how to reduce estimated tax penalty using long form on amended return

It may seem unreasonable but the interpretation appears to be correct. Estimated tax penalties are to be based on an original return. An amended return can only be considered an original return if it is filed by the due date (including extensions) of the original return. If you filed your amended return after the due date, it will be disregarded for purposes of calculating an estimated tax penalty. I am not aware of any ruling that would allow the IRS to refund an estimated tax penalty based on anything other than an original return under the set of circumstances you have identified.

Maybe some other tax pro is aware of such a ruling.

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Your problem is that you calculated the penalty on the basis of the ammended return. Send them a form 2210 AI based on the original return. There are so many ways annualization can defer tax installments you might find even more than the $500 reduction you sought with an ammended return. Some suggestions: Compute Itemized Deductions Schedule A for each quarter, and use the Standard Deductiion for any quarter it is more advantageous, even if you didn't itemize on your final returkn. Apply withholding that was withheld up to the due-date of each installment (15th of following month. Apply Credits and Deductions as early as they are earned. Apply carryover losses in the first quarter. Allow the Capital loss $3,000 limitation to annualize to $12,000. Compute AMT for each quarter. Get an independant form 2210 tax calculator (they're available to download from the web) instead of, or in addition to Pulbication 505 or your tax program (which is usually not as aggressive). ed

I agree that in the past this has worked -- you could leave the

However, Pub 505 (March 2009), page 55 states you must file form 2210 *with* your return for several of the most impotant scenarios, including using the annualized income method. So I am suspicious that they have tighetend up the procedure recently.

Steve

THANK YOU for trimming the previous posts in your reply, including multiple copies of the newsgroup sig.

-Mark Bole

The 2210 must be filed before the due date of your return including extensions.

Steve: That requirement, even with MUST in boldfaced type, has been in Pub 505 for over 10 years, but note also that it contemplates filing the 2210 AI after the original due-date in their instructions to use the original tax if the amended return is later than the original due-date. Since the IRS does not figure the 2210 AI penalty they will not change their penalty, which is based on the original return's tax. The IRS has not refused to accept a 2210 AI correctly figured on the original tax. Try it. What do you have to lose?.

IIRC, the "rule" that you can't amend your 2210 along with an amended tax return filed past the due date of the original return was established in case law, not in the tax code, and the name of the case was Berkshire-Hathaway v. IRS. Warren Buffett, at your service. At least 25, maybe more than 30, years ago.

OMyHeavens. It looks like it may have been Berkshire-Hathaway, Inc. v. United States, 802 F.2d 429 (Fed. Cir. 1986) which makes it *only*

I looked at that decisi If the amended return is filed after the due date it is not the return for the taxable year for purposes of section 6654(b). In that case, the tax shown on the amended return cannot be used to compute the amount of underpayment.

Rev. Rul. 83-36 ISSUE In the following situations, what is the "return for the taxable year" for purposes of section 6654(b) of the Internal Revenue Code? FACTS Situation 1: A is a single taxpayer who files federal income tax returns on a calendar year basis. A filed a return for 1981 on February 15, 1982, showing a tax liability of $1,000. On April

Rev. Rul. 78-256, 1978-1 C.B. 438, holds that the tax shown on an amended return filed by a corporation on or before the due date of the return (including extensions) is the tax shown on the return for the taxable year for purposes of section 6655(b) of the Code, relating to the failure by a corporation to pay estimated tax. Similarly, if an individual taxpayer files an amended return after filing the original return and before the due date for filing the original return (including extensions), the amended return constitutes "the return for the taxable year" under section 6654(b) of the Code. The amount shown on the amended return is used to determine the amount of underpayment. If the amended return is filed after the due date it is not the return for the taxable year for purposes of section 6654(b). In that case, the tax shown on the amended return cannot be used to compute the amount of underpayment. HOLDING Situation 1: The return for the taxable year for purposes of section 6654(b) of the Code is the amended return filed on April

In article , snipped-for-privacy@yahoo.com (Alan) writes: | However, a search of revenue rulings found RR 83-36 that defines | "return for the taxable year" for purposes of section 6654(b) of | the Internal Revenue Code. It's not very long, so I have posted | it below. The relevant part says: | | If the amended return is filed after the due date it is not the | return for the taxable year for purposes of section 6654(b). In | that case, the tax shown on the amended return cannot be used to | compute the amount of underpayment.

What happens when you amend to a higher total? Is the underpayment penalty still based on the original return?

Dan Lanciani ddl@danlan.*com

That's the way I would interpret the ruling and the IRM. The estimated tax penalty is based on an original return.

Yeah, I'm thinking you're right about the source of the "original return" rule. Now I remember why the two of those things overlap in my CPU: I had a copy of the Rev Rul attached to the Berkshire- Hathaway case in my binder-file of things to know about estimated tax penalties. This is before we stored everything in *computers*....

IRS could very well re compute the penalty for you and send you a bill. They are allowed to do this.

So in this case I would simply ignore the 2210 with the 1040x and take a chance. IMO chances are that IRS won't raise a stink about it, although the higher the added tax the more likelihood they might.

ChEAr$, Harlan Lunsford, EA n LA