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Department of the Treasury
Internal Revenue Service
2022

Instructions for Schedule A

(Form 8804)

Penalty for Underpayment of Estimated Section 1446 Tax for Partnerships

Section references are to the Internal certified foreign partner-level items, 8804. Be sure to check the box on
Revenue Code unless otherwise noted. on the ECTI allocable to foreign Form 8804, line 8.
partners for 2021, provided that (1) • If the total section 1446 tax, shown
Future Developments this amount is at least 50% of the sum on Part II, line 1, is $500 or more,
For the latest information about of the amounts shown on lines 4d, 4h, complete the rest of page 1 to
developments related to Schedule A 4l, 4p, and 4t of its 2022 Form 8804; determine the underpayment for any
(Form 8804) and its instructions, such and (2) the tax year was for a full 12 of the installment due dates.
as legislation enacted after they were months. See the instructions for line 2, • If there is an underpayment on
published, go to IRS.gov/About- later, for more details. line 12 (column (a), (b), (c), or (d)), go
to Part VII to figure the penalty.
Schedule-A-Form-8804. In these instructions, “Form 8804”
• Complete Parts IV through VI as
generally refers to the partnership's
appropriate if the partnership uses the
General Instructions original Form 8804. However, an
adjusted seasonal installment method
amended Form 8804 is considered
and/or the annualized income
Purpose of Form the original Form 8804 if the amended
installment method.
Partnerships that have effectively Form 8804 is filed by the due date
connected taxable income (ECTI) (including extensions) of the original
allocable to foreign partners use Form 8804. Specific Instructions
Schedule A (Form 8804) to Also, for purposes of determining a
Part I. Reasons for Filing
determine: required installment, if an amended
• Whether they are subject to the Form 8804 is filed for the prior tax Adjusted seasonal installment
penalty for underpayment of year, then “prior tax year” includes the method and/or annualized income
estimated tax and, if so, amended Form 8804, but only if the installment method. If the
• The amount of the underpayment amended Form 8804 is filed before partnership's income varied during the
penalty. the applicable installment due date. year because, for example, it
operated its business on a seasonal
Who Must File The penalty is figured separately basis, it may be able to lower or
Generally, the partnership doesn’t for each installment due date. eliminate the amount of one or more
have to file this schedule because the Therefore, the partnership may owe a required installments by using the
IRS will figure the amount of the penalty for an earlier due date even if adjusted seasonal installment method
penalty and notify the partnership of it paid enough tax later to make up the and/or the annualized income
any amount due. However, even if the underpayment. This is true even if the installment method.
partnership doesn’t owe a penalty, partnership is due a refund when its
complete and attach this schedule to return is filed. However, the Example 1. A ski shop, which
the partnership's Form 8804 if the Part partnership may be able to reduce or receives most of its income during the
II, line 1, amount on page 1 is $500 or eliminate the penalty by using the winter months, may benefit from using
more and any of the following apply. annualized income installment one or both of these methods to figure
method or the adjusted seasonal its required installments. The
1. The adjusted seasonal installment method. See the annualized income installment or
installment method is used. instructions for Parts IV and V for adjusted seasonal installment may be
2. The annualized income details. less than the required installment
installment method is used. under the current year safe harbor
Exception to the Penalty (increased by any reduction
Who Must Pay the A partnership won’t have to pay a recaptured under section 6655(e)(1)
Underpayment Penalty penalty if the tax shown on line 5f of (B)) for one or more due dates. Using
Generally, a partnership is subject to its 2022 Form 8804 is less than $500. one or both of these methods may
the penalty if it didn’t timely pay in reduce or eliminate the penalty for
installments at least the smaller of: How To Use Schedule A those due dates.
1. The tax shown on line 5f of its Complete this schedule as follows. Use Parts IV through VI of
Schedule A (Form 8804) to figure one
2022 Form 8804; or • Check one or both of the boxes in or more required installments. If Parts
2. The total section 1446 tax that Part I that apply. If the partnership IV through VI are used for any
would have been due for 2021, checks a box in Part I, attach payment due date, Parts IV through VI
without regard to reductions for Schedule A (Form 8804) to Form

Aug 31, 2022 Cat. No. 36325U

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must be used for all subsequent partnership income (for example, Instructions for Forms 8804, 8805,
payment due dates. To arrive at the Form 1065) for the prior tax year. and 8813.
amount of each required installment, • The amount of ECTI for the prior tax • Section 1446(f)(1) tax withheld from
Part VI uses the smallest of: year isn’t less than 50% of the ECTI the partnership filing this Schedule A
• The adjusted seasonal installment shown on the current year Form 8804 (Form 8804) during the tax year for a
(if applicable), that is (or will be) timely filed. disposition of an interest in a
• The annualized income installment If the partnership isn’t permitted to partnership engaged in the conduct of
(if applicable), or use the prior year safe harbor method a U.S. trade or business. See the
• The current year safe harbor because any of the necessary instructions for Form 8804, lines 6f
(increased by any reduction conditions described above isn’t met, and 6g, in the Instructions for Forms
recaptured under section 6655(e)(1) skip line 2 and enter on line 3 the 8804, 8805, and 8813.
(B)). amount from line 1. Column (a). Enter payments made
by the date on line 4, column (a).
Follow the steps below to Note. If the partnership qualifies for
determine which parts of the form and uses the exception under Columns (b), (c), and (d). Enter
have to be completed. Regulations section 1.1446-3(b)(3)(ii) payments made on or before the date
• If the partnership is using only the to switch to the standard option on line 4 for that column and after the
adjusted seasonal installment annualization method during the tax date on line 4 of the preceding
method, check the applicable box in year, the partnership should include column.
Part I and complete Parts IV and VI of on line 2 the total of all installment
Schedule A (Form 8804). payments that were made during the Note. A payment of estimated tax is
• If the partnership is using only the tax year under both the prior year safe applied against unpaid installments in
annualized income installment harbor method and the standard the order in which installments are
method, check the applicable box in option annualization method. Attach a required to be paid, regardless of the
Part I and complete Parts V and VI of statement that explains the installment to which the payment
Schedule A (Form 8804). computation. pertains. See Example 3 under Part
• If the partnership is using both VII. Figuring the Penalty, later.
methods, check both of the boxes in Part III. Figuring the Line 12. If any of the columns in
Part I and complete all three parts line 12 shows an underpayment,
(Parts IV through VI) of Schedule A Underpayment
complete Part VII to figure the penalty.
(Form 8804). Line 6. Enter the estimated tax
payments made by the partnership for Parts IV Through VI
Part II. Current Year and its tax year as indicated below.
Prior Year Safe Harbors Include any overpayment from line 13 Extraordinary items. Generally,
of the partnership's 2021 Form 8804 under the annualized income
Line 2 (prior year safe harbor). that was credited to the partnership's installment method, extraordinary
Enter the total section 1446 tax that first installment period on its 2022 items must be taken into account after
would have been due for 2021, Form 8804. If an installment is due on annualizing the ECTI for the
without regard to reductions for a Saturday, Sunday, or legal holiday, annualization period. Similar rules
certified foreign partner-level items on payments made on the next day that apply in determining ECTI under the
the ECTI allocable to foreign partners isn’t a Saturday, Sunday, or legal adjusted seasonal installment
for 2021. holiday are considered made on the method. An extraordinary item
The partnership can generally use due date to the extent the payment is includes:
the prior year safe harbor only if it paid applied against that required • Any item identified in Regulations
the required amount using that installment. section 1.1502-76(b)(2)(ii)(C)(1), (2),
method for each of its installment Also, include on line 6 any of the (3), (4), (7), and (8);
payments of section 1446 tax during following: • A section 481(a) adjustment; and
the tax year. However, see • Section 1446 tax paid or withheld • Net gain or loss from the disposition
Regulations section 1.1446-3(b)(3)(ii) by another partnership in which the of 25% or more of the fair market
for an exception. Also, see the Note partnership filing this Schedule A value of the partnership's business
below. In addition, the partnership can (Form 8804) was a partner during the assets during the tax year.
only use the prior year safe harbor if tax year. See the instructions for Form These extraordinary items must be
all of the following apply. 8804, lines 6b and 6c, in the accounted for in the appropriate
• Each installment payment that was Instructions for Forms 8804, 8805, annualization period. However, a
made during the tax year, when and 8813. section 481(a) adjustment (unless the
averaged with all prior installment • Section 1445(a) or 1445(e) tax partnership makes the alternative
payments, must have been 25% of withheld from or paid by the choice under Regulations section
the partnership's total section 1446 partnership filing this Schedule A 1.6655-2(f)(3)(ii)(C)) is treated as an
tax liability under the prior year safe (Form 8804) during the tax year for a extraordinary item occurring on the
harbor. disposition of a U.S. real property first day of the tax year in which the
• The prior tax year consisted of 12 interest. See the instructions for Form item is taken into account in
months. 8804, lines 6d and 6e, in the determining ECTI.
• The partnership timely files
(including extensions) a U.S. return of
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For more information regarding period in which the partnership periods for the option listed below. For
extraordinary items, see Regulations normally receives the largest part of example, if the partnership elected
section 1.6655-2(f)(3)(ii) and the its ECTI. Option 1, enter on line 30 the
examples in Regulations section annualization periods 2, 4, 7, and 10,
Example 2. An amusement park
1.6655-2(f)(3)(vii). Also, see in columns (a) through (d),
with a 2022 calendar tax year
Regulations section 1.6655-3(d)(3). respectively.
receives the largest part of its taxable
De minimis rule. Extraordinary income during a 6-month period, May Use Option 1 or Option 2 only
items identified above resulting from a through October. To figure its base ! if the partnership elected to do
particular transaction that totals less period percentage for this 6-month CAUTION so by filing Form 8842,
than $1 million (other than a section period, the amusement park figures its Election To Use Different
481(a) adjustment) can be annualized ECTI for each May–October period in Annualization Periods for Corporate
using the general rules of Regulations 2019, 2020, and 2021. It then divides Estimated Tax, by the due date of the
section 1.6655-2(f), or, if the the ECTI for each May–October first required installment payment.
partnership chooses, can be taken period by the total ECTI for that Once made, the election is
into account after annualizing the particular tax year. The resulting irrevocable for the particular tax year.
ECTI for the annualization period. percentages are 69% (0.69) for May–
October 2019, 74% (0.74) for May– 1st 2nd 3rd 4th
Part IV. Adjusted Seasonal October 2020, and 67% (0.67) for Install- Install- Install- Install-
Installment Method May–October 2021. Because the ment ment ment ment
average of 69% (0.69), 74% (0.74), Standard
Option 3 3 6 9
Note. Part IV doesn't reflect the lower and 67% (0.67) is 70% (0.70), the
preferential rates permitted under base period percentage for May– Option 1 2 4 7 10
Regulations section 1.1446-3(a)(2). October 2022 is 70% (0.70). Option 2 3 5 8 11
These were omitted because, for Therefore, the amusement park
most taxpayers, the income reported qualifies for the adjusted seasonal
in Part IV will be predominantly (or installment method. Line 31. Enter on lines 31a through
31e the ECTI allocable to all foreign
exclusively) ordinary income. If the Line 15. If the partnership has certain partners for the months entered for
partnership wishes to consider lower extraordinary items, special rules each annualization period in columns
preferential rates for Part IV (and if the apply. Don’t include on line 15 the de (a) through (d) on line 30.
requirements outlined in the third minimis extraordinary items that the If the partnership has certain
paragraph of the line 31 instructions partnership chooses to include on extraordinary items, special rules
are met), it must attach a statement line 22b. See Extraordinary items, apply. Don’t include on line 31a, 31b,
which appropriately expands lines 15 earlier. 31c, 31d, or 31e the de minimis
and 22 through 25 to show the
applicable special types of income or Line 22b. If the partnership has extraordinary items that the
gain and the applicable percentages certain extraordinary items of $1 partnership chooses to include on
(see, for example, lines 33 and 34 of million or more from a transaction, or line 33a, 33e, 33i, 33m, or 33q,
this schedule). Also, Part IV, lines 15 a section 481(a) adjustment, special respectively. See Extraordinary items,
and 22 through 25, don’t provide the rules apply. Include these amounts on earlier.
separate entries for corporate and line 22b for the appropriate period.
non-corporate partners necessary to Also, include on line 22b the de With respect to lines 31c, 31d, and
apply the rates on lines 25a and 25b. minimis extraordinary items that the 31e, enter the specified types of
A partnership with corporate and partnership chooses to exclude from income allocable to non-corporate
non-corporate partners completing line 15. See Extraordinary items, partners if (a) the partners would be
Part IV must attach a statement which earlier. entitled to use a preferential rate on
such income or gain (see Regulations
appropriately expands lines 15 and 22 Line 23. Enter the amount by which section 1.1446-3(a)(2)), and (b) the
through 25 to show the amounts line 22c is being reduced for state and partnership has sufficient
allocable to both types of partners. local taxes under Regulations section documentation to meet the
The partnership can use the 1.1446-6(c)(1)(iii) and for certified requirements of Regulations section
adjusted seasonal installment method foreign partner-level items submitted 1.1446-3(a)(2)(ii).
only if the partnership's base period using Form 8804-C. See Reductions
percentage for any 6 consecutive for State and Local Taxes and If the partnership has net ordinary
months of the tax year is 70% or Certification of Deductions and loss, net short-term capital loss, or net
more. The base period percentage for Losses in the Instructions for Forms 28% rate loss, each net loss should
any period of 6 consecutive months is 8804, 8805, and 8813, for additional be netted against the appropriate
the average of the three percentages information. categories of income and gain to
figured by dividing the ECTI for the determine the amounts of income and
corresponding 6-consecutive-month Part V. Annualized Income gain to be entered on lines 31b, 31c,
period in each of the 3 preceding tax Installment Method 31d, and 31e, respectively. See
years by the ECTI for each of their section 1(h) and Notice 97-59,
Line 30. Annualization periods.
respective tax years. Figure the base 1997-45 I.R.B. 7, available at
Enter on line 30, columns (a) through
period percentage using the 6-month IRS.gov/pub/irs-irbs/irb97-45.pdf, for
(d), respectively, the annualization rules for netting gains and losses.

Instructions for Schedule A (Form 8804) (2022) -3-

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Line 32. Annualization amounts. extraordinary item, and the net figured for the period of
Enter on line 32, columns (a) through amount. Also, include an explanation underpayment using the
(d), respectively, the annualization of the item, including the authority underpayment rate determined under
amounts shown in the table below for under which it is being claimed. section 6621(a)(2). The period of
underpayment runs from the
the option used for line 30. For Lines 33b, 33f, 33j, 33n, and 33r.
installment due date to the earlier of
example, if the partnership elected Enter the reduction amounts for state
the date the underpayment is actually
Option 1, enter on line 32 the and local taxes under Regulations
paid or the 15th day of the 3rd month
annualization amounts 6, 3, 1.71429, section 1.1446-6(c)(1)(iii). The netting
after the close of the 2022 tax year
and 1.2, in columns (a) through (d), rules under section 1(h) and Notice
(the 15th day of the 6th month if the
respectively. 97-59 must be considered in
partnership keeps its books and
determining the category of income
records outside the United States and
1st 2nd 3rd 4th the reduction amounts offset.
Install- Install- Install- Install- Puerto Rico). For information on
ment ment ment ment Lines 33c, 33g, 33k, 33o, and 33s. obtaining the interest rate on
Standard Enter the reduction amounts resulting underpayments denoted by an
Option 4 4 2 1.33333
from certified partner-level items asterisk, see the footnote on page 5 of
Option 1 6 3 1.71429 1.2 received from foreign partners using the schedule.
Option 2 4 2.4 1.5 1.09091 Form 8804-C. See Certification of
Deductions and Losses in the A payment of estimated tax is
Instructions for Forms 8804, 8805, applied against unpaid required
Lines 33a, 33e, 33i, 33m, and 33q. and 8813, for additional information. installments in the order in which
If the partnership has extraordinary The netting rules of section 1(h) and installments are required to be paid,
items that total $1 million or more from Notice 97-59 must be considered in regardless of the installment to which
a particular transaction, or a section determining the category of income the payment pertains.
481(a) adjustment, special rules the reduction amounts offset. Example 3. A partnership
apply. Include these amounts on
underpaid the April 15 installment by
line 33a, 33e, 33i, 33m, or 33q, Part VI. Required $1,000. The June 15 installment
depending on the type of income
against which the item applies, for the Installments requires a payment of $2,500. On
June 11, the partnership pays $2,500
appropriate period. Also, include on Line 38. Before completing line 38 in for its June 15 installment. However,
line 33a, 33e, 33i, 33m, or 33q the de columns (b) through (d), complete $1,000 of this payment is applied
minimis extraordinary items that the lines 39 through 43 in each of the against the April 15 installment. The
partnership chooses to exclude from preceding columns. For example, penalty for the April 15 installment is
line 31a, 31b, 31c, 31d, or 31e, complete lines 39 through 43 in figured to June 11 (57 days). The
respectively. See Extraordinary items, column (a) before completing line 38 remaining $1,500 is applied to the
earlier. in column (b). June 15 installment as if it were made
If the partnership has included on Line 43. For each installment, enter on June 15.
line 33a, 33e, 33i, 33m, or 33q any of the smaller of line 39 or line 42 on
If the partnership has made more
the items referred to in the previous line 43. Also, enter the result on line 5.
paragraph, write “EI” and the dollar than one payment for a required
installment, attach a separate
amount of the item next to the affected Part VII. Figuring the
line. Attach a statement which shows computation for each payment.
the income for that line before the Penalty
extraordinary item, the amount of the Complete Part VII to determine the
amount of the penalty. The penalty is

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-4- Instructions for Schedule A (Form 8804) (2022)

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