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2024

Instructions for Schedule A

(Form 8804)

Penalty for Underpayment of Estimated Section 1446 Tax for Partnerships

Section references are to the Internal Revenue Code unless “prior tax year” includes the amended Form 8804, but only if
otherwise noted. the amended Form 8804 is filed before the applicable
installment due date.
Future Developments The penalty is figured separately for each installment due
date. Therefore, the partnership may owe a penalty for an
For the latest information about developments related to earlier due date even if it paid enough tax later to make up
Schedule A (Form 8804) and its instructions, such as the underpayment. This is true even if the partnership is due
legislation enacted after they were published, go to IRS.gov/ a refund when its return is filed. However, the partnership
About-Schedule-A-Form-8804. may be able to reduce or eliminate the penalty by using the
annualized income installment method or the adjusted
seasonal installment method. See the instructions for Parts IV
General Instructions and V, later, for details.

Purpose of Form Exception to the Penalty
Partnerships that have effectively connected taxable income A partnership won’t have to pay a penalty if the tax shown on
(ECTI) allocable to foreign partners use Schedule A (Form line 5f of its 2024 Form 8804 is less than $500.
8804) to determine:
• Whether they are subject to the penalty for underpayment How To Use Schedule A
of estimated tax and, if so, Complete this schedule as follows.
• The amount of the underpayment penalty.
• Check one or both of the boxes in Part I that apply. If the
Who Must File partnership checks a box in Part I, attach Schedule A (Form
Generally, the partnership doesn’t have to file this schedule 8804) to Form 8804. Be sure to check the box on Form 8804,
because the IRS will figure the amount of the penalty and line 8.
notify the partnership of any amount due. However, even if • If the total section 1446 tax, shown on Part II, line 1, is
the partnership doesn’t owe a penalty, complete and attach $500 or more, complete the rest of page 1 to determine the
this schedule to the partnership's Form 8804 if Part II, line 1 underpayment for any of the installment due dates.
(Schedule A), amount is $500 or more and any of the • If there is an underpayment on line 12 (column (a), (b), (c),
following apply. or (d)), go to Part VII to figure the penalty.
• Complete Parts IV through VI, as appropriate, if the
1. The adjusted seasonal installment method is used. partnership uses the adjusted seasonal installment method
2. The annualized income installment method is used. and/or the annualized income installment method.

Who Must Pay the Underpayment
Specific Instructions
Penalty
Generally, a partnership is subject to the penalty if it didn’t Part I. Reasons for Filing
timely pay in installments at least the smaller of:
Adjusted seasonal installment method and/or annual-
1. The tax shown on line 5f of its 2024 Form 8804; or ized income installment method. If the partnership's
2. The total section 1446 tax that would have been due income varied during the year because, for example, it
for 2023, without regard to reductions for certified foreign operated its business on a seasonal basis, it may be able to
partner-level items, on the ECTI allocable to foreign partners lower or eliminate the amount of one or more required
for 2023, provided that (1) this amount is at least 50% of the installments by using the adjusted seasonal installment
sum of the amounts shown on lines 4d, 4h, 4l, 4p, and 4t of method and/or the annualized income installment method.
Form 8804 for its 2024 tax year; and (2) the tax year was for a Example 1. A ski shop, which receives most of its income
full 12 months. See the instructions for line 2, later, for more during the winter months, may benefit from using one or both
details. of these methods to figure its required installments. The
In these instructions, “Form 8804” generally refers to the annualized income installment or adjusted seasonal
partnership's original Form 8804. However, an amended installment may be less than the required installment under
Form 8804 is considered the original Form 8804 if the the current-year safe harbor (increased by any reduction
amended Form 8804 is filed by the due date (including recaptured under section 6655(e)(1)(B)) for one or more due
extensions) of the original Form 8804. dates. Using one or both of these methods may reduce or
eliminate the penalty for those due dates.
Also, for purposes of determining a required installment, if Use Parts IV through VI of Schedule A (Form 8804) to
an amended Form 8804 is filed for the prior tax year, then figure one or more required installments. If Parts IV through
Instructions for Schedule A (Form 8804) (2024) Catalog Number 36325U
Aug 19, 2024 Department of the Treasury Internal Revenue Service www.irs.gov

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VI are used for any payment due date, Parts IV through VI         Saturday, Sunday, or legal holiday, payments made on the 
must be used for all subsequent payment due dates. To             next day that isn’t a Saturday, Sunday, or legal holiday are 
arrive at the amount of each required installment, Part VI        considered made on the due date to the extent the payment 
uses the smallest of:                                             is applied against that required installment.
• The adjusted seasonal installment (if applicable),                Also, include on line 6 any of the following:
• The annualized income installment (if applicable), or           • Section 1446 tax paid or withheld by another partnership in 
• The current-year safe harbor (increased by any reduction        which the partnership filing this Schedule A (Form 8804) was 
recaptured under section 6655(e)(1)(B)).                          a partner during the tax year. See the instructions for Form 
                                                                  8804, lines 6b and 6c, in the Instructions for Forms 8804, 
  Follow the steps below to determine which parts of the          8805, and 8813.
form have to be completed.                                        • Section 1445(a) or 1445(e) tax withheld from or paid by the 
• If the partnership is using only the adjusted seasonal          partnership filing this Schedule A (Form 8804) during the tax 
installment method, check the applicable box in Part I and        year for a disposition of a U.S. real property interest. See the 
complete Parts IV and VI of Schedule A (Form 8804).               instructions for Form 8804, lines 6d and 6e, in the 
• If the partnership is using only the annualized income          Instructions for Forms 8804, 8805, and 8813.
installment method, check the applicable box in Part I and        • Section 1446(f)(1) tax withheld from the partnership filing 
complete Parts V and VI of Schedule A (Form 8804).                this Schedule A (Form 8804) during the tax year for a 
• If the partnership is using both methods, check both of the     disposition of an interest in a partnership engaged in the 
boxes in Part I and complete all three parts (Parts IV through    conduct of a U.S. trade or business. See the instructions for 
VI) of Schedule A (Form 8804).                                    Form 8804, lines 6f and 6g, in the Instructions for Forms 
                                                                  8804, 8805, and 8813.
Part II. Current-Year and Prior-Year 
                                                                  Column (a).    Enter payments made by the date on line 4, 
Safe Harbors                                                      column (a).
Line 2 (prior-year safe harbor).      Enter the total section     Columns (b), (c), and (d).  Enter payments made on or 
1446 tax that would have been due for 2023, without regard        before the date on line 4 for that column and after the date on 
to reductions for certified foreign partner-level items on the    line 4 of the preceding column.
ECTI allocable to foreign partners for 2023.
  The partnership can generally use the prior-year safe           Note. A payment of estimated tax is applied against unpaid 
harbor only if it paid the required amount using that method      installments in the order in which installments are required to 
for each of its installment payments of section 1446 tax          be paid, regardless of the installment to which the payment 
during the tax year. However, see Regulations section             pertains, with any excess applied against successive later 
1.1446-3(b)(3)(ii) for an exception. Also, see the Note below.    installments. See Example 3 under Part VII. Figuring the 
In addition, the partnership can only use the prior-year safe     Penalty, later.
harbor if all of the following apply.                             Line 12. If any of the columns in line 12 shows an 
• Each installment payment that was made during the tax           underpayment, complete Part VII to figure the penalty.
year, when averaged with all prior installment payments, must 
have been 25% of the partnership's total section 1446 tax         Parts IV Through VI
liability under the prior-year safe harbor.
• The prior tax year consisted of 12 months.                      Extraordinary items.   Generally, under the annualized 
• The partnership timely files (including extensions) a U.S.      income installment method, extraordinary items must be 
return of partnership income (for example, Form 1065) for the     taken into account after annualizing the ECTI for the 
prior tax year.                                                   annualization period. Similar rules apply in determining ECTI 
• The amount of ECTI for the prior tax year isn’t less than       under the adjusted seasonal installment method. An 
50% of the ECTI shown on the current-year Form 8804 that is       extraordinary item includes:
(or will be) timely filed.                                        • Any item identified in Regulations section 1.1502-76(b)(2)
  If the partnership isn’t permitted to use the prior-year safe   (ii)(C)(1), (2), (3), (4), (7), and (8);
harbor method because any of the necessary conditions             • A section 481(a) adjustment; and
described above aren’t met, skip line 2 and enter on line 3 the   • Net gain or loss from the disposition of 25% or more of the 
amount from line 1.                                               fair market value of the partnership's business assets during 
                                                                  the tax year.
Note. If the partnership qualifies for and uses the exception       These extraordinary items must be accounted for in the 
under Regulations section 1.1446-3(b)(3)(ii) to switch to the     appropriate annualization period. However, a section 481(a) 
standard option annualization method during the tax year, the     adjustment (unless the partnership makes the alternative 
partnership should include on line 2 the total of all installment choice under Regulations section 1.6655-2(f)(3)(ii)(C)) is 
payments that were made during the tax year under both the        treated as an extraordinary item occurring on the first day of 
prior-year safe harbor method and the standard option             the tax year in which the item is taken into account in 
annualization method. Attach a statement that explains the        determining ECTI.
computation.                                                        For more information regarding extraordinary items, see 
                                                                  Regulations section 1.6655-2(f)(3)(ii) and the examples in 
Part III. Figuring the Underpayment
                                                                  Regulations section 1.6655-2(f)(3)(vii). Also, see Regulations 
Line 6. Enter the estimated tax payments made by the              section 1.6655-3(d)(3).
partnership for its tax year, as indicated below. Include any       De minimis rule. Extraordinary items identified above 
overpayment from line 13 of the partnership's 2023 Form           resulting from a particular transaction that totals less than $1 
8804 that was credited to the partnership's first installment     million (other than a section 481(a) adjustment) can be 
period on its 2024 Form 8804. If an installment is due on a       annualized using the general rules of Regulations section 

2                                                                              Instructions for Schedule A (Form 8804) (2024)

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1.6655-2(f), or, if the partnership chooses, can be taken into Local Taxes and Certification of Deductions and Losses in
account after annualizing the ECTI for the annualization the Instructions for Forms 8804, 8805, and 8813, for
period. additional information.

Part IV. Adjusted Seasonal Installment Part V. Annualized Income Installment
Method Method
Note. Part IV doesn't reflect the lower preferential rates Line 30. Annualization periods. Enter on line 30, columns
permitted under Regulations section 1.1446-3(a)(2). These (a) through (d), respectively, the annualization periods for the
were omitted because, for most taxpayers, the income option listed below. For example, if the partnership elected
reported in Part IV will be predominantly (or exclusively) Option 1, enter on line 30 the annualization periods 2, 4, 7,
ordinary income. If the partnership wishes to consider lower and 10, in columns (a) through (d), respectively.
preferential rates for Part IV (and if the requirements outlined Use Option 1 or Option 2 only if the partnership
in the third paragraph of the line 31 instructions are met), it ! elected to do so by filing Form 8842, Election To Use
must attach a statement which appropriately expands lines CAUTION Different Annualization Periods for Corporate
15 and 22 through 25 to show the applicable special types of Estimated Tax, by the due date of the first required
income or gain and the applicable percentages (see, for installment payment. Once made, the election is irrevocable
example, lines 33 and 34 of this schedule). Also, Part IV, lines for the tax year for which the election is to apply.
15 and 22 through 25, don’t provide the separate entries for
corporate and non-corporate partners necessary to apply the
rates on lines 25a and 25b. A partnership with corporate and 1st 2nd 3rd 4th
Install- Install- Install- Install-
non-corporate partners completing Part IV must attach a ment ment ment ment
statement which appropriately expands lines 15 and 22 Standard Option 3 3 6 9
through 25 to show the amounts allocable to both types of Option 1 2 4 7 10
partners.
Option 2 3 5 8 11
The partnership can use the adjusted seasonal installment
method only if the partnership's base period percentage for
any 6 consecutive months of the tax year is 70% or more. Line 31. Enter on lines 31a through 31e the ECTI allocable
The base period percentage for any period of 6 consecutive to all foreign partners for the months entered for each
months is the average of the three percentages figured by annualization period in columns (a) through (d) on line 30.
dividing the ECTI for the corresponding 6-consecutive-month If the partnership has certain extraordinary items, special
period in each of the 3 preceding tax years by the ECTI for rules apply. Don’t include on line 31a, 31b, 31c, 31d, or 31e
each of their respective tax years. Figure the base period the de minimis extraordinary items that the partnership
percentage using the 6-month period in which the chooses to include on line 33a, 33e, 33i, 33m, or 33q,
partnership normally receives the largest part of its ECTI. respectively. See Extraordinary items, earlier.
Example 2. An amusement park with a 2024 calendar tax With respect to lines 31c, 31d, and 31e, enter the
year receives the largest part of its taxable income during a specified types of income allocable to non-corporate partners
6-month period, May through October. To figure its base if (a) the partners would be entitled to use a preferential rate
period percentage for this 6-month period, the amusement on such income or gain (see Regulations section 1.1446-3(a)
park figures its ECTI for each May–October period in 2021, (2)), and (b) the partnership has sufficient documentation to
2022, and 2023. It then divides the ECTI for each May– meet the requirements of Regulations section 1.1446-3(a)(2)
October period by the total ECTI for that particular tax year. (ii).
The resulting percentages are 69% (0.69) for May–October
If the partnership has net ordinary loss, net short-term
2021, 74% (0.74) for May–October 2022, and 67% (0.67) for
capital loss, or net 28% rate loss, each net loss should be
May–October 2023. Because the average of 69% (0.69),
netted against the appropriate categories of income and gain
74% (0.74), and 67% (0.67) is 70% (0.70), the base period
to determine the amounts of income and gain to be entered
percentage for May–October 2024 is 70% (0.70). Therefore,
on lines 31b, 31c, 31d, and 31e, respectively. See section
the amusement park qualifies for the adjusted seasonal
1(h) and Notice 97-59, 1997-45 I.R.B. 7, available at
installment method.
IRS.gov/pub/irs-irbs/irb97-45.pdf, for rules for netting gains
Line 15. If the partnership has certain extraordinary items, and losses.
special rules apply. Don’t include on line 15 the de minimis
Line 32. Annualization amounts. Enter on line 32,
extraordinary items that the partnership chooses to include
columns (a) through (d), respectively, the annualization
on line 22b. See Extraordinary items, earlier.
amounts shown in the table below for the option used for
Line 22b. If the partnership has certain extraordinary items line 30. For example, if the partnership elected Option 1,
of $1 million or more from a transaction, or a section 481(a) enter on line 32 the annualization amounts 6, 3, 1.71429, and
adjustment, special rules apply. Include these amounts on 1.2 in columns (a) through (d), respectively.
line 22b for the appropriate period. Also, include on line 22b
the de minimis extraordinary items that the partnership 1st 2nd 3rd 4th
chooses to exclude from line 15. See Extraordinary items, Install- Install- Install- Install-
ment ment ment ment
earlier.
Standard Option 4 4 2 1.33333
Line 23. Enter the amount by which line 22c is being Option 1 6 3 1.71429 1.2
reduced for state and local taxes under Regulations section
Option 2 4 2.4 1.5 1.09091
1.1446-6(c)(1)(iii) and for certified foreign partner-level items
submitted using Form 8804-C. See Reductions for State and

Instructions for Schedule A (Form 8804) (2024) 3

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Lines 33a, 33e, 33i, 33m, and 33q. If the partnership has Line 43. For each installment, enter the smaller of line 39 or
extraordinary items that total $1 million or more from a line 42 on line 43. Also, enter the result on line 5.
particular transaction, or a section 481(a) adjustment, special
rules apply. Include these amounts on line 33a, 33e, 33i, Part VII. Figuring the Penalty
33m, or 33q, depending on the type of income against which Complete Part VII to determine the amount of the penalty.
the item applies, for the appropriate period. Also, include on The penalty is figured for the period of underpayment using
line 33a, 33e, 33i, 33m, or 33q the de minimis extraordinary the underpayment rate determined under section 6621(a)(2).
items that the partnership chooses to exclude from line 31a, The period of underpayment runs from the installment due
31b, 31c, 31d, or 31e, respectively. See Extraordinary items, date to the earlier of the date the underpayment is actually
earlier. paid or the 15th day of the 3rd month after the close of the
If the partnership has included on line 33a, 33e, 33i, 33m, 2024 tax year (the 15th day of the 6th month if the
or 33q any of the items referred to in the previous paragraph, partnership keeps its books and records outside the United
write “EI” and the dollar amount of the item next to the States and Puerto Rico). The underpayment rate is the
affected line. Attach a statement which shows the income for federal short-term rate plus 3 percentage points (2% in the
that line before the extraordinary item, the amount of the case of a corporation). See section 6655 for definitions for
extraordinary item, and the net amount. Also, include an underpayment amount and underpayment period. For
explanation of the item, including the authority under which it information on obtaining the federal short-term interest rate
is being claimed. on underpayments denoted by an asterisk, see the footnote
on page 5 of the schedule.
Lines 33b, 33f, 33j, 33n, and 33r. Enter the reduction
amounts for state and local taxes under Regulations section A payment of estimated tax is applied against unpaid
1.1446-6(c)(1)(iii). The netting rules under section 1(h) and required installments in the order in which installments are
Notice 97-59 must be considered in determining the category required to be paid, regardless of the installment to which the
of income the reduction amounts offset. payment pertains, with any excess applied against
successive later installments.
Lines 33c, 33g, 33k, 33o, and 33s. Enter the reduction
Example 3. A partnership underpaid the April 15
amounts resulting from certified partner-level items received
installment by $1,000. The June 15 installment requires a
from foreign partners using Form 8804-C. See Certification of
payment of $2,500. On June 11, the partnership pays $2,500
Deductions and Losses in the Instructions for Forms 8804,
for its June 15 installment. However, $1,000 of this payment
8805, and 8813, for additional information. The netting rules
is applied against the April 15 installment. The penalty for the
of section 1(h) and Notice 97-59 must be considered in
April 15 installment is figured to June 11 (57 days). The
determining the category of income the reduction amounts
remaining $1,500 is applied to the June 15 installment as if it
offset.
were made on June 15.
Part VI. Required Installments If the partnership has made more than one payment for a
Line 38. Before completing line 38 in columns (b) through required installment, attach a separate computation for each
(d), complete lines 39 through 43 in each of the preceding payment.
columns. For example, complete lines 39, 40, 42, and 43 in
column (a) before completing line 38 in column (b).

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4 Instructions for Schedule A (Form 8804) (2024)

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