8804 Schedule A Instructions for Form 8804 Schedule A

2024

Instructions for Schedule A
(Form 8804)
Penalty for Underpayment of Estimated Section 1446 Tax for Partnerships
Section references are to the Internal Revenue Code unless
otherwise noted.

Future Developments
For the latest information about developments related to
Schedule A (Form 8804) and its instructions, such as
legislation enacted after they were published, go to IRS.gov/
About-Schedule-A-Form-8804.

General Instructions
Purpose of Form

Partnerships that have effectively connected taxable income
(ECTI) allocable to foreign partners use Schedule A (Form
8804) to determine:
• Whether they are subject to the penalty for underpayment
of estimated tax and, if so,
• The amount of the underpayment penalty.

Who Must File

Generally, the partnership doesn’t have to file this schedule
because the IRS will figure the amount of the penalty and
notify the partnership of any amount due. However, even if
the partnership doesn’t owe a penalty, complete and attach
this schedule to the partnership's Form 8804 if Part II, line 1
(Schedule A), 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.

Who Must Pay the Underpayment
Penalty

Generally, a partnership is subject to the penalty if it didn’t
timely pay in installments at least the smaller of:
1. The tax shown on line 5f of its 2024 Form 8804; or
2. The total section 1446 tax that would have been due
for 2023, without regard to reductions for certified foreign
partner-level items, on the ECTI allocable to foreign partners
for 2023, provided that (1) this amount is at least 50% of the
sum of the amounts shown on lines 4d, 4h, 4l, 4p, and 4t of
Form 8804 for its 2024 tax year; and (2) the tax year was for a
full 12 months. See the instructions for line 2, later, for more
details.
In these instructions, “Form 8804” generally refers to the
partnership's original Form 8804. However, an amended
Form 8804 is considered the original Form 8804 if the
amended Form 8804 is filed by the due date (including
extensions) of the original Form 8804.
Also, for purposes of determining a required installment, if
an amended Form 8804 is filed for the prior tax year, then

Aug 19, 2024

“prior tax year” includes the amended Form 8804, but only if
the amended Form 8804 is filed before the applicable
installment due date.
The penalty is figured separately for each installment due
date. Therefore, the partnership may owe a penalty for an
earlier due date even if it paid enough tax later to make up
the underpayment. This is true even if the partnership is due
a refund when its return is filed. However, the partnership
may be able to reduce or eliminate the penalty by using the
annualized income installment method or the adjusted
seasonal installment method. See the instructions for Parts IV
and V, later, for details.

Exception to the Penalty

A partnership won’t have to pay a penalty if the tax shown on
line 5f of its 2024 Form 8804 is less than $500.

How To Use Schedule A
Complete this schedule as follows.

• Check one or both of the boxes in Part I that apply. If the
partnership checks a box in Part I, attach Schedule A (Form
8804) to Form 8804. Be sure to check the box on Form 8804,
line 8.
• If the total section 1446 tax, shown on Part II, line 1, is
$500 or more, complete the rest of page 1 to determine the
underpayment for any of the installment due dates.
• If there is an underpayment on line 12 (column (a), (b), (c),
or (d)), go to Part VII to figure the penalty.
• Complete Parts IV through VI, as appropriate, if the
partnership uses the adjusted seasonal installment method
and/or the annualized income installment method.

Specific Instructions
Part I. Reasons for Filing
Adjusted seasonal installment method and/or annualized income installment method. If the partnership'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 1. 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 current-year safe harbor (increased by any reduction
recaptured under section 6655(e)(1)(B)) for one or more due
dates. Using one or both of these methods may reduce or
eliminate the penalty for those due dates.
Use Parts IV through VI of Schedule A (Form 8804) to
figure one or more required installments. If Parts IV through

Instructions for Schedule A (Form 8804) (2024) Catalog Number 36325U
Department of the Treasury Internal Revenue Service www.irs.gov

VI are used for any payment due date, Parts IV through VI
must be used for all subsequent payment due dates. To
arrive at the amount of each required installment, Part VI
uses the smallest of:
• The adjusted seasonal installment (if applicable),
• The annualized income installment (if applicable), or
• The current-year safe harbor (increased by any reduction
recaptured under section 6655(e)(1)(B)).
Follow the steps below to determine which parts of the
form have to be completed.
• If the partnership is using only the adjusted seasonal
installment method, check the applicable box in Part I and
complete Parts IV and VI of Schedule A (Form 8804).
• If the partnership is using only the annualized income
installment method, check the applicable box in Part I and
complete Parts V and VI of Schedule A (Form 8804).
• If the partnership is using both methods, check both of the
boxes in Part I and complete all three parts (Parts IV through
VI) of Schedule A (Form 8804).

Part II. Current-Year and Prior-Year
Safe Harbors
Line 2 (prior-year safe harbor). Enter the total section
1446 tax that would have been due for 2023, without regard
to reductions for certified foreign partner-level items on the
ECTI allocable to foreign partners for 2023.
The partnership can generally use the prior-year safe
harbor only if it paid the required amount using that method
for each of its installment payments of section 1446 tax
during the tax year. However, see Regulations section
1.1446-3(b)(3)(ii) for an exception. Also, see the Note below.
In addition, the partnership can only use the prior-year safe
harbor if all of the following apply.
• Each installment payment that was made during the tax
year, when averaged with all prior installment payments, must
have been 25% of the partnership's total section 1446 tax
liability under the prior-year safe harbor.
• 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 tax year.
• The amount of ECTI for the prior tax year isn’t less than
50% of the ECTI shown on the current-year Form 8804 that is
(or will be) timely filed.
If the partnership isn’t permitted to use the prior-year safe
harbor method because any of the necessary conditions
described above aren’t met, skip line 2 and enter on line 3 the
amount from line 1.
Note. If the partnership qualifies for and uses the exception
under Regulations section 1.1446-3(b)(3)(ii) to switch to the
standard option annualization method during the tax year, the
partnership should include on line 2 the total of all installment
payments that were made during the tax year under both the
prior-year safe harbor method and the standard option
annualization method. Attach a statement that explains the
computation.

Part III. Figuring the Underpayment
Line 6. Enter the estimated tax payments made by the
partnership for its tax year, as indicated below. Include any
overpayment from line 13 of the partnership's 2023 Form
8804 that was credited to the partnership's first installment
period on its 2024 Form 8804. If an installment is due on a
2

Saturday, Sunday, or legal holiday, payments made on the
next day that isn’t a Saturday, Sunday, or legal holiday are
considered made on the due date to the extent the payment
is applied against that required installment.
Also, include on line 6 any of the following:
• Section 1446 tax paid or withheld by another partnership in
which the partnership filing this Schedule A (Form 8804) was
a partner during the tax year. See the instructions for Form
8804, lines 6b and 6c, in the Instructions for Forms 8804,
8805, and 8813.
• Section 1445(a) or 1445(e) tax withheld from or paid by the
partnership filing this Schedule A (Form 8804) during the tax
year for a disposition of a U.S. real property interest. See the
instructions for Form 8804, lines 6d and 6e, in the
Instructions for Forms 8804, 8805, and 8813.
• Section 1446(f)(1) tax withheld from the partnership filing
this Schedule A (Form 8804) during the tax year for a
disposition of an interest in a partnership engaged in the
conduct of a U.S. trade or business. See the instructions for
Form 8804, lines 6f and 6g, in the Instructions for Forms
8804, 8805, and 8813.
Column (a). Enter payments made by the date on line 4,
column (a).
Columns (b), (c), and (d). Enter payments made on or
before the date on line 4 for that column and after the date on
line 4 of the preceding column.
Note. A payment of estimated tax is applied against unpaid
installments in the order in which installments are required to
be paid, regardless of the installment to which the payment
pertains, with any excess applied against successive later
installments. See Example 3 under Part VII. Figuring the
Penalty, later.
Line 12. If any of the columns in line 12 shows an
underpayment, complete Part VII to figure the penalty.

Parts IV Through VI
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 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 totals less than $1
million (other than a section 481(a) adjustment) can be
annualized using the general rules of Regulations section
Instructions for Schedule A (Form 8804) (2024)

1.6655-2(f), or, if the partnership chooses, can be taken into
account after annualizing the ECTI for the annualization
period.

Local Taxes and Certification of Deductions and Losses in
the Instructions for Forms 8804, 8805, and 8813, for
additional information.

Part IV. Adjusted Seasonal Installment
Method

Part V. Annualized Income Installment
Method

Note. Part IV 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 IV will be predominantly (or exclusively)
ordinary income. If the partnership wishes to consider lower
preferential rates for Part IV (and if the requirements outlined
in the third paragraph of the line 31 instructions are met), it
must attach 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 schedule). Also, Part IV, 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 IV must attach a
statement which appropriately expands lines 15 and 22
through 25 to show the amounts allocable to both types of
partners.

Line 30. Annualization periods. Enter on line 30, columns
(a) through (d), respectively, the annualization periods for the
option listed below. For example, if the partnership elected
Option 1, enter on line 30 the annualization periods 2, 4, 7,
and 10, in columns (a) through (d), respectively.

The partnership can use the adjusted seasonal installment
method only if the partnership's base period percentage for
any 6 consecutive months of the tax year is 70% or more.
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 3 preceding tax years by the ECTI for
each of their respective tax years. Figure the base period
percentage using the 6-month period in which the
partnership normally receives the largest part of its ECTI.
Example 2. An amusement park with a 2024 calendar tax
year receives the largest part of its taxable income 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 2021,
2022, and 2023. 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
2021, 74% (0.74) for May–October 2022, and 67% (0.67) for
May–October 2023. Because the average of 69% (0.69),
74% (0.74), and 67% (0.67) is 70% (0.70), the base period
percentage for May–October 2024 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 amount by which line 22c is being
reduced for state and local taxes under Regulations section
1.1446-6(c)(1)(iii) and for certified foreign partner-level items
submitted using Form 8804-C. See Reductions for State and
Instructions for Schedule A (Form 8804) (2024)

Use Option 1 or Option 2 only if the partnership
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 tax year for which the election is to apply.

!

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. 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.
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.
With respect to lines 31c, 31d, and 31e, enter the
specified types of income allocable to non-corporate partners
if (a) the partners would be entitled to use a preferential rate
on such income or gain (see Regulations section 1.1446-3(a)
(2)), and (b) the partnership has sufficient documentation to
meet the requirements of Regulations section 1.1446-3(a)(2)
(ii).
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 31b, 31c, 31d, and 31e, respectively. 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.
Line 32. Annualization amounts. Enter on line 32,
columns (a) through (d), respectively, the annualization
amounts shown in the table below for the option used for
line 30. For example, if the partnership elected 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

Option 1

6

4

2

1.33333

3

1.71429

Option 2

4

1.2

2.4

1.5

1.09091

3

Lines 33a, 33e, 33i, 33m, and 33q. If the partnership has
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 on 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.
If the partnership has included on line 33a, 33e, 33i, 33m,
or 33q any of the items referred to in the previous paragraph,
write “EI” and the dollar amount of the item next to the
affected line. Attach a statement which shows the income for
that line before the extraordinary item, the amount of the
extraordinary item, and the net amount. Also, include an
explanation of the item, including the authority under which it
is being claimed.
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). The netting rules under section 1(h) and
Notice 97-59 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
of section 1(h) and Notice 97-59 must be considered in
determining the category of income the reduction amounts
offset.

Part VI. Required Installments
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, 40, 42, and 43 in
column (a) before completing line 38 in column (b).

Line 43. For each installment, enter the smaller of line 39 or
line 42 on line 43. Also, enter the result on line 5.

Part VII. Figuring the Penalty

Complete Part VII to determine the amount of the penalty.
The penalty is figured for the period of underpayment using
the underpayment rate determined under section 6621(a)(2).
The period of underpayment runs from the installment due
date to the earlier of the date the underpayment is actually
paid or the 15th day of the 3rd month after the close of the
2024 tax year (the 15th day of the 6th month if the
partnership keeps its books and records outside the United
States and Puerto Rico). The underpayment rate is the
federal short-term rate plus 3 percentage points (2% in the
case of a corporation). See section 6655 for definitions for
underpayment amount and underpayment period. For
information on obtaining the federal short-term interest rate
on underpayments denoted by an asterisk, see the footnote
on page 5 of the schedule.
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, with any excess applied against
successive later installments.
Example 3. A partnership underpaid the April 15
installment by $1,000. The June 15 installment requires a
payment of $2,500. On June 11, the partnership pays $2,500
for its 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 to June 11 (57 days). The
remaining $1,500 is applied to the June 15 installment as if it
were made on June 15.
If the partnership has made more than one payment for a
required installment, attach a separate computation for each
payment.

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

4

Instructions for Schedule A (Form 8804) (2024)