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2017

Department of the Treasury

Internal Revenue Service

Instructions for Schedule A

(Form 8804)

Penalty for Underpayment of Estimated Section 1446 Tax for Partnerships

regard to reductions for certified foreign

determine the underpayment for any of

Section references are to the Internal Revenue

Code unless otherwise noted.

partner-level items, on the ECTI

the installment due dates.

allocable to foreign partners for 2016,

If there is an underpayment on line 12

Future Developments

provided that (1) this amount is at least

(column (a), (b), (c), or (d)), go to Part

For the latest information about

50% of the sum of the amounts shown

VII to figure the penalty.

developments related to Schedule A

on lines 4d, 4h, 4l, 4p, and 4t of its 2017

Complete Parts IV through VI as

(Form 8804) and its instructions, such

Form 8804; and (2) the tax year was for

appropriate if the partnership uses the

as legislation enacted after they were

a full 12 months. See the instructions for

adjusted seasonal installment method

published, go to

IRS.gov/Forms-Pubs/

line

2, later, for more details.

and/or the annualized income

About-Schedule-A-Form-8804.

installment method.

In these instructions, “Form 8804”

General Instructions

generally refers to the partnership's

Specific Instructions

original Form 8804. However, an

amended Form 8804 is considered the

Purpose of Form

Part I. Reasons for Filing

original Form 8804 if the amended Form

Partnerships that have effectively

8804 is filed by the due date (including

Adjusted seasonal installment meth-

connected taxable income (ECTI)

extensions) of the original Form 8804.

od and/or annualized income install-

allocable to foreign partners use

Also, for purposes of determining a

ment method. If the partnership's

Schedule A (Form 8804) to determine:

required installment, if an amended

income varied during the year because,

Whether they are subject to the

Form 8804 is filed for the prior tax year,

for example, it operated its business on

penalty for underpayment of estimated

then “prior tax year” includes the

a seasonal basis, it may be able to

tax and, if so,

amended Form 8804, but only if the

lower or eliminate the amount of one or

The amount of the underpayment

amended Form 8804 is filed before the

more required installments by using the

penalty.

applicable installment due date.

adjusted seasonal installment method

Who Must File

and/or the annualized income

The penalty is figured separately for

installment method.

Generally, the partnership doesn’t have

each installment due date. Therefore,

to file this schedule because the IRS will

the partnership may owe a penalty for

Example. A ski shop, which

figure the amount of the penalty and

an earlier due date even if it paid

receives most of its income during the

notify the partnership of any amount

enough tax later to make up the

winter months, may benefit from using

due. However, even if the partnership

underpayment. This is true even if the

one or both of these methods to figure

doesn’t owe a penalty, complete and

partnership is due a refund when its

its required installments. The

attach this schedule to the partnership's

return is filed. However, the partnership

annualized income installment or

Form 8804 if the Part II, line 1 amount

may be able to reduce or eliminate the

adjusted seasonal installment may be

on page 1 is $500 or more and any of

penalty by using the annualized income

less than the required installment under

the following apply.

installment method or the adjusted

the current year safe harbor (increased

seasonal installment method. See the

by any reduction recaptured under

1. The adjusted seasonal

instructions for Parts IV and V for

section 6655(e)(1)(B)) for one or more

installment method is used.

details.

due dates. Using one or both of these

2. The annualized income

methods may reduce or eliminate the

installment method is used.

Exception to the Penalty

penalty for those due dates.

3. The partnership had assets of $1

Use Parts IV through VI of

A partnership won’t have to pay a

billion or more (determined as of the

Schedule A (Form 8804) to figure one or

penalty if the tax shown on line 5f of its

end of the preceding tax year). See the

more required installments. If Parts IV

2017 Form 8804 is less than $500.

instructions for

line 5

and

line

40, later.

through VI are used for any payment

How To Use Schedule A

due date, those Parts must be used for

Who Must Pay the

all subsequent payment due dates. To

Complete this schedule as follows.

Underpayment Penalty

arrive at the amount of each required

installment, Part VI uses the smallest of:

Check one or both of the boxes in

Generally, a partnership is subject to the

Part I that apply. If the partnership

The adjusted seasonal installment (if

penalty if it didn’t timely pay in

checks a box in Part I, attach

applicable),

installments at least the smaller of:

The annualized income installment (if

Schedule A (Form 8804) to Form 8804.

1. The tax shown on line 5f of its

Be sure to check the box on Form 8804,

applicable), or

2017 Form 8804; or

line 8.

The current year safe harbor

2. The total section 1446 tax that

(increased by any reduction recaptured

If Part II, line 1 is $500 or more,

would have been due for 2016, without

complete the rest of page 1 to

under section 6655(e)(1)(B)).

Oct 24, 2017

Cat. No. 36325U

Instructions For Schedule A (Form 8804) - Penalty For Underpayment Of Estimated Section 1446 Tax For Partnerships - 2017

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