Failure by corporation to pay estimated income 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— For purposes of subsection (a)— The amount of the underpayment shall be the excess of— The period of the underpayment shall run from the due date for the installment to whichever of the following dates is the earlier— For purposes of paragraph (2)(B), a payment of estimated tax shall be credited against unpaid required installments in the order in which such installments are required to be paid. For purposes of this section— There shall be 4 required installments for each taxable year. In the case of the following required installments: The due date is: 1st April 15 2nd June 15 3rd September 15 4th December 15. For purposes of this section— Except as otherwise provided in this section, the amount of any required installment shall be 25 percent of the required annual payment. Except as otherwise provided in this subsection, the term “required annual payment” means the lesser of— Except as provided in subparagraph (B), clause (ii) of paragraph (1)(B) shall not apply in the case of a large corporation. 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. 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))— In the case of any required installment, the annualized income installment is the excess (if any) of— an amount equal to the applicable percentage of the tax for the taxable year computed by placing on an annualized basis the taxable income, adjusted financial statement income (as defined in section 56A), and modified taxable income— For purposes of this paragraph— The taxable income, adjusted financial statement income (as defined in section 56A), and modified taxable income shall be placed on an annualized basis under regulations prescribed by the Secretary. In the case of the following required installments: The applicable percentage is: 1st 25 2nd 50 3rd 75 4th 100. The term “modified taxable income” has the meaning given such term by section 59A(c)(1). If the taxpayer makes an election under this clause— If the taxpayer makes an election under this clause— In the case of any required installment, the amount of the adjusted seasonal installment is the excess (if any) of— This paragraph shall apply only if the base period percentage for any 6 consecutive months of the taxable year equals or exceeds 70 percent. The amount determined under this subparagraph for any installment shall be determined in the following manner— For purposes of this paragraph— 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. The term “filing month” means the month in which the installment is required to be paid. The Secretary may by regulations provide for the determination of the base period percentage in the case of reorganizations, new corporations, and other similar circumstances. 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 paragraph (2) in a manner similar to the manner under which partnership income inclusions (and credits properly allocable thereto) are taken into account. If a taxpayer elects to have this subparagraph apply for any taxable year— 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”. 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. 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. 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. 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. For purposes of this section, the term “tax” means the excess of— the sum of— 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. For purposes of subparagraph (A), the term “testing period” means the 3 taxable years immediately preceding the taxable year involved. 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. For purposes of subparagraph (A), taxable income shall be determined without regard to any amount carried to the taxable year under section 172 or 1212(a). For purposes of this section— In the case of an S corporation, for purposes of this section— The following taxes shall be treated as imposed by section 11: Clause (ii) of subsection (d)(1)(B) shall be applied as if it read as follows: the sum of— If the amount of an adjustment under section 6425 made before the 15th day of the 4th 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. For purposes of paragraph (1), the excessive amount is equal to the amount of the adjustment or (if smaller) the amount by which— In applying this section to a taxable year beginning on any date other than January 1, there shall be substituted, for the months specified in this section, the months which correspond thereto. This section shall be applied to taxable years of less than 12 months in accordance with regulations prescribed by the Secretary. The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this section.