Estimated Tax for Corporations

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Instructions for Form 1120-W

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2009

CUMULATIVE CHANGES

Instructions for
Form 1120-W

Department of the Treasury
Internal Revenue Service

APPROVED FOR TPCC CHAIRPERSON
AS CORRECTED
Joan McAlpine 12/19/2008

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

IRS E-Services Make Taxes Easier
Now, more than ever before, businesses can enjoy the benefits
of filing and paying their federal taxes electronically. Whether
you rely on a tax professional or handle your own taxes, the
IRS offers you convenient programs to make filing and paying
taxes easier.
• You can e-file your Form 1120 tax return and certain other
business income tax returns; Form 940 and 941 employment
tax returns; Form 1099 and certain other information returns.
Visit www.irs.gov/efile for more information.
• You can pay taxes online or by phone using the free
Electronic Federal Tax Payment System (EFTPS). Visit www.
eftps.gov or call 1-800-555-4477 for more information. EFTPS
is required for certain corporations; see Depository Methods of
Tax Payment below.

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

What’s New
If a corporation has both a net capital gain and a qualified
timber gain, a maximum 15% capital gain tax rate may apply to
the qualified timber gain. Use new Part II to figure the
corporation’s special alternative tax. See the instructions for
Part II.

Who Must Make Estimated Tax
Payments

• Corporations generally must make estimated tax payments if
they expect their estimated tax (income tax less credits) to be
$500 or more.
• S corporations must also make estimated tax payments for
certain taxes. S corporations should see the instructions for
Form 1120S, U.S. Income Tax Return for an S Corporation, to
figure their estimated tax payments.
• Tax-exempt corporations, tax-exempt trusts, and domestic
private foundations use Form 990-W, Estimated Tax on
Unrelated Business Taxable Income for Tax-Exempt
Organizations, to figure the amount of their estimated tax
payments.

When To Make Estimated Tax Payments
The installments generally are due by the 15th day of the 4th,
6th, 9th, and 12th months of the tax year. If any due date falls
on a Saturday, Sunday, or legal holiday, the installment is due
on the next regular business day.

Underpayment of Estimated Tax
A corporation that does not make estimated tax payments when
due may be subject to an underpayment penalty for the period
of underpayment. Use Form 2220, Underpayment of Estimated
Tax by Corporations, to see if the corporation owes a penalty
and to figure the amount of the penalty. See Form 2220 and the
Instructions for Form 2220.

Overpayment of Estimated Tax
A corporation that has overpaid its estimated tax may apply for
a quick refund if the overpayment is at least 10% of its expected

income tax liability and at least $500. To apply, file Form 4466,
Corporation Application for Quick Refund of Overpayment of
Estimated Tax, after the end of the tax year and before the
corporation files its income tax return. Form 4466 may not be
filed later than the 15th day of the 3rd month after the end of the
tax year.

Depository Methods of Tax Payment
Some corporations (described below) are required to
electronically deposit all depository taxes, including estimated
tax payments.
Electronic deposit requirement. The corporation must make
electronic deposits of all depository taxes (such as employment
tax, excise tax, and corporate income tax) using the Electronic
Federal Tax Payment System (EFTPS) in 2009 if:
• The total deposits of such taxes in 2007 were more than
$200,000 or
• The corporation was required to use EFTPS in 2008.
If the corporation is required to use EFTPS and fails to do so, it
may be subject to a 10% penalty. If the corporation is not
required to use EFTPS, it may participate voluntarily. See IRS
E-Services Make Taxes Easier above.
Depositing on time. For EFTPS deposits to be made timely,
the corporation must initiate the transaction at least 1 business
day before the date the deposit is due.
Deposits with Form 8109. If the corporation does not use
EFTPS, deposit corporation income tax payments (and
estimated tax payments) with Form 8109, Federal Tax Deposit
Coupon. If you do not have a preprinted Form 8109, use Form
8109-B to make deposits. You can get this form only by calling
1-800-829-4933. Be sure to have your employer identification
number (EIN) ready when you call.
Do not send deposits directly to an IRS office; otherwise, the
corporation may have to pay a penalty. Mail or deliver the
completed Form 8109 with the payment to an authorized
depositary (that is, a commercial bank or other financial
institution authorized to accept federal tax deposits). Make
checks or money orders payable to the depositary.
If the corporation prefers, it may mail the coupon and
payment to: Financial Agent, Federal Tax Deposit Processing,
P.O. Box 970030, St. Louis, MO 63197. Make the check or
money order payable to “Financial Agent.”
To help ensure proper crediting, enter the corporation’s EIN,
the tax period to which the deposit applies, and “Form 1120” on
the check or money order. Be sure to darken the “1120” box
under “Type of Tax” and the appropriate “Quarter” box under
“Tax Period” on the coupon. Records of these deposits will be
sent to the IRS. For more information, see “Marking the Proper
Tax Period” in the instructions for Form 8109.
For more information on deposits, see the instructions in the
coupon booklet (Form 8109) and Pub. 583, Starting a Business
and Keeping Records.
Foreign corporations. If a foreign corporation maintains an
office or place of business in the United States, the corporation
must use one of the two methods described above.
If the foreign corporation does not maintain an office or place
of business in the United States, the corporation must pay the
estimated tax due directly to the IRS (i.e., do not use either of
the methods described above).
The corporation must pay the estimated tax due by check or
money order, payable to the “United States Treasury.” To
ensure proper crediting, enter the foreign corporation’s EIN,
“Form 1120-F (or 1120-FSC, if applicable) estimated tax

Cat. No. 52102x

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Instructions for Form 1120-W

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payment,” and the tax period to which the payment applies
(e.g., 1st QTR 2009), on the check or money order. The
payments must be sent to the Internal Revenue Service Center,
P.O. Box 40901, Ogden, UT 84409.

the taxable income in excess of $15 million or (b) $100,000.
See the instructions for line 12 above.

Line 15. Alternative Tax
If the corporation has or is expected to have both a capital gain
and a qualified timber gain, complete Part II. Enter the amount
from Part II, line 37, on line 15. See the instructions for Part II.

Refiguring Estimated Tax
If, after the corporation figures and deposits estimated tax, it
finds that its tax liability for the year will be more or less than
originally estimated, it may have to refigure its required
installments. If earlier installments were underpaid, the
corporation may owe a penalty.
An immediate catchup payment should be made to reduce
the amount of any penalty resulting from the underpayment of
any earlier installments, whether caused by a change in
estimate, failure to make a deposit, or a mistake.

Line 17. Alternative Minimum Tax (AMT)
Note. Skip this line if the corporation is treated as a “small
corporation” exempt from the AMT under section 55(e).
AMT is generally the excess of tentative minimum tax (TMT)
for the tax year over the regular tax for the tax year. A limited
amount of the foreign tax credit, as refigured for the AMT, is
allowed in computing the TMT. Use the 2008 Form 4626 and
the 2008 Instructions for Form 4626 as a guide.

Line 19. Tax Credits

Specific Instructions

For information on tax credits the corporation can take, see the
instructions for Form 1120, Schedule J, lines 5a through 5e, or
the instructions for the applicable lines and schedule of other
income tax returns.

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Line 1. Qualified Personal Service Corporations
A qualified personal service corporation is taxed at a flat rate of
35% on taxable income. A corporation is a qualified personal
service corporation if it meets both of the following tests.
• Substantially all of the corporation’s activities involve the
performance of services in the fields of health, law, engineering,
architecture, accounting, actuarial science, performing arts, or
consulting.
• At least 95% of the corporation’s stock, by value, is owned,
directly or indirectly, by employees performing the services
listed above, retired employees who had performed such
services, any estate of an employee or retiree described above,
or any person who acquired the stock of the corporation as a
result of the death of an employee or retiree (but only for the
2-year period beginning on the date of the employee1s or
retiree1s death). See Temporary Regulations section
1.448-1T(e) for details.

Line 21. Other Taxes
For information on other taxes the corporation may owe, see
the instructions for Form 1120, Schedule J, line 9, or the
instructions for the applicable line and schedule of other income
tax returns.

Line 23. Credit for Federal Tax Paid on Fuels
See Form 4136, Credit for Federal Tax Paid on Fuels, to find
out if the corporation qualifies to take this credit. Also include on
line 21 any credit the corporation is claiming under section
4682(g)(2) for tax on ozone-depleting chemicals.

Line 25a. 2008 Tax
Figure the corporation’s 2008 tax in the same way that line 24
of this worksheet was figured, using the taxes and credits from
the 2008 income tax return. Large corporations, see the
instructions for line 27 below.
If a return was not filed for the 2008 tax year showing a
liability for at least some amount of tax or the 2008 tax year was
for less than 12 months, do not complete line 25a. Instead, skip
line 25a and enter the amount from line 24 on line 25b.

Lines 2, 5, and 8. Members of a Controlled
Group
Members of a controlled group, complete lines 2, 5, and 8 as
follows:
• Enter on line 2, the smaller of the amount on line 1, or the
member’s share of the $50,000 amount.
• Enter on line 5, the smaller of the amount on line 4, or the
member’s share of the $25,000 amount.
• Enter on line 8, the smaller of the amount on line 7, or the
member’s share of the $9,925,000 amount.
Equal apportionment plan. If no apportionment plan is
adopted, members of a controlled group must divide the
amount in each taxable income bracket equally among
themselves. For example, Controlled Group AB consists of
Corporation A and Corporation B. They do not elect an
apportionment plan. Therefore, each corporation is entitled to:
• $25,000 (one-half of $50,000) on line 2,
• $12,500 (one-half of $25,000) on line 5, and
• $4,962,500 (one-half of $9,925,000) on line 8.
Unequal apportionment plan. Members of a controlled group
can elect an unequal apportionment plan and divide the taxable
income brackets as they want. There is no need for consistency
among taxable income brackets. Any member may be entitled
to all, some, or none of the taxable income bracket. However,
the total amount for all members cannot be more than the total
amount in each taxable income bracket.

Line 26. Installment Due Dates
Calendar-year taxpayers: Enter 4-15-2009, 6-15-2009,
9-15-2009, and 12-15-2009, respectively, in columns (a)
through (d).
Fiscal-year taxpayers: Enter the 15th day of the 4th, 6th,
9th, and 12th months of your tax year in columns (a) through
(d). If the due date falls on a Saturday, Sunday, or legal holiday,
enter the next business day.

Line 27. Required Installments
Payments of estimated tax should reflect any 2008
overpayment that the corporation chose to credit against its
2009 tax. The overpayment is credited against unpaid required
installments in the order in which the installments are required
to be paid.
Annualized income installment method and/or adjusted
seasonal installment method. If the corporation’s income is
expected to vary during the year because, for example, it
operates its business on a seasonal basis, it may be able to
lower the amount of one or more required installments by using
the annualized income installment method and/or the adjusted
seasonal installment method. For example, a ski shop, which
receives most of its income during the winter months, may be
able to benefit from using one or both of these methods in
figuring one or more of its required installments.
To use one or both of these methods, complete Schedule A.
If Schedule A is used for any payment date, it must be used for
all payment due dates. To get the amount of each required
installment, Schedule A automatically selects the smallest of (a)
the annualized income installment (if applicable), (b) the
adjusted seasonal installment (if applicable), or (c) the regular
installment under section 6655(d)(1) (increased by any
recapture of a reduction in a required installment under section
6655(e)(1)(B)).

Line 12. Additional 5% Tax
Members of a controlled group are treated as one group to
figure the applicability of the additional 5% tax and the
additional 3% tax. If an additional tax applies, each member will
pay that tax based on the part of the amount used in each
taxable income bracket to reduce that member’s tax. See
section 1561(a). Each member of the group must enter on line
12 its share of the smaller of (a) 5% of the taxable income in
excess of $100,000 or (b) $11,750.

Line 13. Additional 3% Tax
If the additional 3% tax applies, each member of the controlled
group must enter on line 13 its share of the smaller of (a) 3% of

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Instructions for Form 1120-W

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Large corporations. A large corporation is a corporation that
had, or whose predecessor had, taxable income of $1 million or
more for any of the 3 tax years immediately preceding the 2009
tax year, or if less, the number of years the corporation has
been in existence. For this purpose, taxable income is modified
to exclude net operating loss and capital loss carrybacks or
carryovers. Members of a controlled group, as defined in
section 1563, must divide the $1 million amount among
themselves according to rules similar to those in section 1561.
If Schedule A is not used, follow the instructions below to
figure the amounts to enter on line 27. If Schedule A is used,
follow the instructions below to figure the amounts to enter on
line 35 of Schedule A.
• If line 24 is smaller than line 25a: Enter 25% of line 24 in
columns (a) through (d) of line 27.
• If line 25a is smaller than line 27: Enter 25% of line 25a in
column (a) of line 27. In column (b), determine the amount to
enter as follows:
1. Subtract line 25a from line 24,
2. Add the result to the amount on line 24, and
3. Multiply the result in 2 above by 25% and enter the result
in column (b). Enter 25% of line 24 in columns (c) and (d).

the corporation chooses, may be taken into account after
annualizing the taxable income for the annualization period.
For more information regarding extraordinary items, see
Regulations section 1.6655-2(f)(ii) and the examples in
Regulations section 1.6655-2(f)(vii). Also see Regulations
section 1.6655-3(d)(3).

Part I. Adjusted Seasonal
Installment Method
Complete this part only if the corporation1s base period
percentage for any 6 consecutive months of the tax year equals
or exceeds 70% (.70). Figure the base period percentage using
the 6-month period in which the corporation normally receives
the largest part of its taxable income. The base period
percentage for any period of 6 consecutive months is the
average of the three percentages figured by dividing the taxable
income for the corresponding 6-consecutive-month period in
each of the 3 preceding tax years by the taxable income for
each of their respective tax years.
Example. An amusement park with a calendar year as its
tax year receives the largest part of its taxable income during
the 6-month period from May through October. To compute its
base period percentage for this 6-month period in 2009, the
amusement park figures its taxable income for each
May – October period in 2006, 2007, and 2008. It then divides
the taxable income for each May – October period by the total
taxable income for that particular tax year. The resulting
percentages are 69% (.69) for May – October 2006, 74% (.74)
for May – October 2007, and 67% (.67) for May – October 2008.
Because the average of 69%, 74%, and 67% is 70%, the base
period percentage for May through October 2008 is 70%.
Therefore, the amusement park qualifies for the adjusted
seasonal installment method.

Part II. Alternative Tax for Corporations with
Qualified Timber Gain.
If taxable income expected for the tax year includes both a net
capital gain and qualified timber gain, an alternative maximum
15% capital gains tax may apply to the qualified timber gain.
For this purpose, a qualified timber gain means the net gains
described in section 631(a) and (b), determined by taking into
account only trees held more than 15 years. Only qualified
timber gains for the period that begins after May 22, 2008, and
before May 23, 2009, are eligible for the alternative tax.
Complete Part II to determine the alternative tax. Enter the
amount from line 37 on page 1, Part I, line 15.
If the corporation is a regulated investment company (RIC),
qualified timber gain is taxed at 15%. All other gain not
designated under section 852(b)(3)(D) is taxed at 35%.

Line 2

If the corporation has certain extraordinary items, special rules
apply. Do not include on line 2 the de minimis extraordinary
items that the corporation chooses to include on line 9b. See
Extraordinary items above.

Schedule A

Line 9b

If only the adjusted seasonal installment method (Part I) is
used, complete Parts I and III of Schedule A. If only the
annualized income installment method (Part II) is used,
complete Parts II and III. If both methods are used, complete all
three parts. Enter in each column on page 1, Part I, line 27, the
amounts from the corresponding column of line 38. If Schedule
A is used for any payment date, it must be used for all payment
dates.

!

See the Instructions for Form 1120-RIC.

If the corporation has extraordinary items of $1,000,000 or
more, a net operating loss deduction, or a section 481(a)
adjustment, special rules apply. Include these amounts on line
9b for the appropriate period. Also include on line 9b the de
minimis items that the corporation chooses to exclude from line
2. See Extraordinary items above.

Line 15. Alternative Minimum Tax
The corporation may owe AMT unless it will be a “small
corporation” exempt from the AMT under section 55(e) for its
2009 tax year. To figure the AMT, use the 2008 Form 4626 and
its instructions as a guide. Figure alternative minimum taxable
income (AMTI) using income and deductions for the months
shown in the column headings above line 1. Divide the AMTI by
the amounts on line 8 before subtracting the exemption amount.
Multiply that result by 20% and subtract any AMT foreign tax
credit plus the amount on line 10 to arrive at the AMT. For
columns (a) through (c), multiply the AMT by the amount shown
on line 13.

Do not figure any required installment until after the end
of the month preceding the due date for that installment.

CAUTION

Extraordinary items. Generally, under the annualized income
installment method, extraordinary items must be taken into
account after annualizing the taxable income for the
annualization period. Similar rules apply in determining taxable
income under the adjusted seasonal installment method. An
extraordinary item includes:
• Any item identified in Regulations section
1.1502-76(b)(2)(ii)(C)(1), (2), (3), (4), (7) and (8);
• A net operating loss carryover;
• A section 481(a) adjustment; and
• Net gain or loss from the disposition of 25% or more of the
fair market value of the corporation1s business assets during
the tax year.
These extraordinary items must be accounted for in the
appropriate annualization period. However, a net operating loss
deduction and a section 481(a) adjustment (unless the
corporation makes the alternative choice under Regulations
section 1.6655-2(f)(ii)(C)) are treated as extraordinary items
occurring on the first day of the tax year in which the item is
taken into account in determining taxable income.
De minimis rule. Extraordinary items identified above that
are less than $1,000,000 (other than a net operating loss
carryover or a section 481(a) adjustment) may be annualized
using the general rules of Regulations section 1.6655-2(f), or if

Line 16. Other Taxes
For the same taxes used to figure page 1, Part I, line 21, figure
the amounts for the months shown in the column headings
above line 1.

Line 18. Credits
Enter the credits to which the corporation is entitled for the
months shown in the column headings above line 1.

Part II. Annualized Income Installment
Method
Line 20. Annualization Periods
Enter in the space on line 20, columns (a) through (d),
respectively, the annualization periods that the corporation is
using, based on the options listed below. For example, if the

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Instructions for Form 1120-W

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Line 25. Alternative Minimum Tax

corporation elects Option 1, enter on line 20 the annualization
periods 2, 4, 7, and 10, in columns (a) through (d), respectively.
Use Option 1 or Option 2 only if the corporation elected
to use one of these options by filing Form 8842, Election
CAUTION To Use Different Annualization Periods for Corporate
Estimated Tax, on or before the due date of the first required
installment payment. Once made, the election is irrevocable for
the particular tax year.

The corporation may owe AMT unless it will be a “small
corporation” exempt from the AMT under section 55(e) for its
2009 tax year. To figure the AMT, use the 2008 Form 4626 and
its instructions as a guide. Figure AMTI using income and
deductions for the annualization period entered in each column
on line 20. Multiply the AMTI by the annualization amounts on
line 22 before subtracting the exemption amount. Multiply that
result by 20% and subtract any AMT foreign tax credit plus the
amount on line 24 to arrive at the AMT.

!

1st
Installment

2nd
Installment

3rd
Installment

4th
Installment

Standard option

3

3

6

9

Option 1 . . . . . .

2

4

7

10

For the same taxes used to figure line 19 of Form 1120-W,
figure the amounts for the months shown on line 20.

Option 2

3

5

8

11

Line 28. Credits

. . . . .

Line 26. Other Taxes

Enter the credits to which the corporation is entitled for the
months shown in each column on line 20. Do not annualize any
credit. However, when figuring the credits, annualize any item
of income or deduction used to figure the credit.

Line 21. Taxable Income
If a corporation has income includible under section 951(a)
(controlled foreign corporation income), special rules apply.
Amounts includible in income under section 951(a) generally
must be taken into account in figuring the amount of any
annualized income installment as the income is earned. The
amounts are figured in a manner similar to the way in which
partnership income inclusions are taken into account in figuring
a partner’s annualized income installments as provided in
Regulations section 1.6654-2(d)(2).
Safe harbor election. Corporations may be able to elect a
prior year safe harbor election. Under the election, an eligible
corporation is treated as having received ratably during the tax
year items of income under section 951(a) equal to 115%
(100% for a noncontrolling shareholder) of the amounts shown
on the corporation’s return for the first preceding tax year (the
second preceding tax year for the first and second required
installments).
For more information, see section 6655(e) and Regulations
section 1.6655-2(f)((3)(v)(B)(2).
Extraordinary items. If the corporation has extraordinary
items, special rules apply. Do not include on line 21 the de
minimis extraordinary items that the corporation chooses to
include on line 23b. See Extraordinary items on page 3.

Part III. Required Installments
Line 33
Before completing line 33 in columns (b) through (d), complete
lines 34 through 38 in each of the preceding columns. For
example, complete lines 34 through 38 in column (a) before
completing line 33 in column (b).

Line 38. Required Installments
For each installment, enter the smaller of line 34 or line 37 on
line 38. Also enter the result on page 1, Part I, line 27.
Paperwork Reduction Act Notice. Your use of this form is
optional. It is provided to aid the corporation in determining its
tax liability.
You are not required to provide the information requested on
a form that is subject to the Paperwork Reduction Act unless
the form displays a valid OMB control number. Books or
records relating to a form or its instructions must be retained as
long as their contents may become material in the
administration of any Internal Revenue law. Generally, tax
returns and return information are confidential, as required by
section 6103.
The time needed to complete this form will vary depending
on individual circumstances. The estimated average time is:

Line 22. Annualization Amounts
Enter the annualization amounts for the option used on line 20.
For example, if the corporation elects Option 1, enter on line 22
the annualization amounts 6, 3, 1.71429, and 1.2, in columns
(a) through (d), respectively.
1st
Installment

2nd
Installment

Standard option

4

Option 1 . . . . . .

6

Option 2

4

. . . . .

3rd
Installment

4th
Installment

4

2

1.33333

3

1.71429

1.2

2.4

1.5

1.09091

& sending

Form
1120 – W
1120 – W, Sch. A (Pt.I)
1120 – W, Sch. A (Pt.II)
1120 – W, Sch. A (Pt.III)

Recordkeeping
8 hr., 7min.
22 hr., 43 min.
10 hr., 31 min.
6 hr., 13 min.

Learning about the Preparing
law or the form
the form
1 hr., 0 min.
1 hr., 10 min.
6 min.
28 min.
35 min.
48 min.
.......
6 min.

6 min.

If you have comments concerning the accuracy of these time
estimates or suggestions for making this form simpler, we
would be happy to hear from you. You can write to the Internal
Revenue Service, Tax Products Coordinating Committee,
SE:W:CAR:MP:T:T:SP, 1111 Constitution Ave. NW, IR-6526,
Washington, DC 20224. Do not send the tax form to this office.
Instead, keep the form for your records.

Line 23b
If the corporation has certain extraordinary items of $1,000,000
or more, a net operating loss deduction, or a section 481(a)
adjustment, special rules apply. Include these amounts on line
23b. Also include on line 23b the de minimis extraordinary items
that the corporation chooses to exclude from line 21. See
Extraordinary items on page 3.

Please see the
times listed under
the new OMB
sheets I included in
this response.

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