Treasury Regulations · 26 CFR
§ 1.6655-2T. Safe harbor for certain installments of tax due before July 1, 1987 (temporary).
Regulation text, no changes From the eCFR, current as of October 15, 2026. The eCFR is an authoritative but unofficial editorial compilation of the Code of Federal Regulations; the official text is the annual CFR on govinfo. Compare it with this section on ecfr.gov (external site) or the official annual CFR on govinfo (external site).
Regulation under 26 U.S.C. § 6655
Cite as 26 CFR § 1.6655-2T
At a glance
Read from the text and its source citation. Not part of the regulation.
- Status
- In the current eCFR
- Issued
- March 30, 1987 by T.D. 8132
- Issued under
- 26 U.S.C. § 6655
- Length
- 1,931 words · about 8 min to read
- Cross-references
- cites 5 Code sections and 0 regulations; cited by 0
For purposes of this determination, the period of the underpayment shall run from the due date of the subsequent installment payment until the earlier of the dates specified in section 6655(c) (1) or (2).
Corporation M, which uses the calendar year as its taxable year, relies on the safe harbor provided by paragraph (b) of this section for its first two installment payments of estimated tax for 1987. M is required by this paragraph (c) to make a timely subsequent installment payment of $1,000,000 by September 15, 1987, but M's actual installment payment by that date is only $990,000. Because of this shortfall, M loses the benefit of the safe harbor and is subject to underpayment penalties with respect to the first two installments. The aggregate penalties with respect to those two installments, however, cannot exceed the amount of the underpayment penalty to which M would be subject if there were an underpayment of $10,000 with respect to the September 15, 1987, installment payment. Such penalties are independent of any penalty that may apply with respect to M's third installment payment under the normal rules of section 6655.
(i) Corporation X (which is not a life insurance company) uses as its taxable year a fiscal year ending on January 31 and is required to pay an installment of estimated income tax by May 15, 1987, for its taxable year beginning on February 1, 1987. On its return for the taxable year ending January 31, 1987, which was a year of 12 months, X reported taxable income of $10,000,000 ($9,000,000 of which was ordinary income and $1,000,000 of which was net capital gain) and did not claim any net operating loss deduction. As of February 1, 1987, X has no net operating loss carryforwards and no credit carryforwards. X has no credits against tax that are permitted to be taken into account under section 6655(d)(3) for 1987. If X uses the safe harbor provided in paragraph (b)(1) of this section, X must make by May 15, 1987, an installment payment of estimated tax of at least $1,037,836, computed as follows:
| (1) Taxable income shown on return for taxable year ending on January 31, 1987 | $10,000,000 |
| (2) Annualized taxable income for taxable year ending January 31, 1988, determined pursuant to paragraph (b)(1) of this section (Item (1)x120%) | $12,000,000 |
| (Note: 120%xordinary income of $9,000,000 = $10,800,000; | |
| 120%xnet capital gain of $1,000,000 = $1,200,000) | |
| (3) Tax on annualized taxable income (Item 2) using rates under section 11 and 1201, taking into account section 15, applicable to the taxable year ending January 31, 1988 | $4,612,603 |
| (4) Amount described in section 6655(d)(3)(A)(i) (Item (3)x22.5%) | $1,037,836 |
(ii) To preclude imposition of an addition to tax under section 6655 with respect to its May 15, 1987, installment payment, X must make by July 15, 1987, a second installment payment of estimated tax sufficient to bring its aggregate payments to the minimum level required under paragraph (c) of this section.
(iii) X may satisfy the requirements of paragraph (c)(3) of this section by making a second installment payment sufficient to bring X within the exception provided in section 6655(d)(3). Thus, if X determines under that section that the aggregate of X's installment payments of estimated tax by July 15, 1987, must equal at least $3,000,000, X may obtain the benefit of the safe harbor provided in paragraph (b)(1) of this section with respect to the May 15, 1987, installment payment by making a timely second installment payment of $1,962,164 ($3,000,000—$1,037,836).
(iv) Even if X fails to satisfy the requirements of paragraph (c)(3) of this section, X may obtain the benefit of the safe harbor for the May 15, 1987, installment payment if X's second installment payment, when aggregated with the first payment, equals at least 45 percent of the tax (including the alternative minimum tax under section 55 and the environmental tax under section 59A) shown on X's return for X's taxable year beginning on February 1, 1987. Thus, if the tax shown on that return is $6,000,000, X's second installment payment under paragraph (c)(4) of this section must be at least $1,662,164, computed as follows:
| 45 percent of $6,000,000 | $2,700,000 |
| less first payment | 1,037,836 |
| Minimum second installment | $1,662,164 |
[T.D. 8132, 52 FR 10051, Mar. 30, 1987]
Cross-references
Computed from the citations in the text of 26 CFR.
Code sections it cites
Amendment history
From the source citation at the end of the section, newest first. T.D. is a Treasury decision; FR is the Federal Register.
- Issued by T.D. 8132 (52 FR 10051)
Where it sits in 26 CFR
- Subchapter A Income tax
- Part 1 Income taxes
- Additions to the tax, additional amounts, and assessable penalties
Nearby sections
- § 1.6654-7 Applicability.
- § 1.6655-0 Table of contents.
- § 1.6655-1 Addition to the tax in the case of a corporation.
- § 1.6655-2 Annualized income installment method.
- § 1.6655-2T Safe harbor for certain installments of tax due before July 1, 1987 (temporary).
- § 1.6655-3 Adjusted seasonal installment method.
- § 1.6655-4 Large corporations.
- § 1.6655-5 Short taxable year.
- § 1.6655-6 Methods of accounting.