Chapter 68, Subchapter A, Part I—, Section 6654, Subsection (d) · 26 U.S.C. Chapter 68 — ADDITIONS TO THE TAX, ADDITIONAL AMOUNTS, AND ASSESSABLE PENALTIES

Contents

(d)For purposes of this section—

(1)

(A)Except as provided in paragraph (2), the amount of any required installment shall be 25 percent of the required annual payment.

(B)For purposes of subparagraph (A), the term “required annual payment” means the lesser of—

(i)90 percent of the tax shown on the return for the taxable year (or, if no return is filed, 90 percent of the tax for such year), or

(ii)100 percent of the tax shown on the return of the individual for the preceding taxable year.

Clause (ii) shall not apply if the preceding taxable year was not a taxable year of 12 months or if the individual did not file a return for such preceding taxable year.

(C)

(i)If the adjusted gross income shown on the return of the individual for the preceding taxable year beginning in any calendar year exceeds $150,000, clause (ii) of subparagraph (B) shall be applied by substituting “110 percent” for “100 percent”.

(ii)In the case of a married individual (within the meaning of section 7703) who files a separate return for the taxable year for which the amount of the installment is being determined, clause (i) shall be applied by substituting “$75,000” for “$150,000”.

(iii)In the case of an estate or trust, adjusted gross income shall be determined as provided in section 67(e).

(2)

(A)In the case of any required installment, if the individual establishes that the annualized income installment is less than the amount determined under paragraph (1)—

(i)the amount of such required installment shall be the annualized income installment, and

(ii)any reduction in a required installment resulting from the application of this subparagraph shall be recaptured by increasing the amount of the next required installment determined under paragraph (1) 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 clause).

(B)In the case of any required installment, the annualized income installment is the excess (if any) of—

(i)an amount equal to the applicable percentage of the tax for the taxable year computed by placing on an annualized basis the taxable income, alternative minimum taxable income, and adjusted self-employment income for months in the taxable year ending before the due date for the installment, over

(ii)the aggregate amount of any prior required installments for the taxable year.

(C)For purposes of this paragraph—

(i)The taxable income, alternative minimum taxable income, and adjusted self-employment income shall be placed on an annualized basis under regulations prescribed by the Secretary.

(ii)In the case of the following required installments:The applicable percentage is: 1st22.5 2nd45 3rd67.5 4th90.

(iii)The term “adjusted self-employment income” means self-employment income (as defined in section 1402(b)); except that section 1402(b) shall be applied by placing wages (within the meaning of section 1402(b)) for months in the taxable year ending before the due date for the installment on an annualized basis consistent with clause (i).

(D)

(i)Any amounts required to be included in gross income under section 951(a) (and credits properly allocable thereto) shall be taken into account in computing any annualized income installment under subparagraph (B) in a manner similar to the manner under which partnership income inclusions (and credits properly allocable thereto) are taken into account.

(ii)If a taxpayer elects to have this clause apply to any taxable year—

(I)clause (i) shall not apply, and

(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 clause (i) in an amount equal to 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).

United States Government work; public domain under 17 U.S.C. § 105.

Defined terms · 52

Show every defined term

adjusted self-employment income
means self-employment income (as defined in section 1402(b));
applicable percentage
means—
charitable deduction property
means any property contributed by the taxpayer in a contribution for which a deduction was claimed under section 170.
claim for refund
means a claim for refund of, or credit against, any tax imposed by this title.
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.
disallowance of an applicable energy credit
means the disallowance of a credit under section 45X, 45Y, or 48E by reason of overstating the material assistance cost ratio (as determined under section 7701(a)(52)) with respect to any qualified facility, energy storage technology, or facility which produces eligible components.
disregard
includes any careless, reckless, or intentional disregard.
dyed fuel
means any dyed diesel fuel or kerosene, whether or not the fuel was dyed pursuant to section 4082.
eligible child
has the meaning given such term under section 6434.
employment taxes
means the taxes imposed by subtitle C.
excessive amount
means in the case of any person the amount by which the amount of the claim for refund or credit for any taxable year exceeds the amount of such claim allowable under this title for such taxable year.
filing month
means the month in which the installment is required to be paid.
foreign tax redetermination
means any redetermination for which a notice is required under subsection (c) of section 905 or paragraph (2) of section 404A(g).
gross reportable amount
means—
gross valuation misstatements
means—
gross valuation overstatement
means any statement as to the value of any property or services if—
inconsistent estate basis
means any portion of an underpayment attributable to the failure to comply with section 1014(f).
information return
means— Such term also includes any form, statement, or schedule required to be filed with the Secretary under chapter 4 or with respect to any amount from which tax was required to be deducted and withheld under chapter 3 (or from which tax would be required to be so deducted and withheld but for an exemption under this title or any treaty obligation of the United States).
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.
listed transaction
means a reportable transaction which is the same as, or substantially similar to, a transaction specifically identified by the Secretary as a tax avoidance transaction for purposes of section 6011.
modified taxable income
has the meaning given such term by section 59A(c)(1).
mortgage credit certificate
has the meaning given to such term by section 25(c).
negligence
includes any failure to make a reasonable attempt to comply with the provisions of this title, and the term “disregard” includes any careless, reckless, or intentional disregard.
net section 482 transfer price adjustment
means, with respect to any taxable year, the net increase in taxable income for the taxable year (determined without regard to any amount carried to such taxable year from another taxable year) resulting from adjustments under section 482 in the price for any property or services (or for the use of property).
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.
nondisclosed noneconomic substance transaction
means any portion of a transaction described in subsection (b)(6) with respect to which the relevant facts affecting the tax treatment are not adequately disclosed in the return nor in a statement attached to the return.
nontaxable use
has the meaning given such term by section 4082(b).
payee statement
means any statement required to be furnished under— Such term also includes any form, statement, or schedule required to be furnished to the recipient of any amount from which tax was required to be deducted and withheld under chapter 3 or 4 (or from which tax would be required to be so deducted and withheld but for an exemption under this title or any treaty obligation of the United States).
penalty
includes any addition to tax or any additional amount.
person
means any officer, director, trustee, employee, or other individual who is under a duty to perform the act in respect of which the violation occurs.
procures
includes—
qualified appraisal
has the meaning given such term by section 170(f)(11)(E)(i).
qualified appraiser
has the meaning given such term by section 170(f)(11)(E)(ii).
rebate
means so much of an abatement, credit, refund, or other repayment, as was made on the ground that the tax imposed was less than the excess of the amount specified in paragraph (1) over the rebates previously made.
reportable transaction
means any transaction with respect to which information is required to be included with a return or statement because, as determined under regulations prescribed under section 6011, such transaction is of a type which the Secretary determines as having a potential for tax avoidance or evasion.
reportable transaction understatement
means the sum of— For purposes of subparagraph (A), any reduction of the excess of deductions allowed for the taxable year over gross income for such year, and any reduction in the amount of capital losses which would (without regard to section 1211) be allowed for such year, shall be treated as an increase in taxable income.
required annual payment
means the lesser of—
required filing date
means the date prescribed for filing an information return with the Secretary (determined with regard to any extension of time for filing).
return
means any return of any tax imposed by this title, any administrative adjustment request under section 6227, and any partnership adjustment tracking report under section 6226(b)(4)(A).
specified frivolous submission
means a specified submission if any portion of such submission—
specified information reporting requirement
means—
specified submission
means—
subordinate
means any other person (whether or not a director, officer, employee, or agent of the taxpayer involved) over whose activities the person has direction, supervision, or control.
tax
means the excess of— For purposes of the preceding sentence, in the case of a foreign corporation subject to taxation under section 11 or 1201(a), or under subchapter L of chapter 1, the tax imposed by section 881 shall be treated as a tax imposed by section 11.
tax shelter
means—
tax-exempt organization
means any organization which—
testing period
means the 3 taxable years immediately preceding the taxable year involved.
underpayment
means the amount by which any tax imposed by this title exceeds the excess of— For purposes of paragraph (2), the term “rebate” means so much of an abatement, credit, refund, or other repayment, as was made on the ground that the tax imposed was less than the excess of the amount specified in paragraph (1) over the rebates previously made.
understatement
means the excess of— The excess under the preceding sentence shall be determined without regard to items to which section 6662A applies.
understatement of liability
means any understatement of the net amount payable with respect to any tax imposed by this title or any overstatement of the net amount creditable or refundable with respect to any such tax.
undisclosed foreign financial asset
means, with respect to any taxable year, any asset with respect to which information was required to be provided under section 6038, 6038B, 6038D, 6046A, or 6048 for such taxable year but was not provided by the taxpayer as required under the provisions of those sections.
undisclosed foreign financial asset understatement
means, for any taxable year, the portion of the understatement for such taxable year which is attributable to any transaction involving an undisclosed foreign financial asset.