§ 6655. Failure by corporation to pay estimated income tax
(a)
Addition to tax
Except as otherwise provided in this section, in the case of any underpayment of estimated tax by a corporation, there shall be added to the tax under chapter 1 for the taxable year an amount determined by applying—
(b)
Amount of underpayment; period of underpayment
For purposes of subsection (a)—
(d)
Amount of required installments
For purposes of this section—
(1)
Amount
(A)
In general
Except as otherwise provided in this section, the amount of any required installment shall be 25 percent of the required annual payment.
(B)
Required annual payment
Except as otherwise provided in this subsection, the term “required annual payment” means the lesser of—
(i)
100 percent of the tax shown on the return for the taxable year (or, if no return is filed, 100 percent of the tax for such year), or
Clause (ii) shall not apply if the preceding taxable year was not a taxable year of 12 months, or the corporation did not file a return for such preceding taxable year showing a liability for tax.
(2)
Large corporations required to pay 100 percent of current year tax
(A)
In general
Except as provided in subparagraph (B), clause (ii) of paragraph (1)(B) shall not apply in the case of a large corporation.
(B)
May use last year’s tax for 1st installment
Subparagraph (A) shall not apply for purposes of determining the amount of the 1st required installment for any taxable year. Any reduction in such 1st installment by reason of the preceding sentence shall be recaptured by increasing the amount of the next required installment determined under paragraph (1) by the amount of such reduction.
(e)
Lower required installment where annualized income installment or adjusted seasonal installment is less than amount determined under subsection (d)
(1)
In general
In the case of any required installment, if the corporation establishes that the annualized income installment or the adjusted seasonal installment is less than the amount determined under subsection (d)(1) (as modified by paragraphs (2) and (3) of subsection (d))—
(A)
the amount of such required installment shall be the annualized income installment (or, if lesser, the adjusted seasonal installment), and
(B)
any reduction in a required installment resulting from the application of this paragraph shall be recaptured by increasing the amount of the next required installment determined under subsection (d)(1) (as so modified) by the amount of such reduction (and by increasing subsequent required installments to the extent that the reduction has not previously been recaptured under this subparagraph).
(2)
Determination of annualized income installment
(A)
In general
In the case of any required installment, the annualized income installment is the excess (if any) of—
(B)
Special rules
For purposes of this paragraph—
(i)
Annualization
The taxable income, alternative minimum taxable income, and modified alternative minimum taxable income shall be placed on an annualized basis under regulations prescribed by the Secretary.
(C)
Election for different annualization periods
(i)
If the taxpayer makes an election under this clause—
(I)
subclause (I) of subparagraph (A)(i) shall be applied by substituting “2 months” for “3 months”,
(II)
subclause (II) of subparagraph (A)(i) shall be applied by substituting “4 months” for “3 months”,
(3)
Determination of adjusted seasonal installment
(A)
In general
In the case of any required installment, the amount of the adjusted seasonal installment is the excess (if any) of—
(B)
Limitation on application of paragraph
This paragraph shall apply only if the base period percentage for any 6 consecutive months of the taxable year equals or exceeds 70 percent.
(C)
Determination of amount
The amount determined under this subparagraph for any installment shall be determined in the following manner—
(D)
Definitions and special rules
For purposes of this paragraph—
(i)
Base period percentage
The base period percentage for any period of months shall be the average percent which the taxable income for the corresponding months in each of the 3 preceding taxable years bears to the taxable income for the 3 preceding taxable years.
(4)
Treatment of subpart F and section
936 income
(A)
In general
Any amounts required to be included in gross income under section
936
(h) or
951
(a) (and credits properly allocable thereto) shall be taken into account in computing any annualized income installment under paragraph (2) in a manner similar to the manner under which partnership income inclusions (and credits properly allocable thereto) are taken into account.
(B)
Prior year safe harbor
(i)
In general
If a taxpayer elects to have this subparagraph apply for any taxable year—
(II)
for purposes of computing any annualized income installment for such taxable year, the taxpayer shall be treated as having received ratably during such taxable year items of income and credit described in subparagraph (A) in an amount equal to 115 percent of the amount of such items shown on the return of the taxpayer for the preceding taxable year (the second preceding taxable year in the case of the first and second required installments for such taxable year).
(ii)
Special rule for noncontrolling shareholder
(I)
In general
If a taxpayer making the election under clause (i) is a noncontrolling shareholder of a corporation, clause (i)(II) shall be applied with respect to items of such corporation by substituting “100 percent” for “115 percent”.
(II)
Noncontrolling shareholder
For purposes of subclause (I), the term “noncontrolling shareholder” means, with respect to any corporation, a shareholder which (as of the beginning of the taxable year for which the installment is being made) does not own (within the meaning of section
958
(a)), and is not treated as owning (within the meaning of section
958
(b)), more than 50 percent (by vote or value) of the stock in the corporation.
(5)
Treatment of certain REIT dividends
(A)
In general
Any dividend received from a closely held real estate investment trust by any person which owns (after application of subsection (d)(5) of section
856) 10 percent or more (by vote or value) of the stock or beneficial interests in the trust shall be taken into account in computing annualized income installments under paragraph (2) in a manner similar to the manner under which partnership income inclusions are taken into account.
(B)
Closely held REIT
For purposes of subparagraph (A), the term “closely held real estate investment trust” means a real estate investment trust with respect to which 5 or fewer persons own (after application of subsection (d)(5) of section
856) 50 percent or more (by vote or value) of the stock or beneficial interests in the trust.
(f)
Exception where tax is small amount
No addition to tax shall be imposed under subsection (a) for any taxable year if the tax shown on the return for such taxable year (or, if no return is filed, the tax) is less than $500.
(g)
Definitions and special rules
(2)
Large corporation
(A)
In general
For purposes of this section, the term “large corporation” means any corporation if such corporation (or any predecessor corporation) had taxable income of $1,000,000 or more for any taxable year during the testing period.
(B)
Rules for applying subparagraph (A)
(i)
Testing period
For purposes of subparagraph (A), the term “testing period” means the 3 taxable years immediately preceding the taxable year involved.
(ii)
Members of controlled group
For purposes of applying subparagraph (A) to any taxable year in the testing period with respect to corporations which are component members of a controlled group of corporations for such taxable year, the $1,000,000 amount specified in subparagraph (A) shall be divided among such members under rules similar to the rules of section
1561.
(3)
Certain tax-exempt organizations
For purposes of this section—
(A)
Any organization subject to the tax imposed by section
511, and any private foundation, shall be treated as a corporation subject to tax under section
11.
(B)
Any tax imposed by section
511, and any tax imposed by section
1 or
4940 on a private foundation, shall be treated as a tax imposed by section
11.
(C)
Any reference to taxable income shall be treated as including a reference to unrelated business taxable income or net investment income (as the case may be).
In the case of any organization described in subparagraph (A), subsection (b)(2)(A) shall be applied by substituting “5th month” for “3rd month”, subsection (e)(2)(A) shall be applied by substituting “2 months” for “3 months” in clause (i)(I), the election under clause (i) of subsection (e)(2)(C) may be made separately for each installment, and clause (ii) of subsection (e)(2)(C) shall not apply. In the case of a private foundation, subsection (c)(2) shall be applied by substituting “May 15” for “April 15”.
(4)
Application of section to certain taxes imposed on S corporations
In the case of an S corporation, for purposes of this section—
(C)
Clause (ii) of subsection (d)(1)(B) shall be applied as if it read as follows:
“(ii) the sum of—
“(I) the amount determined under clause (i) by only taking into account the taxes referred to in clauses (i) and (iii) of subsection (g)(4)(A), and
“(II) 100 percent of the tax imposed by section
1375
(a) which was shown on the return of the corporation for the preceding taxable year.”
(h)
Excessive adjustment under section
6425
(1)
Addition to tax
If the amount of an adjustment under section
6425 made before the 15th day of the 3rd month following the close of the taxable year is excessive, there shall be added to the tax under chapter 1 for the taxable year an amount determined at the underpayment rate established under section
6621 upon the excessive amount from the date on which the credit is allowed or the refund is paid to such 15th day.
(i)
Fiscal years and short years
(j)
Regulations
The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this section.