reduce or eliminate the penalty for those due dates.

due date. Therefore, the corporation may owe a penalty

for an earlier due date even if it paid enough tax later to

Use Schedule A on pages 3 and 4 of Form 2220 to

make up the underpayment. This is true even if the

figure one or more required installments. If Schedule A is

corporation is due a refund when its return is filed.

used for any payment due date, it must be used for all

However, the corporation may be able to reduce or

payment due dates. To arrive at the amount of each

Cat. No. 64293P

Instructions For Form 2220 - 2002

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