Annualized Income Installment Method

Annualized Income Installment Method

In corporate taxation in the United States, a way to reduce underpayment penalties by assuming that a company's income is annualized for a certain period of time (for example, a quarter). For example, a company may pay estimated taxes based on its profit for one quarter and make the same payment for three more quarters regardless of the company's actual profit for each quarter.
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These final regulations significantly modify the prior proposed regulations (REG-107722-00) and establish a comprehensive set of rules for corporations using the annualized income installment method.
Before the EUCA amendments, a taxpayer with income that varied during the year could lower or eliminate a required estimated payment by using the annualized income installment method.
6655-2(f)(2) (v)(B) does not prevent a corporation from using the annualized income installment method simply because the corporation had a short year.
transferor's computation of its estimated tax payments should not be affected by the deemed payments under the annualized income installment method.
In Letter Ruling (TAM) 9233001, the IRS held that a large corporation was not required to include subpart F income when computing its quarterly installments under the annualized income installment method for estimated tax purposes.
A corporation may be able to reduce its required installment payment for any quarter below the amount determined above by using the annualized income installment method provided by Sec.