8804-W Instructions for Form 8804-W

2020

Department of the Treasury
Internal Revenue Service

Instructions for Form 8804-W
(WORKSHEET)
Installment Payments of Section 1446 Tax for Partnerships
Section references are to the Internal Revenue
Code unless otherwise noted.

Future Developments

For the latest information about
developments related to Form 8804-W
and its instructions, such as legislation
enacted after they were published, go to
IRS.gov/Form8804W.

General Instructions
Purpose of Form

Partnerships that have effectively
connected taxable income (ECTI)
allocable to foreign partners can use the
Form 8804-W (WORKSHEET) to
determine the proper estimated section
1446 tax payments.

Who Must Make Estimated
Section 1446 Tax
Payments

Partnerships generally must make
installment payments of estimated section
1446 tax if the aggregate tax on the ECTI
that is allocable to all foreign partners will
be $500 or more.

When To Make Estimated
Section 1446 Tax
Payments

The installments are due by the 15th day
of the 4th, 6th, 9th, and 12th months of the
partnership's tax year. If any date falls on
a Saturday, Sunday, or legal holiday, the
installment is due on the next regular
business day.

Underpayment of
Estimated Section 1446
Tax

A partnership that doesn’t make estimated
section 1446 tax payments when due may
be subject to an underpayment penalty for
the period of underpayment. See
Schedule A (Form 8804) for details.

How To Make Estimated
Section 1446 Tax
Payments

must file Form 8813. Furthermore, the
partnership is generally required to notify
each foreign partner of the section 1446
tax paid on the partner's behalf within 10
days of the installment payment due date,
or, if paid later, the date the installment
payment is made. See Regulations
section 1.1446-3(d)(1)(i) for information
that must be included in the notification
and for exceptions to the notification
requirement.

Refiguring Estimated
Section 1446 Tax

If, after the partnership figures and makes
an installment payment of estimated
section 1446 tax, it finds that its section
1446 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
partnership may owe a penalty for
underpayment of estimated tax. An
immediate catch-up 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
payment, or a mistake.

Specific Instructions
Part I—Determination of
Installment Payments

Complete Form 8804-W for each
installment payment of section 1446 tax
based on the information available at the
time of the installment payment.

Lines 1 Through 6—Current
Year Safe Harbor
Lines 1a, 1e, 1i, 1m, and 1q. To
determine the allocable share of ECTI for
all foreign partners, see Effectively
Connected Taxable Income in the
Instructions for Forms 8804, 8805, and
8813. Enter on lines 1i, 1m, and 1q the
specified types of ECTI allocable to those
partners who would be entitled to use a
preferential rate on such income or gain
(see Regulations section 1.1446-3(a)(2)).
For tiered partnerships, see Regulations
section 1.1446-5.

A partnership that is required to make an
installment payment of section 1446 tax

Nov 18, 2019

Cat. No. 51675X

A partner may be entitled to use a
preferential rate on the following types of
income or gain.
1. Line 1i—See section 1(h)(4) and
the instructions for Schedule D (Form
1040 or 1040-SR), line 18, for more
information regarding 28% rate gain.
2. Line 1m—See section 1(h)(6) and
the instructions for Schedule D (Form
1040 or 1040-SR), line 19, for more
information regarding unrecaptured
section 1250 gain.
3. Line 1q—Adjusted net capital gain
is net capital gain, as defined in section
1222(11), reduced (but not below zero) by
the sum of (a) unrecaptured section 1250
gain and (b) 28% rate gain, plus qualified
dividend income. See section 1(h)(3).
If the partnership has net ordinary loss,
net short-term capital loss, or net 28% rate
loss, each net loss should be netted
against the appropriate categories of
income and gain to determine the
amounts of income and gain to be entered
on lines 1a, 1e, 1i, 1m, and 1q,
respectively. Don’t enter a negative
number on line 1a, 1e, 1i, 1m, or 1q. See
section 1(h) and Notice 97-59, 1997-45
I.R.B. 7, available at IRS.gov/pub/irs-irbs/
irb97-45.pdf, for rules for netting gains and
losses.
Lines 1b, 1f, 1j, 1n, and 1r. Enter the
reduction amounts for state and local
taxes under Regulations section
1.1446-6(c)(1)(iii). See Reductions for
State and Local Taxes in the Instructions
for Forms 8804, 8805, and 8813 for
additional information. The netting rules
under section 1(h) and Notice 97-59,
available at IRS.gov/pub/irs-irbs/
irb97-45.pdf, must be considered in
determining the category of income the
reduction amounts offset.
Lines 1c, 1g, 1k, 1o, and 1s. Enter the
reduction amounts resulting from certified
partner-level items received from foreign
partners using Form 8804-C. See
Certification of Deductions and Losses in
the Instructions for Forms 8804, 8805, and
8813 for additional information. The
netting rules under section 1(h) and Notice
97-59, available at IRS.gov/pub/irs-irbs/
irb97-45.pdf, must be considered in
determining the category of income the
reduction amounts offset.

Line 8—Prior Year Safe Harbor

Enter the total section 1446 tax that would
have been due for 2019, applying the
2019 rates (see the 2019 Form 8804-W
for the 2019 rates), on ECTI allocable to all
foreign partners for 2019, without any
reductions for state and local taxes under
Regulations section 1.1446-6(c)(1)(iii) or
certified partner-level items. For the
partnership's first installment payment, if
the 2019 Form 8804 hasn’t yet been filed,
an estimate is acceptable. However, if the
partnership later determines that this
estimate is incorrect, see Refiguring
Estimated Section 1446 Tax, earlier.
Complete line 8 only if all of the
following apply.

• The prior tax year consisted of 12

months.
• The partnership timely files (including
extensions) a U.S. return of partnership
income (for example, Form 1065) for the
prior year.
• The amount of ECTI for the prior tax
year is not less than 50% of the ECTI
expected for the current tax year.
Furthermore, the Form 8804 on which the
current year ECTI will be reported must be
timely filed.
If any of the above does not apply, skip
line 8 and enter the amount from line 7 on
line 9.
If the partnership qualifies to use the
prior year safe harbor and chooses that
method, it must use that method to pay
each of its installments during the tax year.
Furthermore, for each installment
payment, the average of that installment
and prior installments during the tax year
must be at least 25% of the amount that
satisfies the partnership's section 1446 tax
liability under the prior year safe harbor. If
the partnership doesn’t satisfy both of
these requirements, it won’t qualify for the
prior year safe harbor when determining
any penalty due on Schedule A (Form
8804).
If the partnership begins using the prior
year safe harbor method and it determines
later in the tax year (based upon the
standard option annualization method
described later in these instructions) that it
won’t meet the 50% of ECTI requirement
described in the last bulleted item above,
it can make all subsequent installment
payments using the standard option
annualization method and it won’t be
subject to the penalty determined on
Schedule A (Form 8804). This change in
method must be disclosed in a statement
attached to the Form 8804 the partnership
files for the current tax year and the
statement must include enough
information to allow the IRS to determine
whether the change was appropriate.
If the partnership begins using the prior
year safe harbor method and switches to

the current year safe harbor (because the
partnership doesn’t qualify for the relief
described in the previous paragraph (that
is, using the standard option annualization
method) or the partnership chooses not to
continue using it), in order to avoid an
underpayment penalty on the current
installment payment, the partnership must
pay the sum of (a) the current installment
payment based on the current year safe
harbor, plus (b) the sum of the amount by
which the current year safe harbor
exceeds the prior year safe harbor amount
paid in for each prior installment period
during which it qualified for the prior year
safe harbor.

at the amount of each required
installment, Part IV automatically selects
the smallest of (a) the annualized income
installment (if applicable), (b) the adjusted
seasonal installment (if applicable), or (c)
the current year safe harbor (increased by
any recapture of a reduction in a required
installment under section 6655(e)(1)(B)).

Line 12

Include on line 12 any 2019 overpayment
that the partnership chose to credit
against its 2020 tax. The overpayment is
credited against unpaid required
installments in the order in which the
installments are required to be paid.
Also include on line 12 the following.

Line 9

You can enter the smaller of line 7 or
line 8. However, if, for any installment
payment, line 7 is smaller than line 8 and
you enter that smaller line 7 amount on
line 9, you won’t qualify for the prior year
safe harbor when determining any penalty
due on Schedule A (Form 8804) (see the
line 8 instructions, earlier). Therefore, in
that case, for any subsequent installment
payment during the tax year, don’t use the
line 8 amount.

Line 10—Installment Due Dates
Calendar-year taxpayers. Enter
4-15-2020, 6-15-2020, 9-15-2020, and
12-15-2020, respectively, in columns (a)
through (d).
Fiscal-year taxpayers. Enter the 15th
day of the 4th, 6th, 9th, and 12th months
of the partnership's tax year in columns (a)
through (d). If the regular due date falls on
a Saturday, Sunday, or legal holiday, enter
the next business day.

Line 11

Enter 25% (0.25) of line 9 in columns (a)
through (d). If the partnership uses the
annualized income installment method or
the adjusted seasonal installment method,
then enter the amount from line 43.
Annualized income installment method
and/or adjusted seasonal installment
method. If the partnership's ECTI 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 Part II and/or Part III of the form.
If those Parts are used for any payment
date, those Parts must be used for all
subsequent payment due dates. To arrive
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• Section 1446 tax withheld and paid by
another partnership because the
partnership preparing this Form 8804-W
was a partner in that partnership during
the tax year. See the instructions for Form
8804, line 6b, in the Instructions for Forms
8804, 8805, and 8813.
• Section 1445(a) or 1445(e)(1) tax
withheld from or paid by the partnership
filing this Form 8804-W during the tax year
for a disposition of a U.S. real property
interest. See the instructions for Form
8804, line 6c, in the Instructions for Forms
8804, 8805, and 8813.
The partnership generally enters these
amounts in the column that corresponds
to the installment period for which these
amounts were paid or withheld. However,
if the partnership learns about the
payments or withholding in a subsequent
installment period, the partnership can
claim them in that period.

Parts II Through IV

If only the adjusted seasonal installment
method (Part II) is used, complete Parts II
and IV. If only the annualized income
installment method (Part III) is used,
complete Parts III and IV. If both methods
are used, complete all three Parts. Enter in
each column on line 11 the amounts from
the corresponding column of line 43.
Don’t figure any required
installment until after the end of
CAUTION the month preceding the due date
for that installment.

!

Extraordinary items. Generally, under
the annualized income installment
method, extraordinary items must be
taken into account after annualizing the
ECTI for the annualization period. Similar
rules apply in determining ECTI 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 section 481(a) adjustment; and
• Net gain or loss from the disposition of
25% or more of the fair market value of the
Instructions for Form 8804-W (2020)

partnership's business assets during the
tax year.
These extraordinary items must be
accounted for in the appropriate
annualization period. However, a section
481(a) adjustment (unless the partnership
makes the alternative choice under
Regulations section 1.6655-2(f)(3)(ii)(C))
is treated as an extraordinary item
occurring on the first day of the tax year in
which the item is taken into account in
determining ECTI.
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). Also see Regulations
section 1.6655-3(d)(3).
De minimis rule. Extraordinary items
identified above resulting from a particular
transaction that total less than $1 million
(other than a section 481(a) adjustment)
can be annualized using the general rules
of Regulations section 1.6655-2(f), or, if
the partnership chooses, can be taken into
account after annualizing the ECTI for the
annualization period.

Part II—Adjusted Seasonal
Installment Method

Note. Part II doesn’t reflect the lower
preferential rates permitted under
Regulations section 1.1446-3(a)(2). These
were omitted because, for most taxpayers,
the income reported in Part II will be
predominantly (or exclusively) ordinary
income. If the partnership wishes to
consider lower preferential rates for Part II
(and if the requirements outlined in the
Note in the line 31 instructions are met), it
should prepare a statement which
appropriately expands lines 15 and 22
through 25 to show the applicable special
types of income or gain and the applicable
percentages (see, for example, lines 33
and 34 of this Form 8804-W). Also, Part II,
lines 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
non-corporate partners completing Part II
should prepare a statement which
appropriately expands lines 15 and 22
through 25 to show the amounts allocable
to both types of partners.
Complete this part only if the
partnership's base period percentage for
any 6 consecutive months of the tax year
equals or exceeds 70%. Figure the base
period percentage using the 6-month
period in which the partnership normally
receives the largest part of its ECTI. The
base period percentage for any period of 6
consecutive months is the average of the
three percentages figured by dividing the
ECTI for the corresponding
6-consecutive-month period in each of the

Instructions for Form 8804-W (2020)

3 preceding tax years by the ECTI 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 ECTI during a 6-month
period, May through October. To figure its
base period percentage for this 6-month
period, the amusement park figures its
ECTI for each May–October period in
2017, 2018, and 2019. It then divides the
ECTI for each May–October period by the
total ECTI for that particular tax year. The
resulting percentages are 69% (0.69) for
May–October 2017, 74% (0.74) for May–
October 2018, and 67% (0.67) for May–
October 2019. Because the average of
69% (0.69), 74% (0.74), and 67% (0.67) is
70% (0.70), the base period percentage
for May through October 2020 is 70%
(0.70). Therefore, the amusement park
qualifies for the adjusted seasonal
installment method.

Line 15

If the partnership has certain extraordinary
items, special rules apply. Don’t include
on line 15 the de minimis extraordinary
items that the partnership chooses to
include on line 22b. See Extraordinary
items, earlier.

Line 22b

If the partnership has certain extraordinary
items of $1 million or more from a
transaction, or a section 481(a)
adjustment, special rules apply. Include
these amounts on line 22b for the
appropriate period. Also, include on
line 22b the de minimis extraordinary
items that the partnership chooses to
exclude from line 15. See Extraordinary
items, earlier.

Line 23

Enter the reduction to the line 22c amount
for state and local taxes under
Regulations section 1.1446-6(c)(1)(iii) and
for certified foreign partner-level items
submitted under Regulations section
1.1446-6. See Certification of Deductions
and Losses in the Instructions for Forms
8804, 8805, and 8813 for additional
information.

Part III—Annualized
Income Installment
Method
Line 30—Annualization Periods

Enter in the space on line 30, columns (a)
through (d), respectively, the annualization
periods that the partnership is using,
based on the options listed below. For
example, if the partnership elects Option
1, enter on line 30 the annualization
periods 2, 4, 7, and 10, in columns (a)
through (d), respectively.

-3-

Use Option 1 or Option 2 only if
the partnership elected to use one
CAUTION of these options by filing Form
8842, Election 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.

!

1st
Installment

2nd
Installment

3rd
Installment

4th
Installment

Standard
Option

3

3

6

9

Option 1

2

4

7

10

Option 2

3

5

8

11

Line 31—ECTI Allocable to All
Foreign Partners

Enter on lines 31a through 31e the ECTI
allocable to all foreign partners for the
months entered for each annualization
period in columns (a) through (d) on
line 30. To determine the allocable share
of ECTI for all foreign partners, see
Effectively Connected Taxable Income in
the Instructions for Forms 8804, 8805, and
8813.
If the partnership has certain
extraordinary items, special rules apply.
Don’t include on line 31a, 31b, 31c, 31d,
or 31e the de minimis extraordinary items
that the partnership chooses to include on
line 33a, 33e, 33i, 33m, or 33q,
respectively. See Extraordinary items,
earlier.

Note. Enter on lines 31c through 31e the
specified types of ECTI (a) allocable to
those partners who would be entitled to
use a preferential rate on such income or
gain (see Regulations section 1.1446-3(a)
(2)), and (b) for whom the partnership has
sufficient documentation to meet the
requirements of Regulations section
1.1446-3(a)(2)(ii).
A partner may be entitled to use a
preferential rate on the following types of
income or gain.
1. Line 31c—See section 1(h)(4) and
the instructions for Schedule D (Form
1040 or 1040-SR), line 18, for more
information regarding 28% rate gain.
2. Line 31d—See section 1(h)(6) and
the instructions for Schedule D (Form
1040 or 1040-SR), line 19, for more
information regarding unrecaptured
section 1250 gain.
3. Line 31e—Adjusted net capital gain
is net capital gain, as defined in section
1222(11), reduced (but not below zero) by
the sum of (a) unrecaptured section 1250
gain and (b) 28% rate gain, plus qualified
dividend income. See section 1(h)(3).

If the partnership has net ordinary loss,
net short-term capital loss, or net 28% rate
loss, each net loss should be netted
against the appropriate categories of
income and gain to determine the
amounts of income and gain to be entered
on lines 31a through 31e, respectively.
Don’t enter a negative number on lines
31a through 31e. See section 1(h) and
Notice 97-59, available at IRS.gov/pub/irsirbs/irb97-45.pdf, for rules for netting gains
and losses.

Line 32—Annualization
Amounts

Enter the annualization amounts for the
option used on line 30. For example, if the
partnership elects Option 1, enter on
line 32 the annualization amounts 6, 3,
1.71429, and 1.2, in columns (a) through
(d), respectively.
1st
Installment

2nd
Installment

3rd
Installment

4th
Installment

Standard
Option

4

4

2

1.33333

Option 1

6

3

1.71429

1.2

Option 2

4

2.4

1.5

1.09091

Lines 33a, 33e, 33i, 33m, and
33q

If the partnership has certain extraordinary
items that total $1 million or more from a
particular transaction, or a section 481(a)
adjustment, special rules apply. Include

these amounts on line 33a, 33e, 33i, 33m,
or 33q, depending upon the type of
income against which the item applies, for
the appropriate period. Also include on
line 33a, 33e, 33i, 33m, or 33q the de
minimis extraordinary items that the
partnership chooses to exclude from
line 31a, 31b, 31c, 31d, or 31e,
respectively. See Extraordinary items,
earlier.
Enter on lines 33i, 33m, and 33q the
specified types of ECTI if the partner
would be entitled to use a preferential rate
on the income or gain (see Regulations
section 1.1446-3(a)(2)).
1. Line 33i—See section 1(h)(4) and
the instructions for Schedule D (Form
1040 or 1040-SR), line 18, for more
information regarding 28% rate gain.
2. Line 33m—See section 1(h)(6) and
the instructions for Schedule D (Form
1040 or 1040-SR), line 19, for more
information regarding unrecaptured
section 1250 gain.
3. Line 33q—Adjusted net capital gain
is net capital gain, as defined in section
1222(11), reduced (but not below zero) by
the sum of (a) unrecaptured section 1250
gain and (b) 28% rate gain, plus qualified
dividend income. See section 1(h)(3).

Lines 33b, 33f, 33j, 33n, and 33r

Enter the reduction amounts for state and
local taxes under Regulations section
1.1446-6(c)(1)(iii). See Reductions for
State and Local Taxes in the Instructions
for Forms 8804, 8805, and 8813 for
additional information. The netting rules

under section 1(h) and Notice 97-59,
available at IRS.gov/pub/irs-irbs/
irb97-45.pdf, must be considered in
determining the category of income the
reduction amounts offset.

Lines 33c, 33g, 33k, 33o, and
33s

Enter the reduction amounts resulting from
certified partner-level items received from
foreign partners using Form 8804-C. See
Certification of Deductions and Losses in
the Instructions for Forms 8804, 8805, and
8813 for additional information. The
netting rules under section 1(h) and Notice
97-59, available at IRS.gov/pub/irs-irbs/
irb97-45.pdf, must be considered in
determining the category of income the
reduction amounts offset.

Part IV—Required
Installments Under Part II
and/or Part III
Line 38

Before completing line 38 in columns (b)
through (d), complete lines 39 through 43
in each of the preceding columns. For
example, complete lines 39 through 43 in
column (a) before completing line 38 in
column (b).

Line 43—Required Installments

For each installment, enter the smaller of
line 39 or line 42 on line 43. Also enter the
result on line 11.

Paperwork Reduction Act Notice. Your use of this form is optional. It is provided to aid the partnership in determining its tax liability.
You aren’t 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 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.
If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler, we’d be happy
to hear from you. You can send us comments from IRS.gov/FormComments. Or you can write to the Internal Revenue Service, Tax
Forms and Publications Division, 1111 Constitution Ave. NW, IR-6526, Washington, DC 20224. Don’t send the tax form to this office.
Instead, keep the form for your records.

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Instructions for Form 8804-W (2020)