2220 Instructions for Form 2220

Caution: DRAFT—NOT FOR FILING
This is an early release draft of an IRS tax form, instructions, or
publication, which the IRS is providing for your information as a courtesy.
Do not file draft forms. Also, do not rely on draft forms, instructions, and
publications for filing. We generally do not release drafts of forms until we
believe we have incorporated all changes. However, unexpected issues
sometimes arise, or legislation is passed, necessitating a change to a draft
form. In addition, forms generally are subject to OMB approval before they
can be officially released. Drafts of instructions and publications usually
have at least some changes before being officially released.
Early release drafts are at IRS.gov/DraftForms, and may remain there
even after the final release is posted at IRS.gov/DownloadForms. All
information about all forms, instructions, and pubs is at IRS.gov/Forms.
Almost every form and publication also has its own page on IRS.gov. For
example, the Form 1040 page is at IRS.gov/Form1040; the Publication 17
page is at IRS.gov/Pub17; the Form W-4 page is at IRS.gov/W4; and the
Schedule A (Form 1040) page is at IRS.gov/ScheduleA. If typing in a link
above instead of clicking on it, be sure to type the link into the address bar
of your browser, not in a Search box. Note that these are friendly shortcut
links that will automatically go to the actual link for the page.
If you wish, you can submit comments about draft or final forms,
instructions, or publications at IRS.gov/FormsComments. We cannot
respond to all comments due to the high volume we receive. Please note that
we may not be able to consider many suggestions until the subsequent
revision of the product.

2018

Instructions for Form 2220

Department of the Treasury
Internal Revenue Service

Underpayment of Estimated Tax by Corporations

DRAFT AS OF
October 17, 2018

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

Future Developments

For the latest information about developments affecting Form
2220 and its instructions, such as legislation enacted after
they were published, go to IRS.gov/Form2220.

General Instructions
Purpose of Form

Corporations (including S corporations), tax-exempt
organizations subject to the unrelated business income tax,
and private foundations use Form 2220 to determine:
• Whether they are subject to the penalty for underpayment
of estimated tax and, if so,
• The amount of the underpayment penalty for the period
that applies.

Who Must File

Generally, the corporation does not have to file this form with
its income tax return because the IRS will figure the amount
of any penalty and notify the corporation of any amount due.
However, even if the corporation does not owe a penalty,
complete and attach this form to the corporation's tax return if
the Part I, line 3, amount is $500 or more and any of the
following apply.
1. The adjusted seasonal installment method is used.
2. The annualized income installment method is used.
3. The corporation is a large corporation (as defined in
the instructions for Part II, line 8) figuring its first required
installment based on the prior year's tax.

Who Must Pay the Underpayment
Penalty

the underpayment. This is true even if the corporation is due
a refund when its return is filed. However, the corporation
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 Part II
for details.

Exception to the Penalty

A corporation will not have to pay a penalty if the tax shown
on the corporation's 2018 return (the Form 2220, Part I, line 3
amount) is less than $500.

How To Use Form 2220

• Complete lines 1 through 3 of Part I. If line 3 is $500 or
more, complete the rest of Part I to determine the required
annual payment and go to Part II.
• Check one or more boxes in Part II if the corporation uses
the adjusted seasonal installment method, the annualized
income installment method, or if the corporation is a large
corporation.
If the corporation checked a box in Part II, attach Form
2220 to the income tax return. Be sure to check the box on
Form 1120, page 1, line 34; or the comparable line of any
other income tax return the corporation is required to file (for
example, Form 1120-C, 1120-L, or 1120S).
• Complete Part III to determine the underpayment for any of
the installment due dates.
• If there is an underpayment on Part III, line 17 (column (a),
(b), (c), or (d)), go to Part IV to figure the penalty.
• Complete Schedule A if the corporation uses the adjusted
seasonal installment method and/or the annualized income
installment method.

Specific Instructions
Part I. Required Annual Payment

Generally, a corporation is subject to the penalty if it did not
timely pay at least the smaller of:
1. The tax shown on its 2018 return, or
2. The tax shown on its 2017 return (if it filed a 2017
return showing at least some amount of tax and the return
was for a full 12 months). However, a large corporation can
base only its first required installment on the prior year's tax.
In these instructions, “return” generally refers to the
corporation's original return. However, an amended return is
considered the original return if the amended return is filed by
the due date (including extensions) of the original return.
Also, for purposes of determining a required installment, if an
amended return is filed for the prior tax year, then “prior tax
year” includes the amended return, but only if the amended
return is filed before the applicable installment due date.

Complete lines 1 through 5 to figure the corporation's
required annual payment.
Line 1. Generally, enter the tax from Form 1120, line 31; or
the applicable line for other income tax returns. However, if
that amount includes any tax attributable to a sale described
in section 338(a)(1), do not include that tax on line 1. Instead,
write “Sec. 338 gain” and show the amount of tax in brackets
on the dotted line next to line 1. This exclusion from the line 1
amount does not apply if a section 338(h)(10) election is
made.
For information on how to figure the total tax for estimated
tax purposes for other entities, see the following forms or
their instructions.

The penalty is figured separately for each installment due
date. Therefore, the corporation may owe a penalty for an
earlier due date even if it paid enough tax later to make up
Oct 12, 2018

Cat. No. 64293P

• 990-PF
• 990-T
• 1120-C
• 1120-F

• 1120-FSC
• 1120-L
• 1120-ND
• 1120-PC

• If the corporation is using only the annualized income
installment method, check the box on Part II, line 7, and
complete Schedule A, Parts II and III.
• If the corporation is using both methods, check the boxes
in Part II, lines 6 and 7, and complete all three parts of
Schedule A.

• 1120-REIT
• 1120-RIC
• 1120S
• 1120-SF

Line 8. Large corporations. A large corporation is a
corporation (other than an S corporation) that had, or whose
predecessor had, taxable income (defined below) of $1
million or more for any of the 3 tax years immediately
preceding the 2018 tax year, or if less, the number of years
the corporation has been in existence. See Regulations
section 1.6655-4.
Taxable income, for this purpose, is modified to exclude
net operating loss and capital loss carrybacks and
carryovers. Members of a controlled group, as defined in
section 1563, must divide the $1 million amount among
themselves under rules similar to those in section 1561.
If the corporation is a large corporation, check the box on
Part II, line 8, and, if applicable, check the box(es) on Part II,
line 6 and/or line 7. Also, if applicable, complete Schedule A,
Parts I, II, and III, as discussed below in the instructions for
line 10.

DRAFT AS OF
October 17, 2018

Line 2c. Enter the amount from Form 1120, Schedule J,
line 20b, or the applicable line for other income tax returns.

Line 4. All filers (other than S corporations). Figure the
corporation's 2017 tax the same way the amount on line 3 of
this form was determined, using the taxes and credits from its
2017 tax return. However, skip line 4 and enter on line 5 the
amount from line 3 if either of the following applies.
• The corporation did not file a tax return for 2017 that
showed a liability for at least some amount of tax.
• The corporation had a 2017 tax year of less than 12
months.
S corporations. Enter on line 4 the sum of:
1. The total of the investment credit recapture tax and the
built-in gains tax shown on the return for the 2018 tax year,
and
2. Any excess net passive income tax shown on the S
corporation's return for the 2017 tax year.

Part III. Figuring the Underpayment
Line 9. The corporation is generally required to enter the
15th day of the 4th (Form 990-PF filers use the 5th month),
6th, 9th, and 12th months of its tax year.

If the 2017 tax year was less than 12 months, skip line 4
and enter on line 5 the amount from line 3.

Line 10. If multiple columns have the same due date, see
the instructions for line 9.
Large corporations. Large corporations, follow the
instructions below.
1. If the box on line 8 (but not line 6 or line 7) is checked
and line 3 is smaller than line 4, enter 25% of line 3 in
columns (a) through (d) of line 10.
2. If the box on line 8 (but not line 6 or line 7) is checked
and line 4 is smaller than line 3, enter 25% of line 4 in column
(a) of line 10. In column (b), figure the amount to enter as
follows:
a. Subtract line 4 from line 3,
b. Add the result to the amount on line 3, and
c. Multiply the total in item b above by 25%, and enter the
result in column (b).

Part II. Reasons for Filing
Lines 6 and 7. Adjusted seasonal installment method
and/or annualized income installment method. If the
corporation's income varied during the year because, for
example, it operated its business on a seasonal basis, it may
be able to lower or eliminate the amount of one or more
required installments by using the adjusted seasonal
installment method and/or the annualized income installment
method.
Example. A ski shop, which receives most of its income
during the winter months, may benefit from using one or both
of these methods to figure its required installments. The
annualized income installment or adjusted seasonal
installment may be less than the required installment under
the regular method for one or more due dates. Using one or
both of these methods may reduce or eliminate the penalty
for those due dates.
Use Schedule A (Form 2220, pages 3 and 4) to figure one
or more required installments. If Schedule A is used for any
payment due date, it must be used for all payment due dates.
To arrive at the amount of each required installment,
Schedule A automatically selects the smallest of:
• The adjusted seasonal installment (if applicable),
• The annualized income installment (if applicable), or
• 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)).
Follow the steps below to determine which parts of the
form have to be completed.
• If the corporation is using only the adjusted seasonal
installment method, check the box in Part II, line 6, and
complete Schedule A, Parts I and III.

In columns (c) and (d), enter 25% of line 3.
3. If the box on line 8 and the box on line 6 and/or line 7
are checked, follow the instructions in items 1 and 2 above
by substituting Schedule A, line 35 for line 10 and complete
the rest of Schedule A, Part III.
Line 11. Enter the estimated tax payments made by the
corporation for its tax year as indicated below. Include any
overpayment from the corporation's 2017 tax return that was
credited to the corporation's 2018 estimated tax. If an
installment is due on a Saturday, Sunday, or legal holiday,
payments made on the next day that is not a Saturday,
Sunday, or legal holiday are considered made on the due
date to the extent the payment is applied against that
required installment. If multiple columns have the same due
date, see the instructions for line 9.
Column (a). Enter payments made by the date on line 9,
column (a).

-2-

Instructions for Form 2220 (2018)

In Schedule A, Part II, make the appropriate adjustments
to annualized taxable income before figuring the estimated
tax for each reporting period. Similar adjustments must be
made, if applicable, to Part I of Schedule A, if the adjusted
seasonal installment method applies. See the instructions for
Schedule A, lines 2, 9b, 21, and 23b, below.
For more information regarding extraordinary items, see
Regulations section 1.6655-2(f)(3)(ii) and the examples in
Regulations section 1.6655-2(f)(3)(vii).

Columns (b), (c), and (d). Enter payments made by the
date on line 9 for that column and after the date on line 9 of
the preceding column.
Line 17. If any of the columns in line 17 shows an
underpayment, complete Part IV to figure the penalty.

Part IV. Figuring the Penalty

Complete lines 19 through 38 to determine the amount of the
penalty. The penalty is figured for the period of
underpayment using the underpayment rate determined
under section 6621. The period of underpayment generally
runs from the installment due date to the earlier of the date
the underpayment is actually paid or the 15th day of the 4th
month after the close of the tax year. C corporations with tax
years ending June 30 and S corporations use the 3rd month
instead of the 4th month. Form 990-PF and 990-T filers use
the 5th month instead of the 4th month.
Note. A corporation with a short tax year ending anytime in
June will be treated as if the short tax year ended on June 30.

DRAFT AS OF
October 17, 2018

Part I. Adjusted Seasonal Installment Method

The corporation can use the adjusted seasonal installment
method only if the corporation's base period percentage for
any 6 consecutive months of the tax year is 70% or more.
The base period percentage for any period of 6 consecutive
months is the average of the 3 percentages figured by
dividing the taxable income for the corresponding
6-consecutive-month period in each of the 3 preceding tax
years by the total taxable income for each of the 3 preceding
tax years, respectively. Figure the base period percentage
using the 6-month period in which the corporation normally
receives the largest part of its taxable income.

A payment of estimated tax is applied against unpaid
required installments in the order in which installments are
required to be paid, regardless of the installment to which the
payment pertains.

Example. An amusement park with a 2018 calendar 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 2018, the
amusement park figures its taxable income for each May–
October period in 2015, 2016, and 2017. 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 2015, 74%
(.74) for May–October 2016, and 67% (.67) for May–October
2017. Because the average of 69%, 74%, and 67% is 70%,
the base period percentage for May–October 2018 is 70%.
Therefore, the amusement park qualifies for the adjusted
seasonal installment method.

Example. A corporation with a calendar tax year
underpaid the April 15 installment by $1,000. The June 15
installment requires a payment of $2,500. On June 10, the
corporation deposits $2,500 to cover the June 15 installment.
However, $1,000 of this payment is applied against the April
15 installment. The penalty for the April 15 installment is
figured from April 15 to June 10 (56 days). The remaining
$1,500 is applied to the June 15 installment.
If the corporation has made more than one payment for a
required installment, attach a separate computation for each
payment.

Schedule A

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

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 corporation's 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)(3)(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 the corporation chooses, may be taken into account after
annualizing the taxable income for the annualization period.

Instructions for Form 2220 (2018)

Line 9b. 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, earlier.
Line 15. Only trusts liable for tax on unrelated business
taxable income may be liable for alternative minimum tax
(AMT) on certain adjustments and tax preference items.
Form 990-T filers compute AMT on Schedule I (Form 1041).
Alternative Minimum Tax—Corporations, if applicable. Figure
alternative minimum taxable income (AMTI) based on the
trust's income and deductions for the months shown in the
column headings directly above line 1.
Line 16. Enter on line 16 any other taxes the corporation
owed for the months shown in each column heading directly
above line 1. Include the same taxes used to figure Form
2220, Part I, line 1, including the base erosion minimum tax, if
applicable. Do not include the personal holding company tax
and interest due under the look-back method of section
460(b)(2) for completed long-term contracts or section
167(g)(2) for property depreciated under the income forecast
method.
-3-

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, earlier.

Line 18. Enter the credits the corporation is entitled to for
the months shown in each column heading above line 1.
Enter the same type of credits that are allowed on Form
2220, page 1, lines 1 and 2c.

Part II. Annualized Income Installment Method
Line 20. Annualization periods. Enter on line 20, columns
(a) through (d), respectively, the annualization periods for the
option shown in the tables below. For example, if the
corporation elected Option 1, enter on line 20 the
annualization periods 2, 4, 7, and 10, in columns (a) through
(d), respectively.

Line 25. Only trusts liable for tax on unrelated business
taxable income may be liable for alternative minimum tax
(AMT) on certain adjustments and tax preference items.
Form 990-T filers compute AMT on Schedule I (Form 1041).
Figure alternative minimum taxable income (AMTI) based on
the trust's income and deductions for the annualization
period entered in each column on line 20.

DRAFT AS OF
October 17, 2018

Use Option 1 or Option 2 only if the corporation
elected to do so by filing Form 8842, Election To Use
CAUTION Different Annualization Periods for Corporate
Estimated Tax, by the due date of the first required
installment payment. Once made, the election is irrevocable
for the particular tax year.

!

Line 26. Enter any other taxes the corporation owed for the
months shown in each column on line 20. Include the same
taxes used to figure Form 2220, Part I, line 1, including the
base erosion minimum tax, if applicable. Do not include the
personal holding company tax and interest due under the
look-back method of section 460(b)(2) for completed
long-term contracts or section 167(g)(2) for property
depreciated under the income forecast method.

Option 2 is not available to tax-exempt organizations and
private foundations. For these entities, see the options shown
in the table in the instructions for line 22.
Corporations

Line 28. Enter the credits the corporation is entitled to 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.

1st
2nd
3rd
4th
Installment Installment Installment Installment

Standard option

3

3

6

9

Option 1

2

4

7

10

Option 2

3

5

8

11

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).

Tax-Exempt Organizations and Private Foundations
1st
2nd
3rd
4th
Installment Installment Installment Installment

Standard option

2

3

6

9

Option 1

2

4

7

10

Line 35. Enter in each column of line 35, 25% of the amount
from page 1, Part I, line 5. Large corporations, see the
instructions for line 10 for the amounts to enter.

Line 21. Enter on line 21 the taxable income (line 30, Form
1120; or the applicable line for other income tax returns) that
the corporation received for the months entered for each
annualization period in columns (a) through (d) on line 20.
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, earlier.

Line 38. For each installment, enter the smaller of line 34 or
line 37 on line 38. Also enter the result on page 1, Part III,
line 10.
Paperwork Reduction Act Notice. We ask for the
information on this form to carry out the Internal Revenue
laws of the United States. You are required to give us the
information. We need it to ensure that you are complying with
these laws and to allow us to figure and collect the right
amount of tax.

Line 22. Annualization amounts. Enter on line 22,
columns (a) through (d), respectively, the annualization
amounts shown in the tables below for the option used for
line 20 above. For example, if the corporation elected Option
1, enter on line 22 the annualization amounts 6, 3, 1.71429,
and 1.2, in columns (a) through (d), respectively.
Corporations

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 can become material in the
administration of any Internal Revenue law. Generally, tax
returns and return information are confidential, as required by
section 6103.

1st
2nd
3rd
4th
Installment Installment Installment Installment

Standard option

4

Option 1

6

3

Option 2

4

2.4

4

2

1.33333

1.71429

1.2

1.5

1.09091

The time needed to complete and file this form will vary
depending on individual circumstances. The estimated
burden for business taxpayers filing this form is approved
under OMB control number 1545-0123 and is included in the
estimates shown in the instructions for their business income
tax return.

Tax-Exempt Organizations and Private Foundations
1st
2nd
3rd
4th
Installment Installment Installment Installment

Standard option

6

4

2

Option 1

6

3

1.71429

1.33333
1.2

If you have comments concerning the accuracy of these
time estimates or suggestions for making this form simpler,
-4-

Instructions for Form 2220 (2018)

we would be happy to hear from you. See the instructions for
the tax return with which this form is filed.

DRAFT AS OF
October 17, 2018

Instructions for Form 2220 (2018)

-5-