Annualized Income Methods
A C corporation can compute current year C
corporation tax
liability for each estimated tax installment under one of three annualized
income methods.
—Method 1) Standard Annualization Periods
• 1st Qtr. Installment— based on annualized C
corporation income from the first
three (3) months of the tax year.
• 2nd Qtr. Installment— based on annualized C
corporation income from the first
three (3) months of the tax year.
• 3rd Qtr. Installment— based on annualized C
corporation income from the first six
(6) months of the tax year.
• 4th Qtr. Installment— based on annualized C
corporation income from the first nine
(9) months of the tax year.
An election to use either of the optional
periods [methods (2) or (3) below] is effective only for the C
corporation tax year for
which it is made. The election must be made on or before the date required
for paying the first installment for the C
corporation tax year.
—Method 2) Optional Annualization
Periods; File Form 8842
• 1st Qtr. Installment— based on C
corporation annualized income from the first two (2) months of the tax year.
• 2nd Qtr. Installment— based on C corporation annualized income from the first four
(4) months of the tax year.
• 3rd Qtr. Installment— based on C
corporation annualized income from the first
seven (7) months of the tax year.
• 4th Qtr. Installment— based on C
corporation annualized income from the first ten
(10) months of the tax year.
—Method 3) Optional Annualization
Periods; File Form 8842
• 1st Qtr. Installment— based on
annualized income from the C
corporation for the first three (3) months of the tax year.
• 2nd
Qtr. Installment— based on annualized income from the C
corporation for the first five (5)
months of the tax year.
• 3rd Qtr. Installment— based on annualized income from the C
corporation for the first
eight (8) months of the tax year.
• 4th Qtr. Installment— based on annualized income from the C
corporation for the first
eleven (11) months of the tax year.
.Related
Forms:
• Form 8842: File
Form 8842, Election To Use Different Annualization Periods for Corporate
Estimated Tax, to make the election to use methods (2) or (3) for optional
annualized income periods.
• Form 1120-W: Used
by C corporations to estimate amount of required payments.
• Form 2220: File
Form 2220 to figure underpayment penalty, or to show exception to penalty
under the C
corporation annualized income method.
