Form 8752 Instructions: Deferral Period, Lines, and Payment

Form 8752, Required Payment or Refund Under Section 7519, is filed each year by a partnership or S corporation that elected a non-calendar fiscal year under Section 444. The form calculates a deposit that offsets the tax deferral your owners get from a fiscal year ending before December 31. For applicable election years beginning in 2025, Form 8752 and any payment are due by May 15, 2026.¹ These instructions walk through who files, how the numbers come together, and what happens if you miss the deadline.

Who Has to File

Any partnership or S corporation with a Section 444 election in effect for the tax year must file Form 8752. You made that election by submitting Form 8716, and the filing obligation continues every year the election is active.¹

You file even when the calculated payment is zero. If Line 9a comes in at $500 or less and no prior year’s payment exceeded $500, you enter zero on Line 9b instead of making a payment, but the form still goes in.²

An entity that terminates its Section 444 election or liquidates also files Form 8752 for its final year, this time to claim back the accumulated deposit balance.¹ Skipping the form when a payment is due is not just a penalty issue; a willful failure can end the Section 444 election permanently.

Start With the Deferral Period

Every number on the form flows from the deferral period, which measures how many months of fiscal-year income get pushed into a later calendar year for the owners. In practical terms, it is the gap between your fiscal year end and December 31. A September 30 year end gives you a three-month deferral period (October, November, December). An October 31 year end gives you two months. Section 444 generally caps the deferral period at three months for most new elections.³

Dividing deferral months by 12 gives the deferral ratio used on Line 3: 25.0% for three months, 16.7% for two months, and so on.

Lines 1 Through 8: Building Net Base Year Income

The first eight lines reach back to the entity’s base year, which is normally the fiscal year immediately before the current applicable election year, and build the figure that drives everything else.

Line 1: Net Income

Line 1 is net income, but it is not the ordinary taxable income from your partnership or S corporation return. For a partnership, it is the total of all income and expense items, excluding tax-exempt income, nondeductible expenses, and guaranteed payments under Section 707(c).¹ Guaranteed payments are pulled out entirely here because Section 7519 handles them separately.⁴ If the base year was shorter than 12 months, add the Line 2 applicable payments to the short-year net income and multiply by 12 divided by the number of months in the short year. Enter zero if the result is zero or negative.

Line 2: Applicable Payments

Line 2 captures the applicable payments the entity made to its owners during the base year — amounts the owners must include in gross income, such as wages or other compensation paid to S corporation shareholder-employees. Excluded are gains from property sales between the entity and an owner, S corporation dividends, and guaranteed payments to partners.⁴ Many partnerships end up with zero on this line because distributions and guaranteed payments do not qualify; S corporations with payroll generally have a figure to enter.

Line 3: Deferral Ratio

Enter the deferral months divided by 12 as a percentage, carried to at least the nearest tenth.²

Lines 4 Through 8: The Arithmetic

Line 4: Multiply Line 1 by Line 3. This isolates the net income attributable to the deferral months.
Line 5: Multiply Line 2 by Line 3. This is the pro-rata share of full-year applicable payments assigned to the deferral period.
Line 6: Enter the applicable payments actually made during the deferral period of the base year.
Line 7: For a 12-month base year, subtract Line 6 from Line 5, with a floor of zero. For a short base year, instead enter the applicable payments made during the deferral period of the applicable election year.
Line 8: For a 12-month base year, add Line 4 and Line 7. For a short base year, subtract Line 7 from Line 4, with a floor of zero.²

The Line 5 to Line 7 sequence gives you credit when you front-loaded owner compensation into the deferral months, because those payments already accelerated income recognition and shrank the deferral benefit.⁵

Lines 9 Through 12: What You Owe or Get Back

Line 9: Apply the Rate and the $500 Threshold

Line 9a multiplies net base year income by 38%, which is the top individual rate (currently 37%) plus one percentage point as required by Section 7519.⁵ The 38% appears on the face of the December 2025 form.² It applies regardless of any individual owner’s actual bracket.

Line 9b applies the $500 threshold. If Line 9a is over $500, or any prior year’s required payment was over $500, carry the full Line 9a amount to Line 9b. Otherwise enter zero.²

Line 10: Net Required Payment Balance

Line 10 is the cumulative balance of all prior required payments deposited with the Treasury, less any refunds already paid out.² It is a deposit sitting with the government, not a tax credit against anything else. Pull the figure from your prior-year Form 8752 carefully.

Lines 11 and 12: Pay or Refund

If Line 9b exceeds Line 10, Line 11 is the difference — the additional payment due this year. If Line 10 exceeds Line 9b, Line 12a is the refund the IRS owes you. Lines 12b through 12d, added on the December 2025 revision, let you request direct deposit instead of a paper check.¹

A Worked Example

A partnership with a September 30 year end has a three-month deferral period and a 25.0% ratio. The base year produced $400,000 of net income (Line 1) and $60,000 of applicable payments across the full year (Line 2). During the October through December deferral months of the base year, the partnership paid $20,000 of applicable payments (Line 6).

Line 4: $400,000 × 25.0% = $100,000
Line 5: $60,000 × 25.0% = $15,000
Line 7: $15,000 − $20,000 is negative, so enter $0
Line 8: $100,000 + $0 = $100,000
Line 9a: $100,000 × 38% = $38,000
Line 9b: $38,000

If the net required payment balance from prior years (Line 10) is $30,000, Line 11 shows $8,000 due. Line 7 came in at zero here because actual deferral-month payments exceeded the pro-rata share, which the formula treats as income already accelerated.

Filing Deadline, Payment, and Where to Send It

For applicable election years beginning in 2025, the form and any payment must be submitted on or before May 15, 2026.¹ The IRS sets a fixed date for each cycle rather than keying the deadline to each entity’s fiscal year.

Electronic payments are encouraged. Business entities can use the Electronic Federal Tax Payment System (EFTPS), a free Treasury service.⁶ If you pay by check or money order, make it payable to the U.S. Treasury and write the entity’s name, taxpayer identification number, and “Form 8752” on the payment.

The form itself goes to one of two IRS service centers depending on the location of the entity’s principal place of business: Kansas City, MO 64999 for eastern states and Ogden, UT 84201 for western and southern states. The full state-by-state breakdown is on the IRS filing-location page.⁷

Penalties and Loss of the Election

A late or missing payment triggers a 10% penalty on the underpayment, which is the difference between the required payment and what was actually paid by the due date. The penalty can be waived if you show reasonable cause and the failure was not willful.⁵

A willful failure to comply with Section 7519 terminates the Section 444 election entirely, and once terminated the entity can never make another one.¹ That pushes the entity onto a calendar year permanently.

Ending the Election and Getting the Deposit Back

You can voluntarily end a Section 444 election by switching to the required tax year (a calendar year for most partnerships and S corporations), and no IRS consent is needed. The election also ends automatically if the entity joins a tiered pass-through structure unless every entity in the tier shares the same tax year.³ An S corporation’s election also ends if the entity loses its S status, unless it immediately becomes a personal service corporation.¹

When the election ends or the entity liquidates, file a final Form 8752 and check the box at Item C to claim the full Line 10 balance back.¹ The IRS will not issue the refund before the later of April 15 of the following calendar year or 90 days after the claim is filed. You get the whole deposit back because it was never a tax, though no interest is paid on the refunded amount.⁵

1
Internal Revenue Service. Instructions for Form 8752 (12/2025)
2
Internal Revenue Service. Form 8752 (Rev. December 2025)
3
Office of the Law Revision Counsel. 26 USC 444 – Election of Taxable Year Other Than Required Taxable Year
4
Legal Information Institute. 26 USC 7519 – Required Payments for Entities Electing Not to Have Required Taxable Year
5
Office of the Law Revision Counsel. 26 U.S. Code 7519 – Required Payments for Entities Electing Not to Have Required Taxable Year
6
Internal Revenue Service. EFTPS: The Electronic Federal Tax Payment System
7
Internal Revenue Service. Where to File Your Taxes (for Form 8752)