Publication 505 
2008 Tax Year 
4.
Underpayment Penalty for 2007
You should consider the items in this section when figuring any underpayment penalty for 2007.
Penalty rate. The penalty for underpayment of 2007 estimated tax is figured at an annual rate of 8% for the number of days the underpayment
remained unpaid from
April 15, 2007, through December 31, 2007, and 7% from January 1, 2008, through April 15, 2008.
Husbandwife business. . Beginning in 2007, if you and your spouse materially participate as the only members of a jointly owned and operated business,
and you file a joint
return for the tax year, you can make an election to be taxed as a qualified joint venture instead of a partnership. For details,
see the instructions
for Schedule C (Form 1040) or Schedule F (Form 1040).
Discharge of debt. In some cases, you will not have taxable income on the forgiveness of your mortgage. See Publication 553 for more details.
Alternative minimum tax (AMT) exemption amount increased. . The AMT exemption amount will increase to $44,350 ($66,250 if married filing jointly or a qualifying widow(er); $33,125 if
married filing
separately).
Foreign earned income exclusion. If you claim the foreign earned income exclusion, the way you figure your tax may change. See Publication 4655, Supplemental
Instructions for 2007
Form 1040 and Form 1040NR, for more details.
If you did not pay enough tax, either through withholding or by making estimated tax payments, you will have underpaid your
estimated tax and may
have to pay a penalty.
You may understand this chapter better if you can refer to copies of your latest federal income tax returns.
No penalty.
Generally, you will not have to pay a penalty for 2007 if any of the following situations apply.

The total of your withholding and estimated tax payments was at least as much as your 2006 tax (or 110% of your 2006 tax if
your AGI was
more than $150,000, $75,000 if your 2007 filing status is married filing separately), and you paid all required estimated
tax payments on time.

The tax balance due on your return is no more than 10% of your total 2007 tax, and you paid all required estimated tax payments
on time.

Your total 2007 tax (defined on page 49) minus your withholding is less than $1,000.

You did not have a tax liability for 2006.

You did not have any withholding taxes and your current year tax less any household employment taxes is less than $1,000.
Special rules apply if you are a farmer or fisherman.
IRS can figure the penalty for you.
If you think you owe the penalty, but you do not want to figure it yourself when you file your tax return, you may
not have to. Generally, the IRS
will figure the penalty for you and send you a bill.
You only need to figure your penalty in the following three situations.

You are requesting a waiver of part, but not all, of the penalty.

You are using the annualized income installment method to figure the penalty.

You are treating the federal income tax withheld from your income as paid on the dates actually withheld.
However, if these situations do not apply to you, and you think you can lower or eliminate your penalty, complete Form 2210
or Form 2210F and
attach it to your return. See Form 2210 on page 49.
Topics  This chapter discusses:

The general rule for the underpayment penalty,

Special rules for certain individuals,

Exceptions to the underpayment penalty,

How to figure your underpayment and the amount of your penalty on Form 2210, and

How to ask IRS to waive the penalty.
Useful Items  You may want to see:
Form (and Instructions)

2210
Underpayment of Estimated Tax by Individuals, Estates, and Trusts

2210F
Underpayment of Estimated Tax by Farmers and Fishermen
See chapter 5 for information about getting these forms.
In general, you may owe a penalty for 2007 if the total of your withholding and estimated tax payments did not equal at least
the smaller of:

90% of your 2007 tax, or

100% of your 2006 tax. (Your 2006 tax return must cover a 12month period.)
Your 2007 tax, for this purpose, is defined under Total tax for 2007 on page 49.
Special rules for certain individuals.
There are special rules for farmers and fishermen, and for certain higher income taxpayers.
Farmers and fishermen.
If at least twothirds of your gross income for 2006 or 2007 is from farming or fishing, substitute 66⅔% for 90% in
(1) above.
See Farmers and Fishermen beginning on page 54.
Higher income taxpayers.
If less than twothirds of your gross income for 2006 and 2007 is from farming or fishing and your AGI for 2006 was
more than $150,000 ($75,000 if
your 2007 filing status is married filing a separate return), substitute 110% for 100% in (2) above.
For 2006, AGI is the amount shown on Form 1040, line 37; Form 1040A, line 21; and Form 1040EZ, line 4.
Penalty figured for each period.
Because the penalty is figured separately for each payment period, you may owe a penalty for a payment period even
if you later paid enough to make
up the underpayment. If you did not pay enough tax by the due date of any of the payment periods, you may owe a penalty even
if you are due a refund
when you file your income tax return.
Example.
You did not make estimated tax payments for 2007 because you thought you had enough tax withheld from your wages. Early in
January 2008, you made
an estimate of your total 2007 tax. Then you realized that your withholding was $2,000 less than the amount needed to avoid
a penalty for underpayment
of estimated tax.
On January 10, you made an estimated tax payment of $3,000, which is the difference between your withholding and your estimate
of your total tax.
Your final return shows your total tax to be $50 less than your estimate, so you are due a refund.
You do not owe a penalty for your payment due January 15, 2008. However, you may owe a penalty through January 10, 2008, the
day you made the
$3,000 payment, for your underpayments for the earlier payment periods.
Minimum required each period.
You will owe a penalty for any 2007 payment period for which your estimated tax payment plus your withholding for
the period and overpayments for
previous periods was less than the smaller of:

22.5% of your 2007 tax, or

25% of your 2006 tax. (Your 2006 tax return must cover a 12month period.)
Note.
If you are subject to the rule for higher income taxpayers, discussed earlier, substitute 27.5% for 25% in (2) above.
When penalty is charged.
If you miss a payment or you paid less than the minimum required in a period, you may be charged an underpayment penalty
from the date the amount
was due to the date the payment is made.
Trust payments of estimated tax.
If you have estimated taxes credited to you from an estate or trust (Schedule K1 (Form 1041), box 13, code A), treat
the payment as made by you on
January 15, 2008.
Amended returns.
If you file an amended return by the due date of your original return, use the tax shown on your amended return to
figure your required estimated
tax payments. If you file an amended return after the due date of the original return, use the tax shown on the original return.
However, if you and your spouse file a joint return after the due date to replace separate returns you originally
filed by the due date, use the
tax shown on the joint return to figure your required estimated tax payments. This rule applies only if both original separate
returns were filed on
time.
2006 separate returns and 2007 joint return.
If you file a joint return with your spouse for 2007, but you filed separate returns for 2006, your 2006 tax is the
total of the tax shown on your
separate returns. You filed a separate return if you filed as single, head of household, or married filing separately.
2006 joint return and 2007 separate returns.
If you file a separate return for 2007, but you filed a joint return with your spouse for 2006, your 2006 tax is your
share of the tax on the joint
return. You are filing a separate return if you file as single, head of household, or married filing separately.
To figure your share of the taxes on a joint return, first figure the tax both you and your spouse would have paid
had you filed separate returns
for 2006 using the same filing status as for 2007. Then multiply the tax on the joint return by the following fraction.

The tax you would have paid had you filed a separate return


The total tax you and your spouse would have paid had you filed separate returns

Example.
Lisa and Paul filed a joint return for 2006 showing taxable income of $49,000 and a tax of $6,599. Of the $49,000 taxable
income, $41,000 was
Lisa's and the rest was Paul's. For 2007, they file married filing separately. Lisa figures her share of the tax on the 2006
joint return as follows.
2006 tax on $41,000 based on a separate return

$ 6,814

2006 tax on $8,000 based on a
separate return

826

Total

$ 7,640

Lisa's percentage of total tax
($6,814 ÷ $ 7,640)

89.19%

Lisa's part of tax on joint return
($6,599 × 89.19%)

$ 5,886

Form 2210.
In most cases, you do not need to file Form 2210. The IRS will figure the penalty for you and send you a bill. If
you want us to figure the penalty
for you, leave the penalty line on your return blank. Do not file Form 2210.
To determine if you should file Form 2210, see Part II of Form 2210. If you decide to figure your penalty, complete
Part I, Part II, and either
Part III or Part IV of Form 2210. If you use Form 2210, you cannot file Form 1040EZ.
On Form 1040, enter the amount of your penalty on line 77. If you owe tax on line 76, add the penalty to your tax
due and show your total payment
on line 76. If you are due a refund, subtract the penalty from the overpayment and enter the result on line 73.
On Form 1040A, enter the amount of your penalty on line 47. If you owe tax on line 46, add the penalty to your tax
due and show your total payment
on line 46. If you are due a refund, subtract the penalty from the overpayment and enter the result on line 43.
Lowering or eliminating the penalty.
You may be able to lower or eliminate your penalty if you file Form 2210. You must file Form 2210 with your return
if any of the following applies.

You request a waiver. See Waiver of Penalty on page 55.

You use the annualized income installment method. See the explanation of this method under Annualized Income Installment Method
(Schedule AI) beginning on page 51.

You use your actual withholding for each payment period for estimated tax purposes. See Actual withholding method on page
51.

You base any of your required installments on the tax shown on your 2006 return and you filed or are filing a joint return
for either 2006
or 2007, but not for both years.
Generally, you do not have to pay an underpayment penalty if either:

Your total tax is less than $1,000, or

You had no tax liability last year.
You do not owe a penalty if the total tax shown on your return minus the amount you paid through withholding (including excess
social security and
tier 1 railroad retirement (RRTA) tax withholding) is less than $1,000.
Total tax for 2007.
For 2007, your total tax on Form 1040 is the amount on line 57 increased by certain other taxes and reduced by certain
refundable credits.
Add the total of the following taxes to the amount on Form 1040, line 57.

Selfemployment tax (line 58).

Tax from recapture of investment credit, lowincome housing credit, qualified electric vehicle credit, Indian employment credit,
new markets
credit, alternative motor vehicle credit, alternative fuel vehicle refueling property credit, or credit for employerprovided
childcare facilities
(included on line 63).

Tax on early distributions from (a) an IRA or other qualified retirement plan, (b) an annuity, or (c) a modified endowment
contract entered
into after June 20, 1988 (included on line 60).

Tax on distributions from a Coverdell education savings account or a qualified tuition program not used for qualified education
expenses
(included on line 60).

Tax on Archer MSA or health savings account distributions not used for qualified medical expenses (included on line 63).

Section 72(m)(5) excess benefits tax (included on line 63).

Advance earned income credit payments (line 61).

Tax on accumulation distribution of trusts (included on line 63).

Interest due under sections 453(l)(3) and 453A(c) on certain installment sales of property (included on line 63).

An increase or decrease in tax as a shareholder in a qualified electing fund (included on line 63).

Tax on electing small business trusts included on Form 1041, Schedule G, line 7 (included on line 63).

Tax on income not effectively connected with a U.S. trade or business from Form 1040NR, lines 53 and 56 (included on line
63).

Household employment taxes, including any advance EIC payments made to your employees (line 62). See the Instructions for
Form 2210,
Line 2, for an exception to including this amount.

Additional tax on income you received from a nonqualified deferred compensation plan that fails to meet certain requirements
(included on
line 63).

Additional tax on recapture of a charitable contribution deduction relating to the contribution of a fractional interest in
tangible
personal property (included on line 63).

Additional tax from Form 8889, Health Savings Accounts (HSAs), Part III (included on line 63).
From the total of Form 1040, line 57 and the other taxes listed above, subtract the following refundable credits.

Earned income credit (line 66a).

Additional child tax credit (line 68).

Credit for federal tax paid on fuels (included on line 70).

Health coverage tax credit (included on line 70).

Refundable credit for prior year minimum tax (line 71).
Your total tax on Form 1040A is the amount on line 37 minus the amount on lines 40a and 41. Your total tax on Form
1040EZ is the amount on line 10
minus the amount on line 8a.
Paid through withholding.
For 2007, the amount you paid through withholding on Form 1040 is the amount on line 64 plus any excess social security
or tier 1 RRTA tax
withholding on line 67. On Form 1040A, the amount you paid through withholding is the amount on line 38 plus any excess social
security or tier 1 RRTA
tax withholding included on line 42. On Form 1040EZ, it is the amount on line 7.
No Tax Liability Last Year
You do not owe a penalty if you had no tax liability last year and you were a U.S. citizen or resident for the whole year.
For this rule to apply,
your tax year must have included all 12 months of the year.
You had no tax liability for 2006 if your total tax was zero or you were not required to file an income tax return.
Example.
Ray, who is single and 22 years old, was unemployed for most of 2006. He earned $2,700 in wages before he was laid off, and
he received $2,500 in
unemployment compensation afterwards. He had no other income. Even though he had gross income of $5,200, he did not have to
pay income tax because his
gross income was less than the filing requirement for a single person under age 65 ($8,450 for 2006). He filed a return only
to have his withheld
income tax refunded to him.
In 2007, Ray began regular work as an independent contractor. Ray made no estimated tax payments in 2007. Even though he did
owe tax at the end of
the year, Ray does not owe the underpayment penalty for 2007 because he had no tax liability in 2006.
Total tax for 2006.
For 2006, your total tax on Form 1040 is the amount on line 57 increased by certain other taxes and reduced by certain
refundable credits.
Add the total of the following taxes to the amount on Form 1040, line 57.

Selfemployment tax (line 58).

Tax from recapture of investment credit, lowincome housing credit, qualified electric vehicle credit, Indian employment credit,
new markets
credit, alternative motor vehicle credit, alternative fuel vehicle refueling property credit, or credit for employerprovided
childcare facilities
(included on line 63).

Tax on early distributions from (a) an IRA or other qualified retirement plan, (b) an annuity, or (c) a modified endowment
contract entered
into after June 20, 1988 (included on line 60).

Tax on distributions from a Coverdell education savings account or a qualified tuition program not used for qualified education
expenses
(included on line 60).

Tax on Archer MSA or health savings account distributions not used for qualified medical expenses (included on line 63).

Section 72(m)(5) excess benefits tax (included on line 63).

Advance earned income credit payments (line 61).

Tax on accumulation distribution of trusts (included on line 63).

Interest due under sections 453(l)(3) and 453A(c) on certain installment sales of property (included on line 63).

An increase or decrease in tax as a shareholder in a qualified electing fund (included on line 63).

Tax on electing small business trusts included on Form 1041, Schedule G, line 7 (included on line 63).

Tax on income not effectively connected with a U.S. trade or business from Form 1040NR, lines 53 and 56 (included on line
63).

Household employment taxes, including any advance EIC payments made to your employees (line 62). See the Instructions for
Form 2210,
Line 2, for an exception to including this amount.

Additional tax on income you received from a nonqualified deferred compensation plan that fails to meet certain requirements
(included on
line 63).
From the total of Form 1040, line 57 and the other taxes listed above, subtract the following refundable credits.

Earned income credit (line 66a).

Additional child tax credit (line 68).

Credit for federal tax paid on fuels (included on line 70).

Health coverage tax credit (included on line 70).
Your total tax on Form 1040A is the amount on line 37 minus the amount on lines 40a and 41. Your total tax on Form
1040EZ is the amount on line 11
minus the amount on line 8a.
Figuring Your Required Annual Payment (Part I)
Figure your required annual payment in Part I of Form 2210, following the linebyline instructions. If you rounded the entries
on your tax return
to whole dollars, you can round on Form 2210.
Example.
The tax on Ivy Fields' 2006 return was $10,000. Her AGI was not more than $150,000. The tax on her 2007 return (Form 1040,
line 44) is $11,000. She
does not claim any credits or pay any other taxes.
For 2007, Ivy had $1,600 income tax withheld and paid $6,800 estimated tax. Her total payments were $8,400. 90% of her 2007
tax is $9,900. Because
she paid less than her 2006 tax ($10,000) and less than 90% of her 2007 tax, and does not meet an exception, Ivy knows that
she owes a penalty for
underpayment of estimated tax. The IRS will figure the penalty for Ivy, but she decides to figure it herself on Form 2210
and pay it with her $2,600
tax balance when she files her tax return.
Ivy's required annual payment is $9,900 ($11,000 × 90%) because that is smaller than her 2006 tax.
Figure 4A on page 56 shows page 1 of Ivy's filledin Form 2210. Her required annual payment of $9,900 is shown on line 9.
Different 2006 filing status.
If you file a separate return for 2007, but you filed a joint return with your spouse for 2006, see 2006 joint return and 2007 separate
returns on page 49 to figure the amount to enter as your 2006 tax on line 8 of Form 2210.
Short Method for Figuring the Penalty (Part III)
You may be able to use the short method in Part III of Form 2210 to figure your penalty for underpayment of estimated tax.
If you qualify to use
this method, it will result in the same penalty amount as the regular method. However, either the annualized income installment
method or the actual
withholding method, explained later, may result in a smaller penalty.
You can use the short method only if you meet one of the following requirements.
If you do not meet either requirement, figure your penalty using the regular method in Form 2210, Part IV.
Note.
If any payment was made before the due date, you can use the short method, but the penalty may be less if you use the regular
method. If the
payment was only a few days early, the difference is likely to be small.
You cannot use the short method if any of the following applies.

You made any estimated tax payments late.

You checked box C or D in Part II of Form 2210.

You are filing Form 1040NR or 1040NREZ and you did not receive wages as an employee subject to U.S. income tax withholding.
If you use the short method, you cannot use the annualized income installment method to figure your underpayment for each
payment period. Also, you
cannot use your actual withholding during each period to figure your payments for each period. These methods, which may give
you a smaller penalty
amount, are explained starting on page 51 under Figuring Your Underpayment (Part IV, Section A).
Completing Part III.
Complete Part III of Form 2210 following the linebyline instructions.
First, figure your total underpayment for the year (line 14) by subtracting the total of your withholding and estimated
tax payments (line 13) from
your required annual payment (line 10). Then figure the penalty you would owe if the underpayment remained unpaid up to April
15, 2008. This amount
(line 15) is the maximum estimated tax penalty on your underpayment.
Next, figure any part of the maximum penalty you do not owe (line 16) because your underpayment was paid before the
due date of your return. For
example, if you filed your 2007 return and paid the tax balance on April 3, 2008, you do not owe the penalty for the 12day
period from April 4
through April 15. Therefore, you would figure the amount to enter on line 16 using 12 days.
Finally, subtract from the maximum penalty amount (line 15) any part you do not owe (line 16). The result (line 17)
is the penalty you owe. Enter
that amount on line 77 of Form 1040 or line 47 of Form 1040A. Attach Form 2210 to your return only if you checked one of the
boxes in Part II.
Example.
Assume the same facts for Ivy Fields as in the previous example on page 50. Ivy paid her estimated tax payments in four installments
of $1,700
($6,800 ÷ 4) each on the dates they were due.
Ivy qualifies to use the short method to figure her estimated tax penalty. Using the annualized income installment method
or actual withholding
will not give her a smaller penalty amount because her income and withholding were distributed evenly throughout the year.
Therefore, she figures her
penalty in Part III of Form 2210 (see Figure 4A (Continued) on page 57) and leaves Part IV (not shown) blank.
Ivy figures her $1,500 total underpayment for the year (line 14) by subtracting the total of her withholding and estimated
tax payments ($8,400)
from her $9,900 required annual payment (line 10). The maximum penalty on her underpayment (line 15) is $76 ($1,500 × .05057).
Ivy plans to file her return and pay her $2,600 tax balance on March 14, 2008, 32 days before April 15. Therefore, she does
not owe part of the
maximum penalty amount. The part she does not owe (line 16) is figured as follows.
$1,500 × 32 × .00019 = $9

Ivy subtracts the $9 from the $76 maximum penalty and enters the result, $67, on Form 2210, line 17, and on Form 1040, line
77. She adds $67 to her
$2,600 tax balance and enters the result, $2,667 on line 76 of her Form 1040. Ivy files her return on March 14 and attaches
a check for $2,667.
Because Ivy did not check any of the boxes in Part II, she does not attach Form 2210 to her tax return.
Regular Method for Figuring the Penalty (Part IV)
You may use the regular method in Part IV of Form 2210 to figure your penalty for underpayment of estimated tax if you paid
one or more estimated
tax payments earlier than the due date.
You must use the regular method in Part IV of Form 2210 to figure your penalty for underpayment of estimated tax if any of
the following apply to
you.

You paid one or more estimated tax payments on a date after the due date.

You paid at least one, but less than four, installments of estimated tax.

You paid estimated tax payments in un
equal amounts.

You use the annualized income installment method to figure your underpayment for each payment period.

You use your actual withholding during each payment period to figure your payments.
If you use the regular method, figure your underpayment for each payment period in Section A, then figure your penalty for
each payment period in
Section B.
Figuring Your Underpayment (Part IV, Section A)
Figure your underpayment of estimated tax for each payment period in Section A following the linebyline instructions. Complete
lines 20 through
26 of the first column before going to line 20 of the next column.
Required installments—line 18.
Your required payment for each payment period (line 18) is usually onefourth of your required annual payment (Part
I, line 9). However, if you are
using the annualized income installment method (described beginning on this page), first complete Schedule AI (Form 2210),
and then enter the amounts
from line 25 of that schedule on line 18 of Form 2210.
Payments.
On line 19, enter in each column the total of:

Your estimated tax paid after the due date for the previous column and by the due date shown at the top of the column, and

Onefourth of your withholding.
For special rules for figuring your payments, see the Instructions for Form 2210.
If you file Form 1040, your withholding is the amount on line 64, plus any excess social security or tier 1 RRTA tax
withholding on line 67. If you
file Form 1040A, your withholding is the amount on line 38 plus any excess social security or tier 1 RRTA tax withholding
included in line 42.
Actual withholding method.
Instead of using onefourth of your withholding for each quarter, you can choose to use the amounts actually withheld
by each due date. You can
make this choice separately for the tax withheld from your wages and for all other withholding. This includes any excess social
security and tier 1
RRTA tax withheld.
Using your actual withholding may result in a smaller penalty if most of your withholding occurred early in the year.
If you use your actual withholding, you must check box D in Form 2210, Part II. Then complete Form 2210 and file it
with your return.
Regular Installment Method
If you received your income evenly throughout the year, use the regular installment method to figure your estimated tax underpayment
for the year.
Example.
Ben Brown's 2007 total tax (Form 1040, line 63) is $7,031, the total of his $4,685 income tax and $2,346 selfemployment tax.
His 2006 AGI was less
than $150,000. He does not owe any other taxes or claim any credits other than for withholding. His 2006 tax was $6,116. See
Figure 4B on page 58 to
see Ben's completed Form 2210, Part I.
Ben's employer withheld $3,228 income tax during 2007. Ben paid no estimated tax for either the first or second period, but
he paid $1,000 each on
August 31, 2007, and January 11, 2008, for the third and fourth periods. Because the total of his withholding and estimated
tax payments, $5,228
($3,228 + $1,000 + $1,000), was less than both 90% of his 2007 tax (90% x $7,031 = $6,328), and 100% of his 2006 tax ($6,116),
Ben knows he owes a
penalty for underpayment of estimated tax. He decides to figure the penalty on Form 2210 and pay it with his $1,803 tax balance
($7,031 
$5,228) when he files his tax return on April 15, 2008.
Ben's required annual payment (Part I, line 9) is $6,116. Because his income and withholding were distributed evenly throughout
the year, Ben
enters onefourth of his required annual payment, $1,529, in each column of line 18 (see Figure 4B (Continued) on page 59). On line 19, he
enters onefourth of his withholding, $807, in the first two columns and $1,807 ($807 plus $1,000 estimated tax payment) in
the last two columns.
Ben has an underpayment (line 25) for each payment period even though his withholding and estimated tax payments for the third
and fourth periods
were more than his required installments (line 18). This is because the estimated tax payments made in the third and fourth
periods are first applied
to underpayments for the earlier periods.
Annualized Income Installment Method (Schedule AI)
If you did not receive your income evenly throughout the year (for example, your income from a repair shop you operated was
much larger in the
summer than it was during the rest of the year), you may be able to lower or eliminate your penalty by figuring your underpayment
using the annualized
income installment method. Under this method, your required installment (line 18) for one or more payment periods may be less
than onefourth of your
required annual payment.
To figure your underpayment using this method, complete Schedule AI of Form 2210 (see Figure 4C on page 60 for an example).
The schedule
annualizes your tax at the end of each payment period based on your income, deductions, and other items relating to events
that occurred since the
beginning of the tax year through the end of the period.
If you use the annualized income installment method, you must check box C in Part II of Form 2210. You also must attach Form
2210 and Schedule AI
to your return.
If you use Schedule AI for any payment due date, you must use it for all payment due dates.
Completing Schedule AI.
Follow the Form 2210 instructions to complete Schedule AI. For each period shown on Schedule AI, figure your income
and deductions based on your
method of accounting. If you use the cash method of accounting (used by most people), include all income actually or constructively
received during
the period and all deductions actually paid during the period.
Note.
Each period includes amounts from the previous period(s).

Period (a) includes items for January 1 through March 31.

Period (b) includes items for January 1 through May 31.

Period (c) includes items for January 1 through August 31.

Period (d) includes items for the entire year.
Example.
Laura Maple files as head of household with two exemptions. Her 2007 total tax (Form 1040, line 63) is $3,980, the
total of her $1,634 income tax
and $2,346 selfemployment tax. Laura also has an earned income credit (EIC) of $450, and her current year tax is $3,530 ($3,980
less the $450 EIC).
She does not owe any other taxes. Her 2006 AGI was less than $150,000. Her 2006 tax was $4,032. Her required annual payment
on Form 2210, Part I, line
9, is $3,177 (the smaller of her $4,032 tax for 2006 or 90% of her $3,530 current year tax after credits for 2007).
Laura's employer withheld $1,500 income tax during 2007. Laura paid no estimated tax for either the first or second
period, but she paid $100 on
August 15, 2007, and $500 on December 3, 2007, for the third and fourth periods.
Laura did not receive her income evenly throughout the year. Therefore, she decides to figure her required installment
for each period (Part IV,
line 18) using the annualized income installment method. To use this method, Laura completes Schedule AI before starting Part
IV. Figure 4C,
beginning on page 60, shows Laura's filledin Schedule AI and Part IV, Section A.
Laura's wages during 2007 were $15,000 ($1,250 a month). Her net earnings from a business she started during the year
were $16,600, received as
follows.
April through May

$3,600

June through August

5,000

September through December

8,000

Selfemployment tax and deduction. Before Laura can figure her AGI for each period (Schedule AI, line 1), she must figure her deduction
for selfemployment tax for each period. To do this, she first completes Schedule AI, Part II, (see Figure 4C on page 60).
Laura had no selfemployment income for the first period, so she leaves the lines in that column blank. Her selfemployment
income was $3,600 for
the second period, $8,600 ($3,600 + $5,000) for the third period, and $16,600 ($8,600 + $8,000) for the fourth period. She
multiplies each amount by
92.35% (.9235) to find the amounts to enter on line 26. She then fills out the rest of Part II. See Figure 4C on page 60.
Laura figures the deduction for onehalf of the selfemployment tax by dividing the amounts on line 34 by the annualization
amounts for each
period. The annualization amounts are:

8 for the first period,

4.8 for the second period,

3 for the third period, and

2 for the fourth period.
Line 1—AGI.
Laura figures the amounts to enter on Schedule AI, line 1, as follows.
Column (a)—1/1/07 to 3/31/07:


$1,250 per month × 3 months

$3,750

Column (b)—1/1/07 to 5/31/07:
$1,250 per month × 5 months

$6,250

Plus:

Selfemployment income through 5/31/07

3,600

Less:

Selfemployment tax deduction ($1,221 ÷ 4.8)

(254)




$9,596

Column (c)—1/1/07 to 8/31/07:
$1,250 per month × 8 months

$10,000

Plus:

Selfemployment income through 8/31/07

8,600

Less:

Selfemployment tax deduction ($1,822 ÷ 3)

(607)




$17,993

Column (d)—1/1/07 to 12/31/07:


$1,250 per month × 12 months

$15,000

Plus:

Selfemployment income through 12/31/07

16,600

Less:

Selfemployment tax deduction ($2,346 ÷ 2)

(1,173)




$30,427

Line 4—Itemized deductions.
Laura had $9,000 in itemized deductions for 2007—$200 per month withheld for state and local taxes, and $550 per
month for mortgage
interest—for a total of $750 each month. She divided them by period in the following manner.

1st period: $2,250 ($750 × 3 months).

2nd period: $3,750 ($750 × 5 months).

3rd period: $6,000 ($750 × 8 months).

4th period: $9,000 ($750 × 12 months).
She enters each amount on line 4 in the proper column for that period.
Now that Laura has figured her entries for lines 1 and 4, she can complete the rest of Schedule AI to determine the
amounts to put on Form 2210,
Part IV, line 18. Laura figures her EIC on Schedule AI, line 16, for each period using her annualized earned income for that
period. Figure 4C on
page 60 shows her completed Parts I and II.
Underpayment.
Laura then figures her underpayment in Part IV, Section A (see Figure 4C (Continued) on page 61). She finds that she overpaid her
estimated tax for the first two payment periods, but underpaid her estimated tax for the last two payment periods.
Figuring Your Penalty (Part IV, Section B)
Figure the amount of your penalty in Section B following the instructions. The penalty is imposed on each underpayment shown
on Section A, line 25,
for the number of days that it remained unpaid. (You may find it helpful to show the date of payment beside each amount on
line 25.)
For 2007, there are two rate periods to figure the penalty. Use Rate Period 1 (lines 27 and 28) to apply the 8% rate in effect between
April 16, 2007, and December 31, 2007. Use Rate Period 2 (lines 29 and 30) to apply the 7% rate in effect between January 1, 2008, and
April 15, 2008.
Aid for counting days.
Table 41 (see page 53) provides a simple method for counting the number of days between payment dates or between
a due date and a payment date.

Find the number for the date the payment was due by going across to the column of the month the payment was due and moving
down the column
to the due date.

In the same manner, find the number for the date the payment was made.

Subtract the due date “number” from the payment date “number.”
For example, if a payment was due on June 15 (61), but was not paid until November 4 (203), the payment was 142 (203
 61) days late.
Table 41. Calendar To Determine the Number of Days a Payment Is Late
Instructions.Use this table with Form 2210 if you are completing Part IV, Section B. First, find the number for the payment
due date by going across to the column of the month the payment was due and moving down the column to the due date. Then,
in the same manner, find the
number for the date the payment was made. Finally, subtract the due date number from the payment date number. The result is
the number of days the
payment is late.
Example.The payment due date is June 15 (61). The payment was made on November 4 (203). The payment is 142 days late (203
 61).
Tax Year 2007 
Day of

2007

2007

2007

2007

2007

2007

2007

2007

2007

2008

2008

2008

2008

Month

April

May

June

July

Aug.

Sept.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

1


16

47

77

108

139

169

200

230

261

292

321

352

2


17

48

78

109

140

170

201

231

262

293

322

353

3


18

49

79

110

141

171

202

232

263

294

323

354

4


19

50

80

111

142

172

203

233

264

295

324

355

5


20

51

81

112

143

173

204

234

265

296

325

356















6


21

52

82

113

144

174

205

235

266

297

326

357

7


22

53

83

114

145

175

206

236

267

298

327

358

8


23

54

84

115

146

176

207

237

268

299

328

359

9


24

55

85

116

147

177

208

238

269

300

329

360

10


25

56

86

117

148

178

209

239

270

301

330

361















11


26

57

87

118

149

179

210

240

271

302

331

362

12


27

58

88

119

150

180

211

241

272

303

332

363

13


28

59

89

120

151

181

212

242

273

304

333

364

14


29

60

90

121

152

182

213

243

274

305

334

365

15

0

30

61

91

122

153

183

214

244

275

306

335

366















16

1

31

62

92

123

154

184

215

245

276

307

336


17

2

32

63

93

124

155

185

216

246

277

308

337


18

3

33

64

94

125

156

186

217

247

278

309

338


19

4

34

65

95

126

157

187

218

248

279

310

339


20

5

35

66

96

127

158

188

219

249

280

311

340
















21

6

36

67

97

128

159

189

220

250

281

312

341


22

7

37

68

98

129

160

190

221

251

282

313

342


23

8

38

69

99

130

161

191

222

252

283

314

343


24

9

39

70

100

131

162

192

223

253

284

315

344


25

10

40

71

101

132

163

193

224

254

285

316

345
















26

11

41

72

102

133

164

194

225

255

286

317

346


27

12

42

73

103

134

165

195

226

256

287

318

347


28

13

43

74

104

135

166

196

227

257

288

319

348


29

14

44

75

105

136

167

197

228

258

289

320

349


30

15

45

76

106

137

168

198

229

259

290


350
















31


46


107

138


199


260

291


351


Payments.
Before completing Section B, make a list of the payments you made after the due date (or the last day payments could
be made on time) for the
earliest payment period an underpayment occurred. For example, if you had an underpayment for the first payment period, list
your payments after April
15, 2007. You can use the tables in the Form 2210 instructions to make your list. Follow those instructions for listing income
tax withheld and
payments made with your return. Use the list to determine when each underpayment was paid.
Underpayment paid in two or more parts.
If an underpayment was paid in two or more parts on different dates, you must figure the penalty separately for each
part. You may find it helpful
to show the underpayment on Section A, line 25, broken down into the amounts paid on different dates. See lines 29 and 30
of Figure 4B
(Continued) on page 59 for an example of this.
Figuring the penalty.
For each underpayment on line 25, columns (a)(d), figure the penalty by:

Determining the date(s) an underpayment was paid,

Determining the number of days between the due date and the payment date(s), and

Multiplying the amount of underpayment by the number of days unpaid and the appropriate penalty rate.
If an underpayment remained unpaid for more than one rate period, the penalty on that underpayment will be figured
using more than one rate.
Use lines 27 and 29 to figure the number of days the underpayment remained unpaid. (Also see Table 41.) Use lines
28 and 30 to figure the actual
penalty amount by applying the rate against the underpayment for the number of days it remained unpaid.
If an underpayment remained unpaid for the entire period, use Table 42 to determine the number of days to enter for
each period.
Table 42.Chart of Total Days 

Column
(a)

Column
(b)

Column
(c)

Column
(d)

line 27

260

199

107

NA

line 29

106

106

106

91

To figure the total penalty, add the amounts on lines 28 and 30 in all columns. Enter the total on line 31.
Example 1.
In the previous example for Ben Brown (see Regular Installment Method on page 51), he determined that he had an underpayment for all
four payment periods. See Ben's completed Section A in Figure 4B (Continued) on page 59.
Ben's 2007 tax is $7,031. His minimum required payment for each period is $1,529 ($6,116 ÷ 4). His $3,228 withholding
is considered paid in
four equal installments of $807, one on each payment due date. Therefore, he must make estimated tax payments of $722 ($1,529
 $807) each
period. However, Ben made only two estimated tax payments—$1,000 on August 31, 2007, and $1,000 on January 11, 2008. He plans
to file his return
and pay his balance due on April 15, 2008. He is considered to have made the following payments for tax year 2007.
April 15, 2007
^{1} 
$ 807

June 15, 2007
^{1} 
807

August 31, 2007
^{2} 
1,000

September 15, 2007
^{1} 
807

January 11, 2008
^{2} 
1,000

January 15, 2008
^{1} 
807

^{1} Onefourth of withholding

^{2} Estimated tax payment

Penalty for first payment period (April 15, 2007)—column (a).
Ben's $722 underpayment for the first payment period was paid by applying $722 of his $807 payment on June 15, 2007.
The $722 remained unpaid 61
days (April 16 through June 15, 2007). Ben enters “ 61” on line 27 and figures this part of the penalty on line 28 ($722 × (61 ÷ 365)
× .08 = $9.65). See his completed Section B in Figure 4B (Continued) on page 59.
Penalty for second payment period (June 15, 2007)—column (b).
Ben figures his second period underpayment as follows.

Of the $807 he paid for the second period, $722 is applied to the underpayment remaining from the first period.

That leaves $85 ($807  $722) to apply to his second period required installment of $1,529.

The result, $1,444 ($1,529  $85), is Ben's underpayment for the second period.
The $1,444 underpayment is paid in two parts by applying the $1,000 paid on August 31 and $444 of his $807 September
15 payment. To help him figure
his penalty, Ben shows each part of the underpayment paid on different dates on line 25.
$1,000 of the underpayment remained unpaid for 77 days (June 16 through August 31) and $444 remained unpaid for 92
days (June 16 through September
15). Ben enters “ 77” and “ 92” on line 27, column (b). He shows the result of both penalty computations on line 28 (see Figure 4B
(Continued) on page 59).
Penalty for third payment period (September 15, 2007)—column (c).
Ben figures his third period underpayment as follows.

Of the $1,807 he paid for the third period, $1,444 is applied to the underpayment remaining from the second period.

That leaves $363 ($1,807  $1,444) to apply to his third period required installment of $1,529.

The result, $1,166 ($1,529  $363), is Ben's underpayment for the third period.
The $1,166 underpayment is paid in two parts by applying his $1,000 payment on January 11, 2008, and $166 of his $807
payment on January 15. On
line 25, Ben shows each part of the underpayment paid on different dates.
For Rate Period 1, the entire underpayment ($1,166) remained unpaid 107 days (September 16 through December 31). Ben enters “ 107”
on line 27. He shows the result of the penalty computation on line 28 (see Figure 4B (Continued) on page 59).
For Rate Period 2, $1,000 of the underpayment remained unpaid for 11 days (January 1 through January 11) and $166 remained unpaid for 15
days (January 1 through January 15). Ben enters “ 11” and “ 15” on line 29. He shows the result of both penalty computations on line 30 (see
Figure 4B (Continued) on page 59).
Penalty for fourth payment period (January 15, 2008)—column (d).
Ben figures his fourth period underpayment as follows.

Of the $1,807 he paid for the fourth period, $1,166 is applied to the underpayment remaining from the third period.

That leaves $641 ($1,807  $1,166) to apply to his fourth period required installment of $1,529.

The result, $888 ($1,529  $641) is Ben's underpayment for the fourth period.
The $888 underpayment was paid April 15, 2008, with his tax return. The $888 remained unpaid 91 days (January 16 through
April 15, 2008). Ben
enters that number on line 29 and shows the result of the penalty computation on line 30 (see Figure 4B (Continued) on page 59).
Total penalty.
Ben's total penalty for 2007 on line 31 is $80.87, the total of all amounts on lines 28 and 30 in all columns. Ben
enters that amount on line 77 of
his Form 1040. He also adds $81 to his $1,803 tax balance and enters the $1,884 total on line 76. He files his return on April
15 and includes a check
for $1,884. He keeps his completed Form 2210 for his records.
Example 2.
In the previous example for Laura Maple (under Completing Schedule AI on page 52), her first underpayment was for the third payment
period. See Laura's completed Section A in Figure 4C (Continued) on page 61.
This example illustrates completion of Part IV, Section B, of Laura's Form 2210 under the annualized income installment
method.
Laura made the following payments for tax year 2007.
April 15, 2007
^{1} 
$ 375

June 15, 2007
^{1} 
375

August 15, 2007
^{2} 
100

September 15, 2007
^{1} 
375

December 3, 2007
^{2} 
500

January 15, 2008
^{1} 
375

^{1} Onefourth of withholding

^{2} Estimated tax payment

Penalty for third payment period—column (c).
Laura's underpayment of $84 is paid by applying $84 of the $500 paid on December 3, 2007. The underpayment remained
unpaid 79 days (September 16
through December 3). Laura enters “ 79” on line 27 and shows the result of her penalty computation on line 28. See Figure 4C
(Continued) on page 61.
Penalty for fourth payment period—column (d).
Laura's $1,076 underpayment for the fourth payment period was paid on April 15, 2008, with her tax return. The entire
amount remained unpaid 91
days (January 16 through April 15, 2008). Laura enters that number on line 29. She shows the result of the penalty computation
on line 30 (see Figure
4C (Continued) on page 61).
Total penalty.
Laura's total penalty for 2007 on line 31 is $20.18, the total of all amounts on lines 28 and 30 in all columns. Laura
enters that amount on line
77 of her Form 1040. She also adds $20 to her $1,430 tax balance and enters the $1,450 total on line 76. She files her return
on April 15 and includes
a check for $1,450. Because she used the annualized income installment method, she must attach Form 2210, including Schedule
AI, to her return and
check box C in Part II.
If you are a farmer or fisherman, the following special rules for underpayment of estimated tax apply to you.

The penalty for underpaying your 2007 estimated tax will not apply if you file your return and pay all the tax due by March
3, 2008. If you
are a fiscal year taxpayer, the penalty will not apply if you file your return and pay the tax due by the first day of the
third month after the end
of your tax year.

Any penalty you owe for underpaying your 2007 estimated tax will be figured from one payment due date, January 15, 2008.

The underpayment penalty for 2007 is figured on the difference between the amount of 2007 withholding plus estimated tax paid
by the due
date and the smaller of:

66⅔% (rather than 90%) of your 2007 tax, or

100% of the tax shown on your 2006 return.
Even if these special rules apply to you, you will not owe the penalty if you meet either of the two conditions discussed
on page 49 under
Exceptions.
See Who Must Pay Estimated Tax in chapter 2 for the definition of a farmer or fisherman who is eligible for these special rules.
Form 2210F.
Use Form 2210F to figure any underpayment penalty. Do not attach it to your return unless you check box 1a or box
1b. However, if neither box
applies to you and you owe a penalty, you do not need to complete Form 2210F. The IRS can figure your penalty and send you
a bill.
The IRS can waive the penalty for underpayment if either of the following applies.

You did not make a payment because of a casualty, disaster, or other unusual circumstance and it would be inequitable to impose
the
penalty.

You retired (after reaching age 62) or became disabled in 2006 or 2007 and both the following requirements are met.

You had a reasonable cause for not making the payment.

Your underpayment was not due to willful neglect.
How to request a waiver.
To request a waiver, complete Form 2210 as follows.

Check box A or B in Part II.

If you checked box A, complete only page 1 of Form 2210.

If you checked box B:

Complete line 1 through line 16 (or lines 1 through 9 and 18 through 30 if you use the regular method) without regard to the
waiver.

Write the amount you want waived in parentheses on the dotted line next to line 17 (line 31 for the regular method).

Subtract this amount from the total penalty you figured without regard to the waiver. Enter the result on line 17 (line 31
for the regular
method).

Attach Form 2210 and a statement to your return explaining the reasons you were unable to meet the estimated tax requirements
and the time
period for which you are requesting a waiver.

If you are requesting a penalty waiver due to retirement or disability, attach documentation that shows your retirement date
(and your age
on that date) or the date you became disabled.

If you are requesting a penalty waiver due to a casualty, disaster, or other unusual circumstance, attach documentation such
as police and
insurance company reports.
The IRS will review the information you provide and will decide whether or not to grant your request for a waiver.
Farmers and fishermen.
To request a waiver, you must complete Form 2210F as follows.

Check box 1a in Part I.

Complete line 2 through line 20 without regard to the waiver.

Write the amount you want waived in parentheses on the dotted line next to line 21.

Subtract this amount from the total penalty you figured without regard to the waiver. Enter the result on line 21.

Attach Form 2210F and a statement to your return explaining the reasons you were unable to meet the estimated tax requirements.

If you are requesting a penalty waiver due to retirement or disability, attach documentation that shows your retirement date
(and your age
on that date) or the date you became disabled.

If you are requesting a penalty waiver due to a casualty, disaster, or other unusual circumstance, attach documentation such
as police and
insurance company reports.
The IRS will review the information you provide and will decide whether or not to grant your request for a waiver.
This image is too large to be displayed in the current screen.
Please click the link to view the image.
Figure 4B. Regular Installment MethodIllustrated (Ben Brown). Filledin examples for Ben Brown
This image is too large to be displayed in the current screen.
Please click the link to view the image.
Figure 4B. Regular Installment MethodIllustrated (Ben Brown) (Continued). Filledin examples for Ben Brown
This image is too large to be displayed in the current screen.
Please click the link to view the image.
Figure 4C. Annualized Installment MethodIllustrated (Laura Maple). Filledin examples for Laura Maple.
Worksheet 41. 2007 Form 2210, Schedule AI—Line 12 Qualified Dividends and Capital Gain Tax Worksheet

Note. To figure the annualized entries for lines 2, 3, and 5 below, multiply the expected
amount for the period by the annualization amount for the same period.










1.

Enter line 11 of your Schedule AI—Annualized Income Installment Method Worksheet

1.




2.

Enter your annualized qualified dividends for the period

2.






3.

Are you filing Schedule D?








□ Yes. Enter the smaller of your annualized amount from line 15 or line 16 of Schedule D. If either line
15 or line 16 is a loss, enter 0.


3.







□ No. Enter your annualized capital gain or (loss) from Form 1040, line 13







4.

Add lines 2 and 3


4.






5.

If you are claiming investment interest expense on Form 4952, enter your annualized amount from line 4g of
that form. Otherwise, enter 0


5.






6.

Subtract line 5 from line 4. If zero or less, enter 0

6.




7.

Subtract line 6 from line 1. If zero or less, enter 0

7.




8.

Enter the smaller of:

The amount on line 1, or

$31,850 if single or married filing separately,
$63,700 if married filing jointly or qualifying widow(er),
$42,650 if head of household

8.




9.

Is the amount on line 7 equal to or more than the amount on line 8?
□ Yes. Skip lines 9 through 11; go to line 12 and check the “No” box.
□ No. Enter the amount from line 7

9.




10.

Subtract line 9 from line 8.

10.




11.

Multiply line 10 by 5% (.05)

11.


12.

Are the amounts on lines 6 and 10 the same?
□ Yes. Skip lines 12 through 15; go to line 16.
□ No. Enter the smaller of line 1 or line 6

12.




13.

Enter the amount from line 10 (if line 10 is blank, enter 0)

13.




14.

Subtract line 13 from line 12

14.




15.

Multiply line 14 by 15% (.15)

15.


16.

Figure the tax on the amount on line 7. Use the Tax Table or Tax Computation Worksheet
in the Form 1040 instructions, whichever applies

16.


17.

Add lines 11, 15, and 16

17.


18.

Figure the tax on the amount on line 1. Use the Tax Table or Tax Computation Worksheet
in the Form 1040 instructions, whichever applies

18.


19.

Tax on all taxable income. Enter the smaller of line 17 or line
18. Enter this amount on line 12 of Schedule AI

19.


Worksheet 42. 2007 Form 2210, Schedule AI—Line 12 Foreign Earned Income Tax Worksheet

Before you begin:If Schedule AI, line 11, is zero for the period, do not complete
this worksheet.





1.

Enter the amount from line 11 of Schedule AI for the period

1.


2.

Enter the annualized amount of foreign earned income and housing amount excluded (from Form 2555, line 45, or Form 2555EZ,
line 18) in
figuring the amount entered for the period on line 1 of Schedule AI

2.


3.

Add lines 1 and 2

3.


4.

Tax on the amount on line 3. Use the Tax Table, Tax Computation Worksheet, Form 8615,* Qualified Dividends and Capital Gain
Worksheet,** or Schedule D Tax Worksheet,** whichever applies. See the instructions for Form 1040, line 44, to find out which
tax computation method
to use. (Note. You do not have to use the same method for each period on Schedule AI.)

4.


5.

Tax on the amount on line 2. Use the Tax Table or Tax Computation Worksheet, whichever applies, from the 2007 Form 1040
instructions

5.


6.

Subtract line 5 from line 4. Enter the result here and on line 12 of Schedule AI. If zero or less,
enter 0

6.






*If you use Form 8615 to figure the tax on line 4 above, enter the
amount from line 3 above on line 4 of Form 8615. If
the child's parent files Form 2555 or 2555EZ, enter the amounts from lines 3 and 4 of the parent's Foreign Earned
Income Tax Worksheet on lines 6 and 10, respectively, of Form 8615. Complete the rest of Form 8615 according to
its instructions. Then complete lines 5 and 6 above.
** Enter the amount from line 3 above on line 1 of the Qualified Dividends and Capital Gain Tax Worksheet (or
Worksheet 41 in this chapter) or the Schedule D Tax Worksheet, whichever worksheet you use to figure the tax on
line 4 above. Complete that worksheet through line 6 (line 10 if you use the Schedule D Tax Worksheet). Next,
determine if you have a capital gain excess.

Figuring capital gain excess. To find out if you have a capital gain
excess for the appropriate period, subtract line 11
of Schedule AI from line 6 of Worksheet 41 or your Qualified Dividends and Capital Gain Tax Worksheet (line 10 of
your Schedule D Tax Worksheet). If the result is more than zero, that amount is your capital gain excess.

No capital gain excess. If you do not have a capital
gain excess, complete the rest of Worksheet 41, Qualified Dividends and Capital Gain Tax Worksheet, or the Schedule D Tax
Worksheet according to the
worksheet's instructions. Then complete lines 5 and 6 above.

Capital gain excess. If you have a capital gain
excess, complete a second Worksheet 41, Qualified Dividends and Capital Gain Tax Worksheet, or Schedule D Tax Worksheet (whichever
applies) as
instructed above but in its entirety and with the following additional modifications. Then complete lines 5 and 6 above.


Make these modifications only for purposes of filling out Worksheet 42
above.


a. Reduce the amount you otherwise would enter on line 3 of your Worksheet 41, line 3
of your Qualified Dividends and Capital Gain Tax Worksheet, or line 7 of your Schedule D Tax Worksheet (but not below zero)
by your capital gain
excess.


b. Reduce the amount you otherwise would enter on line 2 of your Worksheet 41,
Qualified Dividends and Capital Gain Tax Worksheet, or Schedule D Tax Worksheet (but not below zero) by any of your capital
gain excess not used in
(a) above.


c. Reduce the amount on your Schedule D (Form 1040), line 18, (but not below zero) by
your capital gain excess.


d. Include your capital gain excess as a loss on line 16 of your Unrecaptured Section
1250 Gain Worksheet on page D9 of the 2007 Instructions for Schedule D (Form 1040).

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