2023

Instructions for Form 1041 

and Schedules A, B, G, J, 

and K-1

U.S. Income Tax Return for Estates and Trusts

Department of the Treasury

Internal Revenue Service

Section references are to the Internal Revenue Code unless 

otherwise noted.

Contents Page

What's New ............................... 1

Reminders ................................ 1

Photographs of Missing Children ................ 2

The Taxpayer Advocate Service (TAS) ............ 2

How To Get Forms and Publications .............. 3

General Instructions ......................... 3

Purpose of Form ............................ 3

Income Taxation of Trusts and Decedents' 

Estates ............................... 3

Abusive Trust Arrangements ................... 3

Definitions ................................ 4

Who Must File ............................. 5

Electronic Filing ............................ 8

When To File .............................. 8

Period Covered ............................ 8

Where To File .............................. 9

Who Must Sign ............................. 9

Accounting Methods ......................... 9

Accounting Periods ......................... 10

Rounding Off to Whole Dollars ................. 10

Estimated Tax ............................ 10

Interest and Penalties ....................... 10

Other Forms That May Be Required ............. 11

Additional Information ....................... 13

Assembly and Attachments ................... 13

Special Reporting Instructions ................. 13

Specific Instructions ........................ 18

Name of Estate or Trust ...................... 18

Name and Title of Fiduciary ................... 18

Address ................................. 18

A. Type of Entity ........................... 18

B. Number of Schedules K-1 Attached ........... 19

C. Employer Identification Number .............. 19

D. Date Entity Created ....................... 19

E. Nonexempt Charitable and Split-Interest Trusts ... 19

F. Initial Return, Amended Return, etc. ........... 20

G. Section 645 Election ...................... 20

Income ................................. 21

Deductions .............................. 22

Limitations on Deductions .................... 23

Tax and Payments ......................... 27

Contents Page

Schedule A—Charitable Deduction ............. 28

Schedule B—Income Distribution Deduction ....... 29

Schedule G—Tax Computation and Payments ..... 31

Net Investment Income Tax (NIIT) .............. 36

Other Information .......................... 37

Schedule J (Form 1041)—Accumulation 

Distribution for Certain Complex Trusts ........ 39

Schedule K-1 (Form 1041)—Beneficiary's Share of 

Income, Deductions, Credits, etc. ............ 41

Index ................................... 53

Future Developments

For the latest information about developments related to 

Form 1041 and Schedules A, B, G, J, K-1 and its instructions, 

such as legislation enacted after they were published, go to 

IRS.gov/Form1041.

What's New

Due date of return. Calendar year estates and trusts must 

file Form 1041 by April 15, 2024. If you live in Maine or 

Massachusetts, you have until April 17, 2024, because of the 

Patriots' Day and Emancipation Day holidays.

Capital gains and qualified dividends. For tax year 2023, 

the 20% maximum capital gains rate applies to estates and 

trusts with income above $14,650. The 0% and 15% rates 

apply to certain threshold amounts. The 0% rate applies to 

amounts up to $3,000. The 15% rate applies to amounts over 

$3,000 and up to $14,650.

Bankruptcy estate filing threshold. For tax year 2023, the 

requirement to file a return for a bankruptcy estate applies 

only if gross income is at least $13,850.

Qualified disability trust. For tax year 2023, a qualified 

disability trust can claim an exemption of up to $4,700. This 

amount is not subject to phaseout.

Qualified sick and family leave credits. Generally, the 

credits for qualified sick and family leave wages have expired. 

However, qualified sick and family leave wages paid in 2023 

for leave taken before April 1, 2021, and for leave taken after 

March 31, 2021, and before October 1, 2021, may be eligible 

to claim the credits in 2023.

Reminders

• Review a copy of the will or trust instrument, including any 

amendments or codicils, before preparing an estate's or 

trust's return.

• We encourage you to use Form 1041-V, Payment Voucher 

for Estates and Trusts, to accompany your payment of a 

Jan 9, 2024 Cat. No. 11372D
balance of tax due on Form 1041, particularly if your payment 

is made by check or money order.

Form 8978 Worksheet. A Form 8978 

Worksheet—Schedule G, Part I, Line 8 has been added to 

the instructions to calculate the amount due when there is a 

negative amount from Form 8978, line 14, that was not used 

to reduce Schedule G, line 3, to zero, and you have chapter 1 

taxes and/or tax and interest from Form 8621.

Advanced manufacturing production credit. Section 

13502 of the Inflation Reduction Act of 2022 (IRA 2022) 

created the advanced manufacturing production credit for 

certain components produced and sold after 2022. See Form 

7207, Advanced Manufacturing Production Credit, and its 

instructions and section 45X.

Net operating loss (NOL) carryback. Generally, an NOL 

arising in a tax year beginning in 2021 or later may not be 

carried back and instead must be carried forward indefinitely. 

However, farming losses arising in tax years beginning in 

2021 or later may be carried back 2 years and carried 

forward indefinitely.

For special rules for NOLs arising in 2018, 2019 or 2020, 

see Pub. 536, Net Operating Losses (NOLs) for Individuals, 

Estates, and Trusts, for more information.

Section 965. Section 965(a) inclusion amounts are not 

applicable for tax year 2021 and later years. However, 

section 965 may still apply to certain estates and trusts 

(including the S portion of electing small business trusts 

(ESBTs)) where a section 965(h) or section 965(i) election 

has been made.

Section 1061 reporting. Section 1061 recharacterizes 

certain long-term capital gains of applicable partnership 

interests held by an estate or trust as short-term capital 

gains. See Section 1061 Reporting Guidance FAQs.

Excess deductions on termination. Under Final 

Regulations - TD9918, each excess deduction on termination 

of an estate or trust retains its separate character as an 

amount allowed in arriving at adjusted gross income (AGI), a 

non-miscellaneous itemized deduction, or a miscellaneous 

itemized deduction.

See Box 11, Code A Excess Deductions on 

Termination—Section 67(e) Expenses and Box 11, Code B 

Excess Deductions on Termination—Non-Miscellaneous 

Itemized Deductions, later, for more information.

Qualified Opportunity Investment. With the exception of 

grantor trusts, if you held a qualified investment in a qualified 

opportunity fund (QOF) at any time during the year, you must 

file your return with Form 8997, Initial and Annual Statement 

of Qualified Opportunity Fund (QOF) Investments, attached 

to your return. For more information, see Form 8997 and its 

instructions.

Extension of time to file. The extension of time to file an 

estate (other than a bankruptcy estate) or trust return is 51/2 

months.

Item A. Type of entity. On page 1 of Form 1041, item A, 

taxpayers should select more than one box, when 

appropriate, to reflect the type of entity.

Item F. Net operating loss (NOL) carryback. If an 

amended return is filed for an NOL carryback, check the Net 

operating loss carryback box in item F. See Amended Return, 

later, for complete information.

Item G. Section 645 election. If the estate has made a 

section 645 election, the executor must check item G and 

provide the taxpayer identification number (TIN) of the 

electing trust with the highest total asset value in the box 

provided.

The executor must also attach a statement to Form 1041 

providing the following information for each electing trust 

(including the electing trust provided in item G): (a) the name 

of the electing trust, (b) the TIN of the electing trust, and (c) 

the name and address of the trustee of the electing trust.

Form 1041 e-filing. When e-filing Form 1041, use either 

Form 8453-FE, U.S. Estate or Trust Declaration for an IRS 

e-file Return, or Form 8879-F, IRS e-file Signature 

Authorization for Form 1041.

Note. Form 8879-F can only be associated with a single 

Form 1041. Form 8879-F can no longer be used with multiple 

Forms 1041.

For more information about e-filing returns through MeF, 

see Pub. 4164, Modernized e-File (MeF) Guide for Software 

Developers and Transmitters.

Photographs of Missing Children

The Internal Revenue Service is a proud partner with the 

National Center for Missing & Exploited Children® (NCMEC). 

Photographs of missing children selected by the Center may 

appear in instructions on pages that would otherwise be 

blank. You can help bring these children home by looking at 

the photographs and calling 1-800-THE-LOST 

(1-800-843-5678) if you recognize a child.

The Taxpayer Advocate Service (TAS)

The TAS Is Here To Help You

What Is TAS?

TAS is an independent organization within the IRS that 

helps taxpayers and protects taxpayer rights. TAS strives to 

ensure that every taxpayer is treated fairly and that you know 

and understand your rights under the Taxpayer Bill of Rights.

How Can You Learn About Your Taxpayer Rights?

The Taxpayer Bill of Rights describes 10 basic rights that all 

taxpayers have when dealing with the IRS. Go to 

TaxpayerAdvocate.IRS.gov to help you understand what 

these rights mean to you and how they apply. These are your 

rights. Know them. Use them.

What Can TAS Do for You?

TAS can help you resolve problems that you can't resolve 

with the IRS. And their service is free. If you qualify for their 

assistance, you will be assigned to one advocate who will 

work with you throughout the process and will do everything 

possible to resolve your issue. TAS can help you if:

• Your problem is causing financial difficulty for you, your 

family, or your business;

• You face (or your business is facing) an immediate threat 

of adverse action; or

• You’ve tried repeatedly to contact the IRS but no one has 

responded, or the IRS hasn’t responded by the date 

promised.

2 Instructions for Form 1041 (2023)
How Can You Reach TAS?

TAS has offices in every state, the District of Columbia, and 

Puerto Rico. To find your advocate’s number:

• Go to TaxpayerAdvocate.IRS.gov/Contact-Us;

• Download Pub. 1546, The Taxpayer Advocate Service Is 

Your Voice at the IRS, available at IRS.gov/pub/irs-pdf/

p1546.pdf;

• Call the IRS toll free at 800-TAX-FORM (800-829-3676) to 

order a copy of Pub. 1546;

• Check your local directory; or

• Call TAS toll free at 877-777-4778.

How Else Does TAS Help Taxpayers?

TAS works to resolve large-scale problems that affect many 

taxpayers. If you know of one of these broad issues, report it 

to TAS at IRS.gov/SAMS. Be sure to not include any personal 

taxpayer information.

How To Get Forms and Publications

Internet. You can access the IRS website 24 hours a 

day, 7 days a week, at IRS.gov to:

• Download forms, including talking tax forms, instructions, 

and publications;

• Order IRS products;

• Use the online Internal Revenue Code, regulations, and 

other official guidance;

• Research your tax questions;

• Search publications by topic or keyword;

• Apply for an employer identification number (EIN); and

• Sign up to receive local and national tax news by email.

Tax forms and publications. The estate or trust can 

download or print all of the forms and publications it may 

need on IRS.gov/FormsPubs. Otherwise, the estate or trust 

can go to IRS.gov/OrderForms to place an order and have 

forms mailed to it. The IRS will process your order for forms 

and publications as soon as possible.

General Instructions

Purpose of Form

The fiduciary of a domestic decedent's estate, trust, or 

bankruptcy estate uses Form 1041 to report:

• The income, deductions, gains, losses, etc., of the estate 

or trust;

• The income that is either accumulated or held for future 

distribution or distributed currently to the beneficiaries;

• Any income tax liability of the estate or trust;

• Employment taxes on wages paid to household 

employees; and

• Net Investment Income Tax (NIIT). See Schedule G, Part I, 

line 5, and the Instructions for Form 8960.

Income Taxation of Trusts and 

Decedents' Estates

A trust or a decedent's estate is a separate legal entity for 

federal tax purposes. A decedent's estate comes into 

existence at the time of death of an individual. A trust may be 

created during an individual's life (inter vivos) or at the time of 

their death under a will (testamentary). If the trust instrument 

contains certain provisions, then the person creating the trust 

(the grantor) is treated as the owner of the trust's assets. 

Such a trust is a grantor type trust. See Grantor Type Trusts, 

later, under Special Reporting Instructions.

A trust or decedent's estate figures its gross income in 

much the same manner as an individual. Most deductions 

and credits allowed to individuals are also allowed to estates 

and trusts. However, there is one major distinction. A trust or 

decedent's estate is allowed an income distribution 

deduction for distributions to beneficiaries. To figure this 

deduction, the fiduciary must complete Schedule B. The 

income distribution deduction determines the amount of any 

distributions taxed to the beneficiaries.

For this reason, a trust or decedent's estate is sometimes 

referred to as a “pass-through entity.” The beneficiary, and not 

the trust or decedent's estate, pays income tax on their 

distributive share of income. Schedule K-1 (Form 1041) is 

used to notify the beneficiaries of the amounts to be included 

on their income tax returns.

Before preparing Form 1041, the fiduciary must figure the 

accounting income of the estate or trust under the will or trust 

instrument and applicable local law to determine the amount, 

if any, of income that is required to be distributed, because 

the income distribution deduction is based, in part, on that 

amount.

Abusive Trust Arrangements

Certain trust arrangements claim to reduce or eliminate 

federal taxes in ways that are not permitted under the law. 

Abusive trust arrangements are typically promoted by the 

promise of tax benefits with no meaningful change in the 

taxpayer's control over or benefit from the taxpayer's income 

or assets. The promised benefits may include reduction or 

elimination of income subject to tax; deductions for personal 

expenses paid by the trust; depreciation deductions of an 

owner's personal residence and furnishings; a stepped-up 

basis for property transferred to the trust; the reduction or 

elimination of self-employment taxes; and the reduction or 

elimination of gift and estate taxes. These promised benefits 

are inconsistent with the tax rules applicable to trust 

arrangements.

Abusive trust arrangements often use trusts to hide the 

true ownership of assets and income or to disguise the 

substance of transactions. These arrangements frequently 

involve more than one trust, each holding different assets of 

the taxpayer (for example, the taxpayer's business, business 

equipment, home, automobile, etc.). Some trusts may hold 

interests in other trusts, purport to involve charities, or are 

foreign trusts. Funds may flow from one trust to another trust 

by way of rental agreements, fees for services, purchase 

agreements, and distributions.

Some of the abusive trust arrangements that have been 

identified include unincorporated business trusts (or 

organizations), equipment or service trusts, family residence 

trusts, charitable trusts, and final trusts. In each of these 

trusts, the original owner of the assets nominally subject to 

the trust effectively retains the authority to cause financial 

benefits of the trust to be directly or indirectly returned or 

made available to the owner. For example, the trustee may be 

the promoter, a relative, or a friend of the owner who simply 

carries out the directions of the owner whether or not 

permitted by the terms of the trust.

When trusts are used for legitimate business, family, or 

estate planning purposes, either the trust, the beneficiary, or 

Instructions for Form 1041 (2023) 3
the transferor of assets to the trust will pay the tax on income 

generated by the trust property. Trusts can't be used to 

transform a taxpayer's personal, living, or educational 

expenses into deductible items, and can't seek to avoid tax 

liability by ignoring either the true ownership of income and 

assets or the true substance of transactions. Therefore, the 

tax results promised by the promoters of abusive trust 

arrangements are not allowable under the law, and the 

participants in and promoters of these arrangements may be 

subject to civil or criminal penalties in appropriate cases.

For more details, including the legal principles that control 

the proper tax treatment of these abusive trust arrangements, 

see Notice 97-24, 1997-1 C.B. 409.

For additional information about abusive tax 

arrangements, go to IRS.gov and type “Abusive Trusts” in the 

search box.

Definitions

Adjusted gross income (AGI). Compute the AGI of an 

estate or a non-grantor trust by subtracting the following from 

total income on line 9 of page 1.

1. The administration costs of the estate or trust (the total 

of lines 12, 14, and 15a to the extent they are costs incurred 

in the administration of the estate or trust) that wouldn't have 

been incurred if the property were not held by the estate or 

trust.

2. The income distribution deduction (line 18).

3. The amount of the exemption (line 21).

4. The net operating loss deduction (NOLD) claimed on 

line 15b.

Electing small business trust (ESBT). Compute the 

AGI of the S portion of an ESBT in the same manner as an 

individual taxpayer, except that administration costs allocable 

to the S portion (to the extent they are costs incurred in the 

administration of the trust that wouldn't have been incurred if 

the property were not held by the estate or trust) shall be 

deducted in arriving at AGI.

Beneficiary. A beneficiary includes an heir, a legatee, or a 

devisee.

Decedent's estate. The decedent's estate is an entity that 

is formed at the time of an individual's death and is generally 

charged with gathering the decedent's assets, paying the 

decedent's debts and expenses, and distributing the 

remaining assets. Generally, the estate consists of all the 

property, real or personal, tangible or intangible, wherever 

situated, that the decedent owned an interest in at death.

Distributable net income (DNI). The income distribution 

deduction allowable to estates and trusts for amounts paid, 

credited, or required to be distributed to beneficiaries is 

limited to DNI. This amount, which is figured on Schedule B, 

line 7, is also used to determine how much of an amount 

paid, credited, or required to be distributed to a beneficiary 

will be includible in their gross income.

Income in respect of a decedent (IRD). When completing 

Form 1041, you must take into account any items that are 

IRD.

In general, IRD is income that a decedent was entitled to 

receive but that was not properly includible in the decedent's 

final income tax return under the decedent's method of 

accounting.

IRD includes:

• All accrued income of a decedent who reported their 

income on the cash method of accounting,

• Income accrued solely because of the decedent's death in 

the case of a decedent who reported their income on the 

accrual method of accounting, and

• Income to which the decedent had a contingent claim at 

the time of their death.

Some examples of IRD for a decedent who kept their 

books on the cash method are:

• Deferred salary payments that are payable to the 

decedent's estate,

• Uncollected interest on U.S. savings bonds,

• Proceeds from the completed sale of farm produce, and

• The portion of a lump-sum distribution to the beneficiary of 

a decedent's individual retirement arrangement (IRA) that 

equals the balance in the IRA at the time of the owner's 

death. This includes unrealized appreciation and income 

accrued to that date, less the aggregate amount of the 

owner's nondeductible contributions to the IRA. Such 

amounts are included in the beneficiary's gross income in the 

tax year that the distribution is received.

The IRD has the same character it would have had if the 

decedent had lived and received such amount.

Deductions and credits in respect of a decedent. The 

following deductions and credits, when paid by the 

decedent's estate, are allowed on Form 1041 even though 

they were not allowable on the decedent's final income tax 

return.

• Business expenses deductible under section 162.

• Interest deductible under section 163.

• Taxes deductible under section 164.

• Percentage depletion allowed under section 611.

• Foreign tax credit.

For more information on IRD, see section 691 and Pub. 

559, Survivors, Executors, and Administrators.

Income required to be distributed currently. Income 

required to be distributed currently is income that is required 

under the terms of the governing instrument and applicable 

local law to be distributed in the year it is received. The 

fiduciary must be under a duty to distribute the income 

currently, even if the actual distribution is not made until after 

the close of the trust's tax year. See Regulations section 

1.651(a)-2.

Fiduciary. A fiduciary is a trustee of a trust, or an executor, 

executrix, administrator, administratrix, personal 

representative, or person in possession of property of a 

decedent's estate.

Note. Any reference in these instructions to “you” means the 

fiduciary of the estate or trust.

Trust. A trust is an arrangement created either by a will or by 

an inter vivos declaration by which trustees take title to 

property for the purpose of protecting or conserving it for the 

beneficiaries under the ordinary rules applied in chancery or 

probate courts.

Revocable living trust. A revocable living trust is an 

arrangement created by a written agreement or declaration 

during the life of an individual and can be changed or ended 

at any time during the individual's life. A revocable living trust 

is generally created to manage and distribute property. Many 

people use this type of trust instead of (or in addition to) a 

will.

4 Instructions for Form 1041 (2023)
Because this type of trust is revocable, it is treated as a 

grantor type trust for tax purposes. See Grantor Type Trusts 

under Special Reporting Instructions, later, for special filing 

instructions that apply to grantor trusts.

Be sure to read Optional Filing Methods for Certain 

Grantor Type Trusts, later. Generally, most people 

that have revocable living trusts will be able to use 

Optional Method 1. This method is the easiest and least 

burdensome way to meet your obligations.

Who Must File

Decedent's Estate

The fiduciary (or one of the joint fiduciaries) must file Form 

1041 for a domestic estate that has:

1. Gross income for the tax year of $600 or more;

2. A beneficiary who is a nonresident alien; or

3. If you held a qualified investment in a qualified 

opportunity fund (QOF) at any time during the year, you must 

file your return with Form 8997 attached. See the Form 8997 

instructions.

An estate is a domestic estate if it isn't a foreign estate. A 

foreign estate is one the income of which is from sources 

outside the United States that isn't effectively connected with 

the conduct of a U.S. trade or business and isn't includible in 

gross income. If you are the fiduciary of a foreign estate, file 

Form 1040-NR, U.S. Nonresident Alien Income Tax Return, 

instead of Form 1041.

Trust

The fiduciary (or one of the joint fiduciaries) must file Form 

1041 for a domestic trust taxable under section 641 that has:

1. Any taxable income for the tax year;

2. Gross income of $600 or more (regardless of taxable 

income);

3. A beneficiary who is a nonresident alien; or

4. If you held a qualified investment in a QOF at any time 

during the year, you must file your return with Form 8997 

attached. See the Form 8997 instructions.

Two or more trusts are treated as one trust if the trusts 

have substantially the same grantor(s) and substantially the 

same primary beneficiary(ies) and a principal purpose of 

such trusts is avoidance of tax. This provision applies only to 

that portion of the trust that is attributable to contributions to 

corpus made after March 1, 1984.

A trust is a domestic trust if:

• A U.S. court is able to exercise primary supervision over 

the administration of the trust (court test), and

• One or more U.S. persons have the authority to control all 

substantial decisions of the trust (control test).

See Regulations section 301.7701-7 for more information 

on the court and control tests.

Also treated as a domestic trust is a trust (other than a 

trust treated as wholly owned by the grantor) that:

• Was in existence on August 20, 1996,

• Was treated as a domestic trust on August 19, 1996, and

• Elected to continue to be treated as a domestic trust.

A trust that isn't a domestic trust is treated as a foreign 

trust. If you are the trustee of a foreign trust, file Form 

1040-NR instead of Form 1041. Also, a foreign trust with a 

TIP

U.S. owner must generally file Form 3520-A, Annual 

Information Return of Foreign Trust With a U.S. Owner.

If a domestic trust becomes a foreign trust, it is treated 

under section 684 as having transferred all of its assets to a 

foreign trust, except to the extent a grantor or another person 

is treated as the owner of the trust when the trust becomes a 

foreign trust.

Grantor Type Trusts

If all or any portion of a trust is a grantor type trust, then that 

trust or portion of a trust must follow the special reporting 

requirements discussed later under Special Reporting 

Instructions. See Grantor Type Trust under Specific 

Instructions, later, for more details on what makes a trust a 

grantor type trust.

Note. A trust may be part grantor trust and part “other” type 

of trust, for example, simple or complex, or ESBT.

Qualified subchapter S trusts (QSSTs). QSSTs must 

follow the special reporting requirements for these trusts, 

discussed later under Special Reporting Instructions.

Special Rule for Certain Revocable Trusts

Section 645 provides that if both the executor (if any) of an 

estate (the related estate) and the trustee of a qualified 

revocable trust (QRT) elect the treatment in section 645, the 

trust must be treated and taxed as part of the related estate 

during the election period. This election may be made by a 

QRT even if no executor is appointed for the related estate.

In general, Form 8855, Election To Treat a Qualified 

Revocable Trust as Part of an Estate, must be filed by the due 

date for Form 1041 for the first tax year of the related estate. 

This applies even if the combined related estate and electing 

trust don't have sufficient income to be required to file Form 

1041. However, if the estate is granted an extension of time 

to file Form 1041 for its first tax year, the due date for Form 

8855 is the extended due date.

Once made, the election is irrevocable.

Qualified revocable trusts (QRTs). In general, a QRT is 

any trust (or part of a trust) that, on the day the decedent 

died, was treated as owned by the decedent because the 

decedent held the power to revoke the trust as described in 

section 676. An electing trust is a QRT for which a section 

645 election has been made.

Election period. The election period is the period of time 

during which an electing trust is treated as part of its related 

estate.

The election period begins on the date of the decedent's 

death and terminates on the earlier of:

• The day on which the electing trust and related estate, if 

any, distribute all of their assets; or

• The day before the applicable date.

To determine the applicable date, first determine whether a 

Form 706, United States Estate (and Generation-Skipping 

Transfer) Tax Return, is required to be filed as a result of the 

decedent's death. If no Form 706 is required to be filed, the 

applicable date is 2 years after the date of the decedent's 

death. If Form 706 is required, the applicable date is the later 

of 2 years after the date of the decedent's death or 6 months 

after the final determination of liability for estate tax. For 

additional information, see Regulations section 1.645-1(f).

Instructions for Form 1041 (2023) 5
Taxpayer identification number (TIN). All QRTs must 

obtain a new TIN following the death of the decedent whether 

or not a section 645 election is made. (Use Form W-9, 

Request for Taxpayer Identification Number and Certification, 

to notify payers of the new TIN.)

An electing trust that continues after the termination of the 

election period doesn't need to obtain a new TIN following 

the termination unless:

• An executor was appointed and agreed to the election 

after the electing trust made a valid section 645 election, and 

the electing trust filed a return as an estate under the trust's 

TIN; or

• No executor was appointed and the QRT was the filing 

trust (as explained later).

A related estate that continues after the termination of the 

election period doesn't need to obtain a new TIN.

For more information about TINs, including trusts with 

multiple owners, see Regulations sections 1.645-1 and 

301.6109-1(a).

General procedures for completing Form 1041 during 

the election period. 

If there is an executor. The following rules apply to filing 

Form 1041 while the election is in effect.

• The executor of the related estate is responsible for filing 

Form 1041 for the estate and all electing trusts. The return is 

filed under the name and TIN of the related estate. Be sure to 

check the “Decedent's estate” box at the top of Form 1041 

and item G if the estate has made a section 645 election. The 

executor continues to file Form 1041 during the election 

period even if the estate distributes all of its assets before the 

end of the election period.

• The Form 1041 includes all items of income, deduction, 

and credit for the estate and all electing trusts.

• For item G, the executor must provide the TIN of the 

electing trust with the highest total asset value.

• The executor must attach a statement to Form 1041 

providing the following information for each electing trust 

(including the electing trust provided in item G): (a) the name 

of the electing trust, (b) the TIN of the electing trust, and (c) 

the name and address of the trustee of the electing trust.

• The related estate and the electing trust are treated as 

separate shares for purposes of computing DNI and applying 

distribution provisions. Also, each of those shares can 

contain two or more separate shares. For more information, 

see Separate share rule, later, and Regulations section 

1.645-1(e)(2)(iii).

• The executor is responsible for ensuring that the estate's 

share of the combined tax obligation is paid.

For additional information, including treatment of transfers 

between shares and charitable contribution deductions, see 

Regulations section 1.645-1(e).

If there isn't an executor. If no executor has been 

appointed for the related estate, the trustee of the electing 

trust files Form 1041 as if it were an estate. File using the TIN 

that the QRT obtained after the death of the decedent. The 

trustee can choose a fiscal year as the trust's tax year during 

the election period. Be sure to check the “Decedent's estate” 

box at the top of Form 1041 and item G if the filing trust has 

made a section 645 election. For item G, the filing trustee 

must provide the TIN of the electing trust with the highest 

total asset value. The electing trust is entitled to a single $600 

personal exemption on returns filed for the election period.

If there is more than one electing trust, the trusts must 

appoint one trustee as the filing trustee. Form 1041 is filed 

under the name and TIN of the filing trustee's trust. A 

statement providing the same information about the electing 

trusts (except the filing trust) that is listed under If there is an 

executor above must be attached to these Forms 1041. All 

electing trusts must choose the same tax year.

If there is more than one electing trust, the filing trustee is 

responsible for ensuring that the filing trust's share of the 

combined tax liability is paid.

For additional information on filing requirements when 

there is no executor, including application of the separate 

share rule, see Regulations section 1.645-1(e). For 

information on the requirements when an executor is 

appointed after an election is made and the executor doesn't 

agree to the election, see later.

Responsibilities of the trustee when there is an 

executor (or there isn't an executor and the trustee isn't 

the filing trustee). When there is an executor (or there isn't 

an executor and the trustee isn't the filing trustee), the trustee 

of an electing trust is responsible for the following during the 

election period.

• To timely provide the executor with all the trust information 

necessary to allow the executor to file a complete, accurate, 

and timely Form 1041.

• To ensure that the electing trust's share of the combined 

tax liability is paid.

The trustee does not file a Form 1041 during the election 

period (except for a final return if the trust terminates during 

the election period, as explained later).

Procedure for completing Form 1041 for the year in 

which the election terminates. 

If there is an executor. If there is an executor, the Form 

1041 filed under the name and TIN of the related estate for 

the tax year in which the election terminates includes (a) the 

items of income, deduction, and credit for the related estate 

for its entire tax year; and (b) the income, deductions, and 

credits for the electing trust for the period that ends with the 

last day of the election period. If the estate won't continue 

after the close of the tax year, indicate that this Form 1041 is 

a final return.

At the end of the last day of the election period, the 

combined entity is deemed to distribute the share comprising 

the electing trust to a new trust. All items of income, including 

net capital gains, that are attributable to the share comprising 

the electing trust are included in the calculation of DNI of the 

electing trust and treated as distributed. The distribution rules 

of sections 661 and 662 apply to this deemed distribution. 

The combined entity is entitled to an income distribution 

deduction for this deemed distribution, and the "new" trust 

must include its share of the distribution in its income. See 

Regulations sections 1.645-1(e)(2)(iii) and 1.645-1(h) for 

more information.

If the electing trust continues in existence after the 

termination of the election period, the trustee must file Form 

1041 under the name and TIN of the trust, using the calendar 

year as its accounting period, if it is otherwise required to file.

If there isn't an executor. If there isn't an executor, the 

following rules apply to filing Form 1041 for the tax year in 

which the election period ends.

• The tax year of the electing trust closes on the last day of 

the election period, and the Form 1041 filed for that tax year 

includes all items of income, deduction, and credit for the 

electing trust for the period beginning with the first day of the 

tax year and ending with the last day of the election period.

• The deemed distribution rules discussed above apply.

6 Instructions for Form 1041 (2023)
• Check the box to indicate that this Form 1041 is a final 

return.

• If the filing trust continues after the termination of the 

election period, the trustee must obtain a new TIN. If the trust 

meets the filing requirements, the trustee must file a Form 

1041 under the new TIN for the period beginning with the day 

after the close of the election period and, in general, ending 

December 31 of that year.

Responsibilities of the trustee when there is an 

executor (or there isn't an executor and the trustee isn't 

the filing trustee). In addition to the requirements listed 

above under this same heading, the trustee is responsible for 

the following.

• If the trust will not continue after the close of the election 

period, the trustee must file a Form 1041 under the name and 

TIN of the trust. Complete the entity information and items A, 

C, D, and F. Indicate in item F that this is a final return. Don't 

report any items of income, deduction, or credit.

• If the trust will continue after the close of the election 

period, the trustee must file a Form 1041 for the trust for the 

tax year beginning the day after the close of the election 

period and, in general, ending December 31 of that year. Use 

the TIN obtained after the decedent's death. Follow the 

general rules for completing the return.

Special filing instructions. 

When the election isn't made by the due date of the 

QRT's Form 1041. If the section 645 election hasn't been 

made by the time the QRT's first income tax return would be 

due for the tax year beginning with the decedent's death, but 

the trustee and executor (if any) have decided to make a 

section 645 election, then the QRT isn't required to file a 

Form 1041 for the short tax year beginning with the 

decedent's death and ending on December 31 of that year. 

However, if a valid election isn't subsequently made, the QRT 

may be subject to penalties and interest for failure to file and 

failure to pay.

If the QRT files a Form 1041 for this short period, and a 

valid section 645 election is subsequently made, then the 

trustee must file an amended Form 1041 for the electing 

trust, excluding all items of income, deduction, and credit of 

the electing trust. These amounts are then included on the 

first Form 1041 filed by the executor for the related estate (or 

the filing trustee for the electing trust filing as an estate).

Later appointed executor. If an executor for the related 

estate isn't appointed until after the trustee has made a valid 

section 645 election, the executor must agree to the trustee's 

election and they must file a revised Form 8855 within 90 

days of the appointment of the executor. If the executor 

doesn't agree to the election, the election terminates as of 

the date of appointment of the executor.

If the executor agrees to the election, the trustee must 

amend any Form 1041 filed under the name and TIN of the 

electing trust for the period beginning with the decedent's 

death. The amended returns are still filed under the name 

and TIN of the electing trust, and they must include the items 

of income, deduction, and credit for the related estate for the 

periods covered by the returns. Also, attach a statement to 

the amended Forms 1041 identifying the name and TIN of 

the related estate, and the name and address of the executor. 

Check the “Final return” box on the amended return for the 

tax year that ends with the appointment of the executor. 

Except for this amended return, all returns filed for the 

combined entity after the appointment of the executor must 

be filed under the name and TIN of the related estate.

If the election terminates as the result of a later appointed 

executor, the executor of the related estate must file Forms 

1041 under the name and TIN of the related estate for all tax 

years of the related estate beginning with the decedent's 

death. The electing trust's election period and tax year 

terminate the day before the appointment of the executor. 

The trustee isn't required to amend any of the returns filed by 

the electing trust for the period prior to the appointment of the 

executor. The trust must file a final Form 1041 following the 

instructions above for completing Form 1041 in the year in 

which the election terminates and there is no executor.

Termination of the trust during the election period. If 

an electing trust terminates during the election period, the 

trustee of that trust must file a final Form 1041 by completing 

the entity information (using the trust's EIN), checking the 

Final return box, and signing and dating the form. Don't report 

items of income, deduction, and credit. These items are 

reported on the related estate's return.

Alaska Native Settlement Trusts

The trustee of an Alaska Native Settlement Trust may elect 

the special tax treatment for the trust and its beneficiaries 

provided for in section 646. The election must be made by 

the due date (including extensions) for filing the trust's tax 

return for its first tax year ending after June 7, 2001. Don't 

use Form 1041. Use Form 1041-N, U.S. Income Tax Return 

for Electing Alaska Native Settlement Trusts, to make the 

election. Additionally, Form 1041-N is the trust's income tax 

return and satisfies the section 6039H information reporting 

requirement for the trust.

Bankruptcy Estate

The bankruptcy trustee or debtor-in-possession must file 

Form 1041 for the estate of an individual involved in 

bankruptcy proceedings under chapter 7 or 11 of title 11 of 

the U.S. Code if the estate has gross income for the tax year 

of $13,850 or more. See Bankruptcy Estates, later, for 

details.

Charitable Remainder Trusts (CRTs)

A section 664 CRT doesn’t file Form 1041. Instead, a CRT 

files Form 5227, Split-Interest Trust Information Return. If the 

CRT has any unrelated business taxable income, it must also 

file Form 4720, Return of Certain Excise Taxes Under 

Chapters 41 and 42 of the Internal Revenue Code.

Common Trust Funds

Don't file Form 1041 for a common trust fund maintained by a 

bank. Instead, the fund may use Form 1065, U.S. Return of 

Partnership Income, for its return. For more details, see 

section 584 and Regulations section 1.6032-1.

ESBTs

ESBTs file Form 1041. However, see Electing Small Business 

Trusts (ESBTs), later, for a discussion of the special reporting 

requirements for these trusts.

Pooled Income Funds

Pooled income funds file Form 1041. See Pooled Income 

Funds, later, for the special reporting requirements for these 

trusts. Additionally, pooled income funds must file Form 5227.

Qualified Funeral Trusts

Trustees of pre-need funeral trusts who elect treatment under 

section 685 file Form 1041-QFT, U.S. Income Tax Return for 

Instructions for Form 1041 (2023) 7
Qualified Funeral Trusts. All other pre-need funeral trusts, see 

Grantor Type Trusts, later, for Form 1041 reporting 

requirements.

Qualified Settlement Funds

The trustee of a designated or qualified settlement fund 

(QSF) must generally file Form 1120-SF, U.S. Income Tax 

Return for Settlement Funds, instead of Form 1041.

Special election. If a QSF has only one transferor, the 

transferor may elect to treat the QSF as a grantor type trust.

To make the grantor trust election, the transferor must 

attach an election statement to a timely filed Form 1041, 

including extensions, that the administrator files for the QSF 

for the tax year in which the settlement fund is established. If 

Form 1041 isn't filed because Optional Method 1 or 2 

(described later) was chosen, attach the election statement 

to a timely filed income tax return, including extensions, of 

the transferor for the tax year in which the settlement fund is 

established.

Election statement. The election statement may be 

made separately or, if filed with Form 1041, on the 

attachment described under Grantor Type Trusts, later. At the 

top of the election statement, enter “Section 1.468B-1(k) 

Election” and include the transferor's:

• Name,

• Address,

• TIN, and

• A statement that they will treat the QSF as a grantor type 

trust.

Widely Held Fixed Investment Trust (WHFITs)

Trustees and middlemen of WHFITs don't file Form 1041. 

Instead, they report all items of gross income and proceeds 

on the appropriate Form 1099. For the definition of a WHFIT, 

see Regulations section 1.671-5(b)(22). A tax information 

statement that includes the information given to the IRS on 

Forms 1099, as well as additional information identified in 

Regulations section 1.671-5(e), must be given to trust 

interest holders. See the General Instructions for Certain 

Information Returns for more information.

Electronic Filing

Qualified fiduciaries or transmitters may be able to file Form 

1041 and related schedules electronically. To become an 

e-file provider, complete the following steps.

1. Create an IRS e-Services account.

2. Submit your e-file provider application online.

3. Pass a suitability check.

The online application process takes 4–6 weeks to 

complete.

Note. Existing e-file providers must now use e-Services to 

make account updates.

Help is available online at e-services or through the e-Help 

Desk at 866-255-0654 (512-416-7750 for international calls), 

Monday through Friday, 6:30 a.m.–6:00 p.m. (Central time). 

Frequently asked questions and Online Tutorials are available 

to answer questions or to guide users through the application 

process.

If you file Form 1041 electronically, you may sign the return 

electronically by using a personal identification number (PIN). 

See Form 8879-F for details.

Form 8879-F can only be associated with a single 

Form 1041. Form 8879-F can't be used with multiple 

Forms 1041.

Form 1041 may also be e-filed using Form 8453-FE.

For more information about e-filing returns through MeF, 

see Pub. 4164.

If Form 1041 is e-filed and there is a balance due, the 

fiduciary may authorize an electronic funds withdrawal with 

the return.

Private Delivery Services (PDSs)

You can use certain PDSs designated by the IRS to meet the 

“timely mailing as timely filing/paying” rule for tax returns and 

payments. Go to IRS.gov/PDS for the current list of 

designated services.

The PDS can tell you how to get written proof of the 

mailing date.

For the IRS mailing address to use if you’re using a PDS, 

go to IRS.gov/PDSstreetAddresses.

PDSs can't deliver items to P.O. boxes. You must use 

the U.S. Postal Service to mail any item to an IRS 

P.O. box address.

When To File

For calendar year estates and trusts, file Form 1041 and 

Schedule(s) K-1 by April 15, 2024. If you live in Maine or 

Massachusetts, you have until April 17, 2024, because of the 

Patriots' Day and Emancipation Day holidays.

For fiscal year estates and trusts, file Form 1041 by the 

15th day of the 4th month following the close of the tax year. 

For example, an estate that has a tax year that ends on June 

30, 2024, must file Form 1041 by October 15, 2024. If the 

due date falls on a Saturday, Sunday, or legal holiday, file on 

the next business day.

Extension of Time To File

If more time is needed to file the estate or trust return, use 

Form 7004, Application for Automatic Extension of Time To 

File Certain Business Income Tax, Information, and Other 

Returns, to apply for an automatic 51/2-month extension of 

time to file.

Period Covered

File the 2023 return for calendar year 2023 and fiscal years 

beginning in 2023 and ending in 2024. If the return is for a 

fiscal year or a short tax year (less than 12 months), fill in the 

tax year space at the top of the form.

The 2023 Form 1041 may also be used for a tax year 

beginning in 2024 if:

1. The estate or trust has a tax year of less than 12 

months that begins and ends in 2024, and

2. The 2024 Form 1041 isn't available by the time the 

estate or trust is required to file its tax return. However, the 

estate or trust must show its 2024 tax year on the 2023 Form 

1041 and incorporate any tax law changes that are effective 

for tax years beginning after 2023.

CAUTION

!

CAUTION

!

8 Instructions for Form 1041 (2023)
Who Must Sign

Fiduciary

The fiduciary, or an authorized representative, must sign 

Form 1041. If there are joint fiduciaries, only one is required 

to sign the return.

A financial institution that submitted estimated tax 

payments for trusts for which it is the trustee must enter its 

EIN in the space provided for the EIN of the fiduciary. Don't 

enter the EIN of the trust. For this purpose, a financial 

institution is one that maintains a Treasury Tax and Loan 

(TT&L) account. If you are an attorney or other individual 

functioning in a fiduciary capacity, leave this space blank. 

Don't enter your individual social security number (SSN).

Paid Preparer

Generally, anyone who is paid to prepare a tax return must 

have a Preparer Tax Identification Number (PTIN), sign the 

return, and fill in the other blanks in the Paid Preparer Use 

Only area of the return.

The person required to sign the return must:

• Complete the required preparer information including their 

PTIN,

• Sign it in the space provided for the preparer's signature (a 

facsimile signature is acceptable), and

• Give you a copy of the return for your records.

If you, as fiduciary, fill in Form 1041, leave the Paid 

Preparer Use Only space blank.

If someone prepares this return and doesn't charge you, 

that person should not sign the return.

Paid Preparer Authorization

If the fiduciary wants to allow the IRS to discuss the estate's 

or trust's 2023 tax return with the paid preparer who signed it, 

check the “Yes” box in the signature area of the return. This 

authorization applies only to the individual whose signature 

appears in the Paid Preparer Use Only area of the estate's or 

trust's return. It doesn't apply to the firm, if any, shown in that 

section.

If the “Yes” box is checked, the fiduciary is authorizing the 

IRS to call the paid preparer to answer any questions that 

may arise during the processing of the estate's or trust's 

return. The fiduciary is also authorizing the paid preparer to:

• Give the IRS any information that is missing from the 

estate's or trust's return;

• Call the IRS for information about the processing of the 

estate's or trust's return or the status of its refund or 

payment(s); and

• Respond to certain IRS notices that the fiduciary has 

shared with the preparer about math errors, offsets, and 

return preparation. The notices won't be sent to the preparer.

The fiduciary isn't authorizing the paid preparer to receive 

any refund check, bind the estate or trust to anything 

(including any additional tax liability), or otherwise represent 

the estate or trust before the IRS.

The authorization will automatically end no later than the 

due date (without regard to extensions) for filing the estate's 

or trust's 2024 tax return. If the fiduciary wants to expand the 

paid preparer's authorization or revoke the authorization 

before it ends, see Pub. 947, Practice Before the IRS and 

Power of Attorney.

Accounting Methods

Figure taxable income using the method of accounting 

regularly used in keeping the estate's or trust's books and 

records. Generally, permissible methods include the cash 

method, the accrual method, or any other method authorized 

by the Internal Revenue Code. In all cases, the method used 

must clearly reflect income.

Generally, the estate or trust may change its accounting 

method (for income as a whole or for any material item) only 

by getting consent on Form 3115, Application for Change in 

Accounting Method. For more information, see Pub. 538, 

Accounting Periods and Methods.

Where To File

For all estates and trusts, including charitable and split-interest trusts (other than CRTs).

THEN use this address if you...

IF you are located in... Are not enclosing a check or money order: Are enclosing a check or money order:

Connecticut, Delaware, District of 

Columbia, Georgia, Illinois, Indiana, 

Kentucky, Maine, Maryland, 

Massachusetts, Michigan, New 

Hampshire, New Jersey, New York, North 

Carolina, Ohio, Pennsylvania, Rhode 

Island, South Carolina, Tennessee, 

Vermont, Virginia, West Virginia, 

Wisconsin

Department of the Treasury

Internal Revenue Service 

Kansas City, MO 64999-0048

Department of the Treasury

Internal Revenue Service 

Kansas City, MO 64999-0148

Alabama, Alaska, Arizona, Arkansas, 

California, Colorado, Florida, Hawaii, 

Idaho, Iowa, Kansas, Louisiana, 

Minnesota, Mississippi, Missouri, 

Montana, Nebraska, Nevada, New 

Mexico, North Dakota, Oklahoma, 

Oregon, South Dakota, Texas, Utah, 

Washington, Wyoming

Department of the Treasury

Internal Revenue Service 

Ogden, UT 84201-0048

Department of the Treasury

Internal Revenue Service 

Ogden, UT 84201-0148

A foreign country or U.S. territory Internal Revenue Service

P.O. Box 409101

Ogden, UT 84409

Internal Revenue Service 

P.O. Box 409101

Ogden, UT 84409

Instructions for Form 1041 (2023) 9
Accounting Periods

For a decedent's estate, the moment of death determines the 

end of the decedent's tax year and the beginning of the 

estate's tax year. As executor or administrator, you choose 

the estate's tax period when you file its first income tax return. 

The estate's first tax year may be any period of 12 months or 

less that ends on the last day of a month. If you select the last 

day of any month other than December, you are adopting a 

fiscal tax year.

To change the accounting period of an estate, use Form 

1128, Application To Adopt, Change, or Retain a Tax Year.

Generally, a trust must adopt a calendar year. The 

following trusts are exempt from this requirement.

• A trust that is exempt from tax under section 501(a).

• A charitable trust described in section 4947(a)(1).

• A trust that is treated as wholly owned by a grantor under 

the rules of sections 671 through 679.

Rounding Off to Whole Dollars

You may round off cents to whole dollars on the estate's or 

trust's return and schedules. If you do round to whole dollars, 

you must round all amounts. To round, drop amounts under 

50 cents and increase amounts from 50 to 99 cents to the 

next dollar. For example, $1.39 becomes $1 and $2.50 

becomes $3.

If you have to add two or more amounts to figure the 

amount to enter on a line, include cents when adding the 

amounts and round off only the total.

If you are entering amounts that include cents, make sure 

to include the decimal point. There is no cents column on the 

form.

Estimated Tax

Generally, an estate or trust must pay estimated income tax 

for 2024 if it expects to owe, after subtracting any withholding 

and credits, at least $1,000 in tax, and it expects the 

withholding and credits to be less than the smaller of:

1. 90% of the tax shown on the 2024 tax return (662/3% of 

the tax if the estate or trust qualifies as a farmer or 

fisherman); or

2. 100% of the tax shown on the 2023 tax return (110% 

of that amount if the estate's or trust's AGI on that return is 

more than $150,000, and less than 2/3 of gross income for 

2023 and 2024 is from farming or fishing).

However, if a return was not filed for 2023 or that return 

didn't cover a full 12 months, item 2 doesn't apply.

For this purpose, include household employment taxes in 

the tax shown on the tax return, but only if either of the 

following is true.

• The estate or trust will have federal income tax withheld for 

2024 (see the instructions for Schedule G, Part II, line 14).

• The estate or trust would be required to make estimated 

tax payments for 2024 even if it didn't include household 

employment taxes when figuring estimated tax.

Exceptions

Estimated tax payments aren't required from:

1. An estate of a domestic decedent or a domestic trust 

that had no tax liability for the full 12-month 2023 tax year;

2. A decedent's estate for any tax year ending before the 

date that is 2 years after the decedent's death; or

3. A trust that was treated as owned by the decedent if 

the trust will receive the residue of the decedent's estate 

under the will (or, if no will is admitted to probate, is the trust 

primarily responsible for paying debts, taxes, and expenses 

of administration) for any tax year ending before the date that 

is 2 years after the decedent's death.

For more information, see Form 1041-ES, Estimated 

Income Tax for Estates and Trusts.

Electronic Deposits

A financial institution that has been designated as an 

authorized federal tax depository, and acts as a fiduciary for 

at least 200 taxable trusts that are required to pay estimated 

tax, is required to deposit the estimated tax payments 

electronically using the Electronic Federal Tax Payment 

System (EFTPS).

A fiduciary that isn't required to make electronic deposits 

of estimated tax on behalf of a trust or an estate may 

voluntarily participate in EFTPS. To enroll in or get more 

information about EFTPS, go to EFTPS.gov or call 

800-555-4477. To contact EFTPS using Telecommunications 

Relay Services (TRS) for people who are deaf, hard of 

hearing, or have a speech disability, dial 711 and then 

provide the TRS assistant the 800-555-4477 number above 

or 800-733-4829. Also, see Pub. 966, Electronic Federal Tax 

Payment System: A Guide to Getting Started.

Depositing on time. For a deposit using EFTPS to be on 

time, the deposit must be submitted by 8:00 p.m. Eastern 

time the day before the due date of the deposit.

Section 643(g) Election

Fiduciaries of trusts that pay estimated tax may elect under 

section 643(g) to have any portion of their estimated tax 

payments allocated to any of the beneficiaries.

The fiduciary of a decedent's estate may make a section 

643(g) election only for the final year of the estate.

Make the election by filing Form 1041-T, Allocation of 

Estimated Tax Payments to Beneficiaries, by the 65th day 

after the close of the estate's or trust's tax year. Then, include 

that amount in box 13, code A, of Schedule K-1 (Form 1041) 

for any beneficiaries for whom it was elected.

If Form 1041-T was timely filed, the payments are treated 

as paid or credited to the beneficiary on the last day of the tax 

year and must be included as an other amount paid, credited, 

or required to be distributed on Form 1041, Schedule B, 

line 10. See the instructions for Schedule B, line 10, later.

Failure to make a timely election will result in the estimated 

tax payments not being transferred to the beneficiary(ies) 

even if you entered the amount on Schedule K-1.

See the instructions for Schedule G, Part II, line 11, for 

more details.

Interest and Penalties

Interest

Interest is charged on taxes not paid by the due date, even if 

an extension of time to file is granted.

Interest is also charged on penalties imposed for failure to 

file, negligence, fraud, substantial valuation misstatements, 

substantial understatements of tax, and reportable 

transaction understatements. Interest is charged on the 

10 Instructions for Form 1041 (2023)
penalty from the due date of the return (including extensions). 

The interest charge is figured at a rate determined under 

section 6621.

Late Filing of Return

The law provides a penalty of 5% of the tax due for each 

month, or part of a month, for which a return isn't filed up to a 

maximum of 25% of the tax due (15% for each month, or part 

of a month, up to a maximum of 75% if the failure to file is 

fraudulent). If the return is more than 60 days late, the 

minimum penalty is the smaller of $485 or the tax due.

The penalty won't be imposed if you can show that the 

failure to file on time was due to reasonable cause. If you 

receive a notice about penalty and interest after you file this 

return, send us an explanation and we will determine if you 

meet reasonable-cause criteria. Don't attach an explanation 

when you file Form 1041.

Late Payment of Tax

Generally, the penalty for not paying tax when due is 1/2 of 1% 

of the unpaid amount for each month or part of a month it 

remains unpaid. The maximum penalty is 25% of the unpaid 

amount. The penalty applies to any unpaid tax on the return. 

Any penalty is in addition to interest charges on late 

payments.

If you include interest on either of these penalties 

with your payment, identify and enter these amounts 

in the bottom margin of Form 1041, page 1. Don't 

include the interest or penalty amount in the balance of tax 

due on line 28.

Failure To Provide Information Timely

You must provide Schedule K-1 (Form 1041), on or before 

the day you are required to file Form 1041, to each 

beneficiary who receives a distribution of property or an 

allocation of an item of the estate.

For each failure to provide Schedule K-1 to a beneficiary 

when due and each failure to include on Schedule K-1 all the 

information required to be shown (or the inclusion of incorrect 

information), a $310 penalty may be imposed with regard to 

each Schedule K-1 for which a failure occurs. The maximum 

penalty is $3,783,000 for all such failures during a calendar 

year. If the requirement to report information is intentionally 

disregarded, each $310 penalty is increased to $630 or, if 

greater, 10% of the aggregate amount of items required to be 

reported, and no maximum penalty applies.

The penalty won't be imposed if the fiduciary can show 

that not providing information timely and correctly was due to 

reasonable cause and not due to willful neglect.

Underpaid Estimated Tax

If the fiduciary underpaid estimated tax, use Form 2210, 

Underpayment of Estimated Tax by Individuals, Estates, and 

Trusts, to figure any penalty. Enter the amount of any penalty 

on Form 1041, line 27.

Trust Fund Recovery Penalty

This penalty may apply if certain excise, income, social 

security, and Medicare taxes that must be collected or 

withheld aren't collected or withheld, or these taxes aren't 

paid. These taxes are generally reported on Forms 720, 941, 

943, 944, or 945. The trust fund recovery penalty may be 

imposed on all persons who are determined by the IRS to 

TIP

have been responsible for collecting, accounting for, or 

paying over these taxes, and who acted willfully in not doing 

so. The penalty is equal to the unpaid trust fund tax. See the 

Instructions for Form 720; Pub. 15 (Circular E), Employer's 

Tax Guide; or Pub. 51 (Circular A), Agricultural Employer's 

Tax Guide, for more details, including the definition of 

responsible persons.

Other Penalties

Other penalties can be imposed for negligence, substantial 

understatement of tax, and fraud. See Pub. 17, Your Federal 

Income Tax, for details on these penalties.

Other Forms That May Be Required

Form W-2, Wage and Tax Statement, and Form W-3, 

Transmittal of Wage and Tax Statements.

Form 56, Notice Concerning Fiduciary Relationship. You 

must notify the IRS of the creation or termination of a 

fiduciary relationship. You may use Form 56 to provide this 

notice to the IRS.

Form 461, Limitation on Business Losses.

Form 706, United States Estate (and Generation-Skipping 

Transfer) Tax Return; or Form 706-NA, United States Estate 

(and Generation-Skipping Transfer) Tax Return, Estate of 

nonresident not a citizen of the United States.

Form 706-GS(D), Generation-Skipping Transfer Tax 

Return for Distributions.

Form 706-GS(D-1), Notification of Distribution From a 

Generation-Skipping Trust.

Form 706-GS(T), Generation-Skipping Transfer Tax 

Return for Terminations.

Form 709, United States Gift (and Generation-Skipping 

Transfer) Tax Return.

Form 720, Quarterly Federal Excise Tax Return. Use Form 

720 to report environmental excise taxes, communications 

and air transportation taxes, fuel taxes, luxury tax on 

passenger vehicles, manufacturers' taxes, ship passenger 

tax, and certain other excise taxes.

See Trust Fund Recovery Penalty, earlier.

Form 926, Return by a U.S. Transferor of Property to a 

Foreign Corporation. Use this form to report certain 

information required under section 6038B.

Form 940, Employer's Annual Federal Unemployment 

(FUTA) Tax Return. The estate or trust may be liable for FUTA 

tax and may have to file Form 940 if it paid wages of $1,500 

or more in any calendar quarter during the calendar year (or 

the preceding calendar year) or one or more employees 

worked for the estate or trust for some part of a day in any 20 

different weeks during the calendar year (or the preceding 

calendar year).

Form 941, Employer's QUARTERLY Federal Tax Return. 

Employers must file this form quarterly to report income tax 

withheld on wages and employer and employee social 

security and Medicare taxes. Certain small employers must 

file Form 944, Employer's ANNUAL Federal Tax Return, 

instead of Form 941. For more information, see the 

Instructions for Form 944. Agricultural employers must file 

Form 943, Employer's Annual Federal Tax Return for 

CAUTION

!

Instructions for Form 1041 (2023) 11
Agricultural Employees, instead of Form 941, to report 

income tax withheld and employer and employee social 

security and Medicare taxes on farmworkers.

See Trust Fund Recovery Penalty, earlier.

Form 945, Annual Return of Withheld Federal Income Tax. 

Use this form to report income tax withheld from nonpayroll 

payments, including pensions, annuities, IRAs, gambling 

winnings, and backup withholding.

See Trust Fund Recovery Penalty, earlier.

Form 965-A, Individual Report of Net 965 Tax Liability.

Form 982, Reduction of Tax Attributes Due to Discharge of 

Indebtedness (and Section 1082 Basis Adjustment).

Form 1040, U.S. Individual Income Tax Return.

Form 1040-NR, U.S. Nonresident Alien Income Tax 

Return.

Form 1040-SR, U.S. Tax Return for Seniors.

Form 1041-A, U.S. Information Return Trust Accumulation 

of Charitable Amounts.

Form 1042, Annual Withholding Tax Return for U.S. 

Source Income of Foreign Persons; and Form 1042-S, 

Foreign Person's U.S. Source Income Subject to Withholding. 

Use these forms to report and transmit withheld tax on 

payments or distributions made to nonresident alien 

individuals, foreign partnerships, or foreign corporations to 

the extent such payments or distributions constitute gross 

income from sources within the United States that isn't 

effectively connected with a U.S. trade or business. For more 

information, see sections 1441 and 1442, and Pub. 515, 

Withholding of Tax on Nonresident Aliens and Foreign 

Entities.

Forms 1099-A, B, INT, LTC, MISC, NEC, OID, Q, R, S, and 

SA. You may have to file these information returns to report 

acquisitions or abandonments of secured property; proceeds 

from broker and barter exchange transactions; interest 

payments; payments of long-term care and accelerated 

death benefits; miscellaneous income payments; 

nonemployee compensation; original issue discount; 

distributions from Coverdell ESAs; distributions from 

pensions, annuities, retirement or profit-sharing plans, IRAs 

(including SEPs, SIMPLEs, Roth IRAs, Roth Conversions, 

and IRA recharacterizations), insurance contracts, etc.; 

proceeds from real estate transactions; and distributions from 

an HSA, Archer MSA, or Medicare Advantage MSA.

Also, use certain of these returns to report amounts 

received as a nominee on behalf of another person, except 

amounts reported to beneficiaries on Schedule K-1 (Form 

1041).

Form 8275, Disclosure Statement. File Form 8275 to 

disclose items or positions, except those contrary to a 

regulation, that are not otherwise adequately disclosed on a 

tax return. The disclosure is made to avoid parts of the 

accuracy-related penalty imposed for disregard of rules or 

substantial understatement of tax. Form 8275 is also used for 

disclosures relating to preparer penalties for 

understatements due to unrealistic positions or disregard of 

rules.

CAUTION

!

CAUTION

!

Form 8275-R, Regulation Disclosure Statement, is used to 

disclose any item on a tax return for which a position has 

been taken that is contrary to Treasury regulations.

Form 8288, U.S. Withholding Tax Return for Certain 

Dispositions by Foreign Persons; and Form 8288-A, 

Statement of Withholding on Certain Dispositions by Foreign 

Persons. Use these forms to report and transmit withheld tax 

on the sale of U.S. real property by a foreign person. Also, 

use these forms to report and transmit tax withheld from 

amounts distributed to a foreign beneficiary from a “U.S. real 

property interest account” that a domestic estate or trust is 

required to establish under Regulations section 1.1445-5(c)

(1)(iii).

Form 8300, Report of Cash Payments Over $10,000 

Received in a Trade or Business. Generally, this form is used 

to report the receipt of more than $10,000 in cash or foreign 

currency in one transaction (or a series of related 

transactions).

Form 8855, Election To Treat a Qualified Revocable Trust 

as Part of an Estate. This election allows a QRT to be treated 

and taxed (for income tax purposes) as part of its related 

estate during the election period.

Form 8865, Return of U.S. Persons With Respect to 

Certain Foreign Partnerships. The estate or trust may have to 

file Form 8865 if it:

1. Controlled a foreign partnership (that is, owned more 

than a 50% direct or indirect interest in a foreign partnership);

2. Owned at least a 10% direct or indirect interest in a 

foreign partnership while U.S. persons controlled that 

partnership;

3. Had an acquisition, disposition, or change in 

proportional interest in a foreign partnership that:

a. Increased its direct interest to at least 10%,

b. Reduced its direct interest of at least 10% to less than 

10%, or

c. Changed its direct interest by at least a 10% interest; 

or

4. Contributed property to a foreign partnership in 

exchange for a partnership interest if:

a. Immediately after the contribution, the estate or trust 

owned, directly or indirectly, at least a 10% interest in the 

foreign partnership; or

b. The fair market value (FMV) of the property the estate 

or trust contributed to the foreign partnership, for a 

partnership interest, when added to other contributions of 

property made to the foreign partnership during the 

preceding 12-month period, exceeds $100,000.

Also, the estate or trust may have to file Form 8865 to 

report certain dispositions by a foreign partnership of 

property it previously contributed to that foreign partnership if 

it was a partner at the time of the disposition.

For more details, including penalties for failing to file Form 

8865, see Form 8865 and its separate instructions.

Form 8886, Reportable Transaction Disclosure Statement. 

Use Form 8886 to disclose information for each reportable 

transaction in which the trust participated, directly or 

indirectly. Form 8886 must be filed for each tax year that the 

federal income tax liability of the estate or trust is affected by 

its participation in the transaction. The estate or trust may 

have to pay a penalty if it has a requirement to file Form 8886 

but you fail to file it. The following are reportable transactions.

12 Instructions for Form 1041 (2023)
• Any transaction that is the same as or substantially similar 

to tax avoidance transactions identified by the IRS as listed 

transactions.

• Any transaction offered under conditions of confidentiality 

and for which the estate or trust paid a minimum fee 

(confidential transaction).

• Any transaction for which the estate or trust or a related 

party has contractual protection against disallowance of the 

tax benefits (transaction with contractual protection).

• Any transaction resulting in a loss of at least $2 million in 

any single year or $4 million in any combination of years 

($50,000 in any single year if the loss is generated by a 

section 988 transaction) (loss transactions).

• Any transaction substantially similar to one of the types of 

transactions identified by the IRS as a transaction of interest.

See the Instructions for Form 8886 for more details and 

exceptions.

Form 8918, Material Advisor Disclosure Statement. 

Material advisors who provide material aid, assistance, or 

advice on organizing, managing, promoting, selling, 

implementing, insuring, or carrying out any reportable 

transaction, and who directly or indirectly receive or expect to 

receive a minimum fee, must use Form 8918 to disclose any 

reportable transaction under Regulations section 

301.6111-3. For more information, see Form 8918 and its 

instructions.

Form 8938, Statement of Specified Foreign Financial 

Assets.

Form 8960, Net Investment Income Tax—Individuals, 

Estates, and Trusts.

Form 8971, Information Regarding Beneficiaries Acquiring 

Property From a Decedent.

Form 8975, Country-by-Country Report.

Schedule A (Form 8975), Tax Jurisdiction and Constituent 

Entity Information.

Form 8978, Partner's Additional Reporting Year Tax.

Form 8990, Limitation on Business Interest Expense 

Under Section 163(j).

Form 8992, U.S. Shareholder Calculation of Global 

Intangible Low-Taxed Income (GILTI).

Form 8995, Qualified Business Income Deduction 

Simplified Computation.

Form 8995-A, Qualified Business Income Deduction.

Form 8997, Initial and Annual Statement of Qualified 

Opportunity Fund (QOF) Investments.

Additional Information

The following publications may assist you in preparing Form 

1041.

• Pub. 550, Investment Income and Expenses.

• Pub. 559, Survivors, Executors, and Administrators.

• Pub. 590-A, Contributions to Individual Retirement 

Arrangements (IRAs).

• Pub. 590-B, Distributions from Individual Retirement 

Arrangements (IRAs).

• Pub. 4895, Tax Treatment of Property Acquired From a 

Decedent Dying in 2010.

Assembly and Attachments

Assemble any schedules, forms, and attachments behind 

Form 1041 in the following order.

1. Schedule I (Form 1041).

2. Form 4952.

3. Schedule H (Form 1040).

4. Schedule D (Form 1041).

5. Form 8949.

6. Form 8995 or Form 8995-A.

7. Form 4136.

8. Form 8978.

9. Form 965-A.

10. Form 8941.

11. Form 3800.

12. Form 8997.

13. Form 8960.

14. Schedule A (Form 8936).

15. Additional schedules in alphabetical order.

16. Additional forms in numerical order.

17. All other attachments.

Attachments

If you need more space on the forms or schedules, attach 

separate sheets. Use the same size and format as on the 

printed forms. But show the totals on the printed forms.

Attach these separate sheets after all the schedules and 

forms. Enter the estate's or trust's EIN on each sheet.

Don't file a copy of the decedent's will or the trust 

instrument unless the IRS requests it.

Special Reporting Instructions

Grantor type trusts, the S portion of ESBTs, and bankruptcy 

estates all have reporting requirements that are significantly 

different than other subchapter J trusts and decedents’ 

estates. Additionally, grantor type trusts have optional filing 

methods available. Pooled income funds have many similar 

reporting requirements that other subchapter J trusts (other 

than grantor type trusts and ESBTs) have but there are some 

very important differences. These reporting differences and 

optional filing methods are discussed below by entity.

Grantor Type Trusts

A trust is a grantor trust if the grantor retains certain powers 

or ownership benefits. This can also apply to only a portion of 

a trust. See Grantor Type Trust, later, for details on what 

makes a trust a grantor trust.

In general, a grantor trust is ignored for income tax 

purposes and all of the income, deductions, etc., are treated 

as belonging directly to the grantor. This also applies to any 

portion of a trust that is treated as a grantor trust.

Note. If only a portion of the trust is a grantor type trust, 

indicate both grantor trust and the other type of trust, for 

example, simple or complex trust, as the type of entities 

checked in Section A on page 1 of Form 1041.

The following instructions apply only to grantor type 

trusts that are not using an optional filing method.

How to report. If the entire trust is a grantor trust, fill in only 

the entity information of Form 1041. Don't show any dollar 

amounts on the form itself; show dollar amounts only on an 

CAUTION

!

Instructions for Form 1041 (2023) 13
attachment to the form. Don't use Schedule K-1 (Form 1041) 

as the attachment.

If only part of the trust is a grantor type trust, the portion of 

the income, deductions, etc., that is allocable to the 

non-grantor part of the trust is reported on Form 1041, under 

normal reporting rules. The amounts that are allocable 

directly to the grantor are shown only on an attachment to the 

form. Don't use Schedule K-1 (Form 1041) as the 

attachment. However, Schedule K-1 is used to reflect any 

income distributed from the portion of the trust that isn't 

taxable directly to the grantor or owner.

The fiduciary must give the grantor (owner) of the trust a 

copy of the attachment.

Attachment. On the attachment, show:

• The name, identifying number, and address of the 

person(s) to whom the income is taxable;

• The income of the trust that is taxable to the grantor or 

another person under sections 671 through 678—report the 

income in the same detail as it would be reported on the 

grantor's return had it been received directly by the grantor; 

and

• Any deductions, credits, or elections that apply to this 

income. Report these deductions and credits in the same 

detail as they would be reported on the grantor's return had 

they been received directly by the grantor.

The income taxable to the grantor or another person under 

sections 671 through 678 and the deductions and credits that 

apply to that income must be reported by that person on their 

own income tax return.

Example. The John Doe Trust is a grantor type trust. 

During the year, the trust sold 100 shares of ABC stock for 

$1,010 in which it had a basis of $10 and 200 shares of XYZ 

stock for $10 in which it had a $1,020 basis.

The trust doesn't report these transactions on Form 1041. 

Instead, a schedule is attached to the Form 1041 showing 

each stock transaction separately and in the same detail as 

John Doe (grantor and owner) will need to report these 

transactions on his Form 8949, Sales and Other Dispositions 

of Capital Assets; and Schedule D (Form 1040). The trust 

doesn't net the capital gains and losses, nor does it issue 

John Doe a Schedule K-1 (Form 1041) showing a $10 

long-term capital loss.

QSSTs. Income allocated to S corporation stock held by the 

trust is treated as owned by the income beneficiary of the 

portion of the trust that owns the stock. Report this income 

following the rules discussed above for grantor type trusts. A 

QSST can't elect any of the optional filing methods discussed 

below.

However, the trust, and not the income beneficiary, is 

treated as the owner of the S corporation stock for figuring 

and attributing the tax results of a disposition of the stock. For 

example, if the disposition is a sale, the QSST election ends 

as to the stock sold, and any gain or loss recognized on the 

sale will be that of the trust. For more information on QSSTs, 

see Regulations section 1.1361-1(j).

Optional Filing Methods for Certain Grantor Type 

Trusts

Generally, if a trust is treated as owned by one grantor or 

other person, the trustee may choose Optional Method 1 or 

Optional Method 2 as the trust's method of reporting instead 

of filing Form 1041. Spouses will be treated as one grantor for 

purposes of these two optional methods if:

• All of the trust is treated as owned by the spouses, and

• The spouses file their income tax return jointly for that tax 

year.

Generally, if a trust is treated as owned by two or more 

grantors or other persons, the trustee may choose Optional 

Method 3 as the trust's method of reporting instead of filing 

Form 1041.

Once you choose the trust's filing method, you must follow 

the rules under Changing filing methods, later, if you want to 

change to another method.

Exceptions. The following trusts can't report using the 

optional filing methods.

• A common trust fund (as defined in section 584(a)).

• A foreign trust or a trust that has any of its assets located 

outside the United States.

• A QSST (as defined in section 1361(d)(3)).

• A trust all of which is treated as owned by one grantor or 

one other person whose tax year is other than a calendar 

year.

• A trust all of which is treated as owned by one or more 

grantors or other persons, one of which isn't a U.S. person.

• A trust all of which is treated as owned by one or more 

grantors or other persons if at least one grantor or other 

person is an exempt recipient for information reporting 

purposes, unless at least one grantor or other person isn't an 

exempt recipient and the trustee reports without treating any 

of the grantors or other persons as exempt recipients.

Optional Method 1. For a trust treated as owned by one 

grantor or by one other person, the trustee must give all 

payers of income during the tax year the name and TIN of the 

grantor or other person treated as the owner of the trust and 

the address of the trust. This method may be used only if the 

owner of the trust provides the trustee with a signed Form 

W-9. In addition, unless the grantor or other person treated 

as owner of the trust is the trustee or a co-trustee of the trust, 

the trustee must give the grantor or other person treated as 

owner of the trust a statement that:

• Shows all items of income, deduction, and credit of the 

trust;

• Identifies the payer of each item of income;

• Explains how the grantor or other person treated as owner 

of the trust takes those items into account when figuring the 

grantor's or other person's taxable income or tax; and

• Informs the grantor or other person treated as the owner of 

the trust that those items must be included when figuring 

taxable income and credits on their income tax return.

Grantor trusts that haven't applied for an EIN and are 

going to file under Optional Method 1 don't need an 

EIN for the trust as long as they continue to report 

under that method.

Optional Method 2. For a trust treated as owned by one 

grantor or by one other person, the trustee must give all 

payers of income during the tax year the name, address, and 

TIN of the trust. The trustee must also file with the IRS the 

appropriate Forms 1099 to report the income or gross 

proceeds paid to the trust during the tax year that show the 

trust as the payer and the grantor, or other person treated as 

owner, as the payee. The trustee must report each type of 

income in the aggregate and each item of gross proceeds 

separately. The due date for any Forms 1099 required to be 

filed with the IRS by a trustee under this method is February 

28, 2024 (March 31, 2024, if filed electronically).

TIP

14 Instructions for Form 1041 (2023)
In addition, unless the grantor, or other person treated as 

owner of the trust, is the trustee or a co-trustee of the trust, 

the trustee must give the grantor or other person treated as 

owner of the trust a statement that:

• Shows all items of income, deduction, and credit of the 

trust;

• Explains how the grantor or other person treated as owner 

of the trust takes those items into account when figuring the 

grantor's or other person's taxable income or tax; and

• Informs the grantor or other person treated as the owner of 

the trust that those items must be included when figuring 

taxable income and credits on their income tax return. This 

statement satisfies the requirement to give the recipient 

copies of the Forms 1099 filed by the trustee.

Optional Method 3. For a trust treated as owned by two or 

more grantors or other persons, the trustee must give all 

payers of income during the tax year the name, address, and 

TIN of the trust. The trustee must also file with the IRS the 

appropriate Forms 1099 to report the income or gross 

proceeds paid to the trust by all payers during the tax year 

attributable to the part of the trust treated as owned by each 

grantor, or other person, showing the trust as the payer and 

each grantor, or other person treated as owner of the trust, as 

the payee. The trustee must report each type of income in the 

aggregate and each item of gross proceeds separately. The 

due date for any Forms 1099 required to be filed with the IRS 

by a trustee under this method is February 28, 2024 (March 

31, 2024, if filed electronically).

In addition, the trustee must give each grantor or other 

person treated as owner of the trust a statement that:

• Shows all items of income, deduction, and credit of the 

trust attributable to the part of the trust treated as owned by 

the grantor or other person;

• Explains how the grantor or other person treated as owner 

of the trust takes those items into account when figuring the 

grantor's or other person's taxable income or tax; and

• Informs the grantor or other person treated as the owner of 

the trust that those items must be included when figuring 

taxable income and credits on their income tax return. This 

statement satisfies the requirement to give the recipient 

copies of the Forms 1099 filed by the trustee.

Changing filing methods. A trustee who previously had 

filed Form 1041 can change to one of the optional methods 

by filing a final Form 1041 for the tax year that immediately 

precedes the first tax year for which the trustee elects to 

report under one of the optional methods. On the front of the 

final Form 1041, the trustee must enter “Pursuant to section 

1.671-4(g), this is the final Form 1041 for this grantor trust,” 

and check the Final return box in item F.

For more details on changing reporting methods, including 

changes from one optional method to another, see 

Regulations section 1.671-4(g).

Backup withholding. The following grantor trusts are 

treated as payors for purposes of backup withholding.

1. A trust established after 1995, all of which is owned by 

two or more grantors (treating spouses filing a joint return as 

one grantor).

2. A trust with 10 or more grantors established after 1983 

but before 1996.

The trustee must withhold a certain percentage of 

reportable payments made to any grantor who is subject to 

backup withholding.

For more information, see section 3406 and its 

regulations.

Pooled Income Funds

If you are filing for a pooled income fund, attach a statement 

to support the following.

• The calculation of the yearly rate of return.

• The computation of the deduction for distributions to the 

beneficiaries.

• The computation of any charitable deduction.

See section 642 and the regulations thereunder for more 

information.

You don't have to complete Schedule A or B of Form 1041.

Also, you must file Form 5227 for the pooled income fund. 

However, if all amounts were transferred in trust before May 

27, 1969, or if an amount was transferred to the trust after 

May 26, 1969, for which no deduction was allowed under any 

of the sections listed under section 4947(a)(2), then Form 

5227 does not have to be filed.

Note. Form 1041-A is no longer filed by pooled income 

funds.

Electing Small Business Trusts (ESBTs)

Special rules apply when figuring the tax on the S portion of 

an ESBT. The S portion of an ESBT is the portion of the trust 

that consists of stock in one or more S corporations and isn't 

treated as a grantor type trust. The tax on the S portion:

• Must be figured separately from the tax on the remainder 

of the ESBT (if any) and attached to the return; and

• Is entered on Schedule G, Part I, line 4.

The tax on the remainder (non-S portion) of the ESBT is 

figured in the normal manner on Form 1041.

Tax computation attachment. Attach to the return the tax 

computation for the S portion of the ESBT.

If you need to complete and attach a tax form or 

worksheet for the S portion of the trust, enter “ESBT” in the 

top margin of the tax form, worksheet, or attachment.

To compute the tax on the S portion:

• Treat that portion of the ESBT as if it were a separate trust;

• Include only the income, losses, deductions, and credits 

allocated to the ESBT as an S corporation shareholder and 

gain or loss from the disposition of S corporation stock;

• Aggregate items of income, losses, deductions, and 

credits allocated to the ESBT as an S corporation 

shareholder if the S portion of the ESBT has stock in more 

than one S corporation;

• Deduct state and local income taxes directly related to the 

S portion or allocated to the S portion if the allocation is 

reasonable in light of all the circumstances and 

administrative expenses that wouldn't have been incurred if 

the S corporation shares were not held by the trust;

• Deduct interest expense paid or accrued on indebtedness 

incurred to acquire stock in an S corporation; and

• Deduct charitable contributions attributable to the S 

portion. See Pub. 526 to figure the amount of the deduction if 

either of the following apply.

1. Cash contributions or contributions of ordinary income 

property are more than 30% of the AGI of the S portion.

2. Gifts of capital gain property are more than 20% of the 

AGI of the S portion.

• Don't claim a deduction for capital losses in excess of 

capital gains;

Instructions for Form 1041 (2023) 15
• Don't claim an income distribution deduction or an 

exemption amount;

• Don't claim an exemption amount in figuring the alternative 

minimum tax (AMT); and

• Don't use the tax rate schedule to figure the tax. The tax is 

37% of the S portion's taxable income except in figuring the 

maximum tax on qualified dividends and capital gains.

For additional information, see Regulations section 

1.641(c)-1.

Other information. When figuring the tax and DNI on the 

remaining (non-S) portion of the trust, disregard the S 

corporation items.

Don't apportion to the beneficiaries any of the S 

corporation items.

If the ESBT consists entirely of stock in one or more S 

corporations, don't make any entries on lines 1–23

of page 1. Instead:

• Complete the entity portion;

• Follow the instructions above for figuring the tax on the S 

corporation items;

• Enter the ESBT tax on Schedule G, Part I, line 4;

• Carry the Total tax from line 9 of Schedule G, Part I, to 

line 24 on page 1; and

• Complete the rest of the return.

The grantor portion (if any) of an ESBT will follow the rules 

discussed under Grantor Type Trusts, earlier.

Bankruptcy Estates

The bankruptcy estate that is created when an individual 

debtor files a petition under either chapter 7 or 11 of title 11 of 

the U.S. Code is treated as a separate taxable entity. The 

bankruptcy estate is administered by a trustee or a 

debtor-in-possession. If the case is later dismissed by the 

bankruptcy court, the individual debtor is treated as if the 

bankruptcy petition had never been filed.

A separate taxable entity isn't created if a partnership or 

corporation files a petition under any chapter of title 11 of the 

U.S. Code.

For additional information about bankruptcy estates, see 

Pub. 908, Bankruptcy Tax Guide.

Who Must File

Every trustee (or debtor-in-possession) for an individual's 

bankruptcy estate under chapter 7 or 11 of title 11 of the U.S. 

Code must file a return if the bankruptcy estate has gross 

income of $13,850 or more for tax years beginning in 2023.

Failure to do so may result in an estimated Request for 

Administrative Expenses being filed by the IRS in the 

bankruptcy proceeding or a motion to compel filing of the 

return.

The filing of a tax return for the bankruptcy estate 

doesn't relieve the individual debtor(s) of their 

individual tax obligations.

EIN

Every bankruptcy estate of an individual required to file a 

return must have its own EIN. The SSN of the individual 

debtor can't be used as the EIN for the bankruptcy estate.

CAUTION

!

Accounting Period

A bankruptcy estate is allowed to have a fiscal year. However, 

this period can't be longer than 12 months.

When To File

File Form 1041 on or before the 15th day of the 4th month 

following the close of the tax year. Use Form 7004 to apply for 

an automatic 6-month extension of time to file.

Disclosure of Return Information

Under section 6103(e)(5), tax returns of individual debtors 

who have filed for bankruptcy under chapter 7 or 11 of title 11 

are, upon written request, open to inspection by or disclosure 

to the trustee.

The returns subject to disclosure to the trustee are those 

for the year the bankruptcy begins and prior years. Use Form 

4506, Request for Copy of Tax Return, to request copies of 

the individual debtor's tax returns.

If the bankruptcy case wasn't voluntary, disclosure can't be 

made before the bankruptcy court has entered an order for 

relief, unless the court rules that the disclosure is needed for 

determining whether relief should be ordered.

Transfer of Tax Attributes From the Individual 

Debtor to the Bankruptcy Estate

The bankruptcy estate succeeds to the following tax 

attributes of the individual debtor.

1. NOL carryovers.

2. Charitable contribution carryovers.

3. Recovery of tax benefit items.

4. Credit carryovers.

5. Capital loss carryovers.

6. Basis, holding period, and character of assets.

7. Method of accounting.

8. Unused passive activity losses.

9. Unused passive activity credits.

10. Unused section 465 losses.

Income, Deductions, and Credits

Under section 1398(c), the taxable income of the bankruptcy 

estate is generally figured in the same manner as that of an 

individual. The gross income of the bankruptcy estate 

includes any income included in property of the estate as 

defined in U.S. Code, title 11, sections 541, 1115, and 1186.

In certain chapter 11 cases, under section 1115 of title 11, 

property of the bankruptcy estate includes (a) earnings from 

services performed by the debtor after the beginning of the 

case (both wages and self-employment income) and before 

the case is closed, dismissed, or converted to a case under a 

different chapter; and (b) property described in section 541 of 

title 11 and income earned therefrom that the debtor acquires 

after the beginning of the case and before the case is closed, 

dismissed, or converted. If section 1115 of title 11 applies, 

the bankruptcy estate's gross income includes, as described 

above, (a) the debtor's earnings from services performed 

16 Instructions for Form 1041 (2023)
after the beginning of the case, and (b) the income from 

property acquired after the beginning of the case.

The income from property owned by the debtor when the 

case began is also included in the bankruptcy estate's gross 

income. However, if this property is exempted from the 

bankruptcy estate or is abandoned by the trustee or 

debtor-in-possession, the income from the property isn't 

included in the bankruptcy estate's gross income. Also 

included in income is gain from the sale of the bankruptcy 

estate's property. To figure gain, the trustee or 

debtor-in-possession must determine the correct basis of the 

property.

To determine whether any amount paid or incurred by the 

bankruptcy estate is allowable as a deduction or credit, or is 

treated as wages for employment tax purposes, treat the 

amount as if it were paid or incurred by the individual debtor 

in the same trade or business or other activity the debtor 

engaged in before the bankruptcy proceedings began.

Administrative expenses. The bankruptcy estate is 

allowed a deduction for any administrative expense allowed 

under section 503 of title 11 of the U.S. Code, and any fee or 

charge assessed under chapter 123 of title 28 of the U.S. 

Code, to the extent not disallowed under an Internal Revenue 

Code provision (for example, section 263, 265, or 275).

Bankruptcy administrative expenses and fees, including 

accounting fees, attorney fees, and court costs, are 

deductible on Schedule 1 (Form 1040), Part II, line 24z, as 

allowable in arriving at AGI because they would not have 

been incurred if property had not been held by the 

bankruptcy estate. See section 67(e) and Final Regulations - 

TD9918.

Administrative expenses of the bankruptcy estate 

attributable to conducting a trade or business or for the 

production of estate rents or royalties are deductible in 

arriving at AGI on Form 1040, Schedules C, E, and F.

Administrative expense loss. When figuring an NOL, 

nonbusiness deductions (including administrative expenses) 

are limited under section 172(d)(4) to the bankruptcy estate's 

nonbusiness income. The excess nonbusiness deductions 

are an administrative expense loss that may be carried back 

to each of the 3 preceding tax years and forward to each of 

the 7 succeeding tax years of the bankruptcy estate. The 

amount of an administrative expense loss that may be carried 

to any tax year is determined after the NOL deductions 

allowed for that year. An administrative expense loss is 

allowed only to the bankruptcy estate and can't be carried to 

any tax year of the individual debtor.

Carryback of NOLs and credits. 

Generally, an NOL arising in a tax year beginning in 

2021 or later may not be carried back and instead 

must be carried forward indefinitely. However, 

farming losses arising in tax years beginning in 2021 or later 

may be carried back 2 years and carried forward indefinitely. 

See Pub. 536 and Pub. 225, Farmer’s Tax Guide, for more 

information.

If the bankruptcy estate itself incurs an NOL (apart from 

losses carried forward to the estate from the individual 

debtor), it can carry back its NOLs not only to previous tax 

years of the bankruptcy estate, but also to tax years of the 

individual debtor prior to the year in which the bankruptcy 

proceedings began.

CAUTION

!

Excess credits, such as the foreign tax credit, may also be 

carried back to pre-bankruptcy years of the individual debtor.

Standard deduction. A bankruptcy estate that doesn't 

itemize deductions is allowed a standard deduction of 

$13,850 for tax year 2023.

Discharge of indebtedness. In a title 11 case, gross 

income doesn't include amounts that would normally be 

included in gross income resulting from the discharge of 

indebtedness. However, any amounts excluded from gross 

income must be applied to reduce certain tax attributes in a 

certain order. Attach Form 982 to show the reduction of tax 

attributes.

Tax Rate Schedule

Figure the tax for the bankruptcy estate using the tax rate 

schedule below. Enter the tax on Form 1040 or 1040-SR, 

line 16.

If taxable income is:

Over— But not over

—

The tax is:

Of the 

amount over

—

$0 $11,000 10% $0

11,000 44,725 $1,100.00 + 12% 11,000

44,725 95,375 5,147.00 + 22% 44,725

95,375 182,100 16,290.00 + 24% 95,375

182,100 231,250 37,104.00 + 32% 182,100

231,250 346,875 52,832.00 + 35% 231,250

346,875 ...... 93,300.75 + 37% 346,875

Prompt Determination of Tax Liability

To request a prompt determination of the tax liability of the 

bankruptcy estate, the trustee or debtor-in-possession must 

file a written request for the determination with the IRS. The 

request must be submitted in duplicate and executed under 

penalties of perjury. The request must include a statement 

indicating that it is a request for prompt determination of tax 

liability and (a) the return type, and all the tax periods for 

which prompt determination is sought; (b) the name and 

location of the office where the return was filed; (c) the 

debtor's name; (d) the debtor's SSN, TIN, or EIN; (e) the type 

of bankruptcy estate; (f) the bankruptcy case number; and (g) 

the court where the bankruptcy is pending. Send the request 

to the Centralized Insolvency Operation, P.O. Box 7346, 

Philadelphia, PA 19101-7346 (marked “Request for Prompt 

Determination”).

The IRS will notify the trustee or debtor-in-possession 

within 60 days from receipt of the request if the return filed by 

the trustee or debtor-in-possession has been selected for 

examination or has been accepted as filed. If the return is 

selected for examination, it will be examined as soon as 

possible. The IRS will notify the trustee or 

debtor-in-possession of any tax due within 180 days from 

receipt of the request or within any additional time permitted 

by the bankruptcy court.

See Rev. Proc. 2006-24, 2006-22 I.R.B. 943, available at 

IRS.gov/irb/2006-22_IRB/ar12.html, modified by 

Announcement 2011-77, available at IRS.gov/irb/

2011-51_IRB/ar13.

Instructions for Form 1041 (2023) 17
Special Filing Instructions for Bankruptcy Estates

Use Form 1041 only as a transmittal for Form 1040 or 

1040-SR. In the top margin of Form 1040 or 1040-SR, enter 

“Attachment to Form 1041. DO NOT DETACH.” Attach Form 

1040 or 1040-SR to Form 1041. Complete only the 

identification area at the top of Form 1041. Enter the name of 

the individual debtor in the following format: “John Q. Public 

Bankruptcy Estate.” Beneath, enter the name of the trustee in 

the following format: “Avery Snow, Trustee.” In item D, enter 

the date the petition was filed or the date of conversion to a 

chapter 7 or 11 case.

Enter on Form 1041, line 24, the total tax from line 24 of 

Form 1040 or 1040-SR. Complete lines 25 through 30 of 

Form 1041, and sign and date it.

In a chapter 11 case, the bankruptcy estate's gross 

income may be affected by section 1115 or 1186 of title 11 of 

the U.S. Code. See Income, Deductions, and Credits, earlier. 

The debtor may receive a Form W-2, 1099-INT, 1099-DIV, 

1099-MISC, or 1099-NEC or other information return 

reporting wages or other income to the debtor for the entire 

year, even though some or all of this income is includible in 

the bankruptcy estate's gross income under section 1115 of 

title 11 of the U.S. Code. If this happens, the income reported 

to the debtor on the Form W-2 or 1099, or other information 

return (and the withheld income tax shown on these forms) 

must be reasonably allocated between the debtor and the 

bankruptcy estate. The debtor-in-possession (or the 

chapter 11 trustee, if one was appointed) must attach a 

schedule that shows (a) all the income reported on the Form 

W-2, Form 1099, or other information return; (b) the portion of 

this income includible in the bankruptcy estate's gross 

income; and (c) all the withheld income tax, if any, and the 

portion of withheld tax reasonably allocated to the bankruptcy 

estate. Also, the debtor-in-possesion (or the chapter 11 

trustee, if one was appointed) must attach a copy of the Form 

W-2, if any, issued to the debtor for the tax year if the Form 

W-2 reports wages to the debtor and some or all of the 

wages are includible in the bankruptcy estate's gross income 

because of section 1115 of title 11 of the U.S. Code. For 

more details, including acceptable allocation methods, see 

Notice 2006-83, 2006-40 I.R.B. 596, available at IRS.gov/irb/

2006-40_IRB/ar12.html.

Specific Instructions

Name of Estate or Trust

Copy the exact name of the estate or trust from the Form 

SS-4, Application for Employer Identification Number, that 

you used to apply for the EIN. If the name of the trust was 

changed during the tax year for which you are filing, enter the 

trust's new name and check the “Change in trust's name” box 

in item F.

If a grantor type trust (discussed later), enter the name, 

identification number, and address of the grantor(s) or other 

owner(s) in parentheses after the name of the trust.

Name and Title of Fiduciary

Enter the name and title of the fiduciary. If the name entered 

is different from the name on the prior year's return, see 

Change in Fiduciary's Name and Change in Fiduciary, later.

Address

Include the suite, room, or other unit number after the street 

address. If the post office doesn't deliver mail to the street 

address and the fiduciary has a P.O. box, show the box 

number instead.

If you want a third party (such as an accountant or an 

attorney) to receive mail for the estate or trust, enter on the 

street address line “C/O” followed by the third party's name 

and street address or P.O. box.

If the estate or trust has had a change of address 

(including a change to an “in care of” name and address) and 

did not file Form 8822-B, Change of Address or Responsible 

Party — Business, check the Change in fiduciary's address 

box in item F.

If the estate or trust has a change of mailing address 

(including a new "in care of" name and address) or 

responsible party after filing its return, file Form 8822-B to 

notify the IRS of the change.

A. Type of Entity

Check the appropriate box(es) that describes the entity for 

which you are filing the return.

In some cases, more than one box is checked. Check all 

boxes that apply to your trust. For example, if only a portion of 

a trust is a grantor type trust or if only a portion of an ESBT is 

the S portion, then more than one box is checked.

Note. Determination of entity status is made on an annual 

basis.

There are special reporting requirements for grantor 

type trusts, pooled income funds, ESBTs, and 

bankruptcy estates. See Special Reporting 

Instructions, earlier.

Decedent's Estate

An estate of a deceased person is a taxable entity separate 

from the decedent. It generally continues to exist until the 

final distribution of the assets of the estate is made to the 

heirs and other beneficiaries. The income earned from the 

property of the estate during the period of administration or 

settlement must be accounted for and reported by the estate.

Simple Trust

A trust may qualify as a simple trust if:

1. The trust instrument requires that all income must be 

distributed currently;

2. The trust instrument doesn't provide that any amounts 

are to be paid, permanently set aside, or used for charitable 

purposes; and

3. The trust doesn't distribute amounts allocated to the 

corpus of the trust.

Complex Trust

A complex trust is any trust that doesn't qualify as a simple 

trust as explained above.

Qualified Disability Trust

A qualified disability trust is any non-grantor trust:

1. Described in 42 U.S.C. 1396p(c)(2)(B)(iv) and 

established solely for the benefit of an individual under 65 

years of age who is disabled, and

CAUTION

!

18
2. All the beneficiaries of which are determined by the 

Commissioner of Social Security to have been disabled for 

some part of the tax year within the meaning of 42 U.S.C. 

1382c(a)(3).

A trust will not fail to meet item 2 above just because the 

trust's corpus may revert to a person who isn't disabled after 

the trust ceases to have any disabled beneficiaries.

ESBT (S Portion Only)

The S portion of an ESBT is the portion of the trust that 

consists of S corporation stock and that isn't treated as 

owned by the grantor or another person. See Electing Small 

Business Trusts (ESBTs), earlier, for more information about 

an ESBT.

Grantor Type Trust

A grantor type trust is a legal trust under applicable state law 

that isn't recognized as a separate taxable entity for income 

tax purposes because the grantor or other substantial owners 

have not relinquished complete dominion and control over 

the trust.

Generally, for transfers made in trust after March 1, 1986, 

the grantor is treated as the owner of any portion of a trust in 

which they have a reversionary interest in either the income 

or corpus therefrom, if, as of the inception of that portion of 

the trust, the value of the reversionary interest is more than 

5% of the value of that portion. Also, the grantor is treated as 

holding any power or interest that was held by either the 

grantor's spouse at the time that the power or interest was 

created or who became the grantor's spouse after the 

creation of that power or interest. See Grantor Type Trusts, 

earlier, for more information.

Pre-need funeral trusts. The purchasers of pre-need 

funeral services are the grantors and the owners of pre-need 

funeral trusts established under state laws. See Rev. Rul. 

87-127, 1987-2 C.B. 156. However, the trustees of pre-need 

funeral trusts can elect to file the return and pay the tax for 

qualified funeral trusts. For more information, see Form 

1041-QFT.

Nonqualified deferred compensation plans. Taxpayers 

may adopt and maintain grantor trusts in connection with 

nonqualified deferred compensation plans (sometimes 

referred to as “rabbi trusts”). Rev. Proc. 92-64, 1992-2 C.B. 

422, provides a “model grantor trust” for use in rabbi trust 

arrangements. The procedure also provides guidance for 

requesting rulings on the plans that use these trusts.

QSSTs. The beneficiary of a QSST is treated as the 

substantial owner of that portion of the trust which consists of 

stock in an S corporation for which an election under section 

1361(d)(2) has been made. See QSSTs, earlier.

Bankruptcy Estate

A chapter 7 or 11 bankruptcy estate is a separate and distinct 

taxable entity from the individual debtor for federal income 

tax purposes. See Bankruptcy Estates, earlier.

For more information, see section 1398 and Pub. 908.

Pooled Income Fund

A pooled income fund is a split-interest trust with a remainder 

interest for a public charity and a life income interest retained 

by the donor or for another person. The property is held in a 

pool with other pooled income fund property and doesn't 

include any tax-exempt securities. The income for a retained 

life interest is figured using the yearly rate of return earned by 

the trust. See section 642(c) and the related regulations for 

more information.

B. Number of Schedules K-1 Attached

Every trust or decedent's estate claiming an income 

distribution deduction on page 1, line 18, must enter the 

number of Schedules K-1 (Form 1041) that are attached to 

Form 1041.

C. Employer Identification Number

Every estate or trust that is required to file Form 1041 must 

have an EIN. An EIN may be applied for in the following ways.

• Online at IRS.gov/EIN. The EIN is issued immediately 

once the application information is validated.

• By mailing or faxing Form SS-4.

If the estate or trust hasn't received its EIN by the time the 

return is due, enter “Applied for” and the date you applied in 

the space for the EIN. For more details, see Pub. 583, 

Starting a Business and Keeping Records.

D. Date Entity Created

Enter the date the trust was created, or, if a decedent's 

estate, the date of the decedent's death.

E. Nonexempt Charitable and 

Split-Interest Trusts

Section 4947(a)(1) Trust

Check this box if the trust is a nonexempt charitable trust 

within the meaning of section 4947(a)(1).

A nonexempt charitable trust is a trust:

• That isn't exempt from tax under section 501(a);

• In which all of the unexpired interests are devoted to one or 

more charitable purposes described in section 170(c)(2)(B); 

and

• For which a deduction was allowed under section 170 (for 

individual taxpayers) or similar Code section for personal 

holding companies, foreign personal holding companies, or 

estates or trusts (including a deduction for estate or gift tax 

purposes).

Nonexempt charitable trust treated as a private foundation. If a nonexempt charitable trust is treated as though it 

were a private foundation under section 509, then the 

fiduciary must file Form 990-PF, Return of Private 

Foundation, in addition to Form 1041.

If a nonexempt charitable trust is treated as though it were 

a private foundation, and it has no taxable income under 

subtitle A, it may check the box on Form 990-PF, Part VI-A, 

line 15, and enter the tax-exempt interest received or accrued 

during the year on that line, instead of filing Form 1041 to 

meet its section 6012 filing requirement for that tax year.

Excise taxes. If a nonexempt charitable trust is treated as 

a private foundation, then it is subject to the same excise 

taxes under chapters 41 and 42 that a private foundation is 

subject to. If the nonexempt charitable trust is liable for any of 

these taxes (except the section 4940 tax), then it reports 

these taxes on Form 4720. Taxes paid by the trust on Form 

4720 or on Form 990-PF (the section 4940 tax) can't be taken 

as a deduction on Form 1041.

Not a Private Foundation

Check this box if the nonexempt charitable trust (section 

4947(a)(1)) isn't treated as a private foundation under section 

Instructions for Form 1041 (2023) 19
509. For more information, see Regulations section 

53.4947-1.

Other returns that must be filed. If a nonexempt charitable 

trust isn't treated as though it were a private foundation, the 

fiduciary must file Form 990, Return of Organization Exempt 

From Income Tax; or Form 990-EZ, Short Form Return of 

Organization Exempt From Income Tax, in addition to Form 

1041, if the trust meets the filing requirements for either of 

those forms.

If a nonexempt charitable trust isn't treated as though it 

were a private foundation, and it has no taxable income 

under subtitle A, it may answer “Yes” on Form 990, Part V, 

line 12a, and enter the tax-exempt interest received or 

accrued during the year on Form 990, Part V, line 12b, 

instead of filing Form 1041 to meet its section 6012 filing 

requirement for that tax year (or if Form 990-EZ is filed 

instead of Form 990, you may check the box on Form 

990-EZ, line 43, and enter the tax-exempt interest received or 

accrued during the year on that line).

Section 4947(a)(2) Trust

Check this box if the trust is a split-interest trust described in 

section 4947(a)(2).

A split-interest trust is a trust that:

• Isn't exempt from tax under section 501(a);

• Has some unexpired interests that are devoted to 

purposes other than religious, charitable, or similar purposes 

described in section 170(c)(2)(B); and

• Has amounts transferred in trust after May 26, 1969, for 

which a deduction was allowed under section 170 (for 

individual taxpayers) or similar Code sections for personal 

holding companies, foreign personal holding companies, or 

estates or trusts (including a deduction for estate or gift tax 

purposes).

Other returns that must be filed. The fiduciary of a 

split-interest trust must file Form 5227. However, see the 

Instructions for Form 5227 for the exception that applies to 

split-interest trusts other than section 664 CRTs.

F. Initial Return, Amended Return, etc.

Amended Return

If you are filing an amended Form 1041:

• Check the “Amended return” box in item F,

• Complete the entire return,

• Correct the appropriate lines with the new information, and

• Refigure the estate's or trust's tax liability.

Note. If you are amending the return for an NOL 

carryback, also check the “Net operating loss carryback” box 

in item F.

If the total tax on line 24 is larger on the amended return 

than on the original return, you should generally pay the 

difference with the amended return. However, you should 

adjust this amount if there is any increase or decrease in the 

total payments shown on line 26.

Attach a sheet that explains the reason for the 

amendments and identifies the lines and amounts being 

changed on the amended return.

Amended Schedule H (Form 1040). If you discover an 

error on a Schedule H (Form 1040), Household Employment 

Taxes, that you previously filed with Form 1041, file an 

“Amended” Form 1041 and attach a corrected Schedule H.

In the top margin of your corrected Schedule H, enter 

“CORRECTED” and the date you discovered the error. Also, 

on an attachment, explain the reason for your correction. If 

you owe tax, pay the tax in full with your amended Form 

1041. If you overpaid tax on a previously filed Schedule H, 

depending on whether you choose the adjustment or claim 

for refund process to correct the error, you must either repay 

or reimburse the employee's share of social security and 

Medicare taxes or get the employee's consent to the filing of 

a refund claim for their share. See Pub. 926, Household 

Employer's Tax Guide, for more information.

Amended Schedule K-1 (Form 1041). If the amended 

return results in a change to income, or a change in 

distribution of any income or other information provided to a 

beneficiary, an amended Schedule K-1 (Form 1041) must 

also be filed with the amended Form 1041 and given to each 

beneficiary. Check the “Amended K-1” box at the top of the 

amended Schedule K-1.

Final Return

Check this box if this is a final return because the estate or 

trust has terminated. Also, check the “Final K-1” box at the 

top of Schedule K-1.

If, on the final return, there are excess deductions, an 

unused capital loss carryover, or an NOL carryover, see the 

instructions for box 11 of Schedule K-1, later.

Change in Trust's Name

If the name of the trust has changed from the name shown on 

the prior year's return (or Form SS-4 if this is the first return 

being filed), be sure to check this box.

Change in Fiduciary

If a different fiduciary enters their name on the line for Name 

and title of fiduciary than was shown on the prior year's return 

(or Form SS-4 if this is the first return being filed) and you 

didn't file a Form 8822-B, be sure to check this box. If there is 

a change in the fiduciary whose address is used as the 

mailing address for the estate or trust after the return is filed, 

use Form 8822-B to notify the IRS.

Change in Fiduciary's Name

If the fiduciary changed their name from the name they 

entered on the prior year's return (or Form SS-4 if this is the 

first return being filed), be sure to check this box.

Change in Fiduciary's Address

If the same fiduciary who filed the prior year's return (or Form 

SS-4 if this is the first return being filed) files the current 

year's return and changed the address on the return 

(including a change to an "in care of" name and address), 

and didn't report the change on Form 8822-B, check this box.

If the address shown on Form 1041 changes after you file 

the form (including a change to an "in care of" name and 

address), file Form 8822-B to notify the IRS of the change.

G. Section 645 Election

If a section 645 election was made by filing Form 8855, check 

the box in item G. See Special Rule for Certain Revocable 

Trusts under Who Must File, earlier, and Form 8855 for more 

information about this election.

20 Instructions for Form 1041 (2023)
Income

Determining Qualified Business Income (QBI)

The estate's or trust's QBI includes items of income, gain, 

deduction, and loss that are effectively connected with the 

conduct of a trade or business within the United States and 

included or allowed in determining taxable income for the 

year. This includes the estate's or trust's share of items of 

income, gain, deduction, and loss from trades or business 

conducted by partnerships (other than publicly traded 

partnerships (PTPs)), S corporations, and other estates or 

trusts. For more information, see section 199A, the 

Instructions for Form 8995, and the Instructions for Form 

8995-A.

Special Rule for Blind Trust

If you are reporting income from a qualified blind trust (under 

the Ethics in Government Act of 1978), don't identify the 

payer of any income to the trust but complete the rest of the 

return as provided in the instructions. Also enter “Blind Trust” 

at the top of page 1.

Extraterritorial Income Exclusion

The extraterritorial income exclusion isn't allowed for 

transactions after 2006. However, income from certain 

long-term sales and leases may still qualify for the exclusion. 

For details and to figure the amount of the exclusion, see 

Form 8873, Extraterritorial Income Exclusion, and its 

separate instructions. The estate or trust must report the 

extraterritorial income exclusion on line 15a of Form 1041, 

page 1.

Although the extraterritorial income exclusion is entered 

on line 15a, it is an exclusion from income and should be 

treated as tax-exempt income when completing other parts of 

the return.

Line 1—Interest Income

Report the estate's or trust's share of all taxable interest 

income that was received during the tax year. Examples of 

taxable interest include interest from:

• Accounts (including certificates of deposit and money 

market accounts) with banks, credit unions, and thrift 

institutions;

• Notes, loans, and mortgages;

• U.S. Treasury bills, notes, and bonds;

• U.S. savings bonds;

• Original issue discount; and

• Income received as a regular interest holder of a real 

estate mortgage investment conduit (REMIC).

For taxable bonds acquired after 1987, amortizable bond 

premium is treated as an offset to the interest income instead 

of as a separate interest deduction. See Pub. 550.

For the year of the decedent's death, Forms 1099-INT 

issued in the decedent's name may include interest income 

earned after the date of death that should be reported on the 

income tax return of the decedent's estate. When preparing 

the decedent's final income tax return, report on Schedule B 

(Form 1040), line 1, the total interest shown on Form 

1099-INT. Under the last entry on line 1, subtotal all the 

interest reported on line 1. Below the subtotal, enter “Form 

1041” and the name and address shown on Form 1041 for 

the decedent's estate. Also, show the part of the interest 

reported on Form 1041 and subtract it from the subtotal.

Line 2a—Total Ordinary Dividends

Report the estate's or trust's share of all ordinary dividends 

received during the tax year.

For the year of the decedent's death, Forms 1099-DIV 

issued in the decedent's name may include dividends earned 

after the date of death that should be reported on the income 

tax return of the decedent's estate. When preparing the 

decedent's final income tax return, report on Schedule B 

(Form 1040), line 5, the ordinary dividends shown on Form 

1099-DIV. Under the last entry on line 5, subtotal all the 

dividends reported on line 5. Below the subtotal, enter “Form 

1041” and the name and address shown on Form 1041 for 

the decedent's estate. Also, show the part of the ordinary 

dividends reported on Form 1041 and subtract it from the 

subtotal.

Report capital gain distributions on Schedule D 

(Form 1041), line 13.

Line 2b—Qualified Dividends

Enter the beneficiary's allocable share of qualified dividends 

on line 2b(1) and enter the estate's or trust's allocable share 

on line 2b(2).

If the estate or trust received qualified dividends that were 

derived from IRD, you must reduce the amount on line 2b(2) 

by the portion of the estate tax deduction claimed on Form 

1041, page 1, line 19, that is attributable to those qualified 

dividends. Don't reduce the amounts on line 2b by any other 

allocable expenses.

Note. The beneficiary's share (as figured above) may differ 

from the amount entered on line 2b of Schedule K-1 (Form 

1041).

Qualified dividends. Qualified dividends are eligible for a 

lower tax rate than other ordinary income. Generally, these 

dividends are reported to the estate or trust in box 1b of 

Form(s) 1099-DIV. See Pub. 550 for the definition of qualified 

dividends if the estate or trust received dividends not 

reported on Form 1099-DIV.

Exception. Some dividends may be reported to the estate 

or trust as in box 1b of Form 1099-DIV but aren't qualified 

dividends. These include the following.

• Dividends received on any share of stock that the estate or 

trust held for less than 61 days during the 121-day period that 

began 60 days before the ex-dividend date. The ex-dividend 

date is the first date following the declaration of a dividend on 

which the purchaser of a stock isn't entitled to receive the 

next dividend payment. When counting the number of days 

the stock was held, include the day the estate or trust 

disposed of the stock but not the day it acquired the stock. 

However, you can't count certain days during which the 

estate's or trust's risk of loss was diminished. See Pub. 550 

for more details.

• Dividends attributable to periods totaling more than 366 

days that the estate or trust received on any share of 

preferred stock held for less than 91 days during the 181-day 

period that began 90 days before the ex-dividend date. When 

counting the number of days the stock was held, include the 

day the estate or trust disposed of the stock but not the day it 

acquired the stock. However, you can't count certain days 

during which the estate's or trust's risk of loss was 

diminished. See Pub. 550 for more details. Preferred 

dividends attributable to periods totaling less than 367 days 

are subject to the 61-day holding period rule above.

TIP

Instructions for Form 1041 (2023) 21
• Dividends on any share of stock to the extent that the 

estate or trust is under an obligation (including a short sale) 

to make related payments with respect to positions in 

substantially similar or related property.

• Payments in lieu of dividends, but only if you know or have 

reason to know that the payments are not qualified dividends.

If you have an entry on line 2b(2), be sure you use 

Schedule D (Form 1041), the Schedule D Tax 

Worksheet, or the Qualified Dividends Tax 

Worksheet, whichever applies, to figure the estate's or trust's 

tax. Figuring the estate's or trust's tax liability in this manner 

will usually result in a lower tax.

Line 3—Business Income or (Loss)

If the estate operated a business, report the income and 

expenses on Schedule C (Form 1040), Profit or Loss From 

Business. Enter the net profit or (loss) from Schedule C on 

line 3.

Line 4—Capital Gain or (Loss)

Enter the gain from Schedule D (Form 1041), Part III, line 19, 

column (3), or the loss from Part IV, line 20.

If you deferred a capital gain into a QOF, you must file your 

return with Schedule D, Form 8949, and Form 8997 attached. 

You will need to file Form 8997 annually until you dispose of 

the investment. See the Form 8997 instructions.

Don't substitute Schedule D (Form 1040) for 

Schedule D (Form 1041).

Line 5—Rents, Royalties, Partnerships, Other 

Estates and Trusts, etc.

Use Schedule E (Form 1040), Supplemental Income and 

Loss, to report the estate's or trust's share of income or 

(losses) from rents, royalties, partnerships, S corporations, 

other estates and trusts, and REMICs. Also use Schedule E 

(Form 1040) to report farm rental income and expenses 

based on crops or livestock produced by a tenant. Enter the 

net profit or (loss) from Schedule E on line 5. See the 

Instructions for Schedule E (Form 1040) for reporting 

requirements.

If the estate or trust received a Schedule K-1 from a 

partnership, S corporation, or other flow-through entity, use 

the corresponding lines on Form 1041 to report the interest, 

dividends, capital gains, etc., from the flow-through entity.

Line 6—Farm Income or (Loss)

If the estate or trust operated a farm, use Schedule F (Form 

1040), Profit or Loss From Farming, to report farm income 

and expenses. Enter the net profit or (loss) from Schedule F 

on line 6.

If an estate or trust has farm rental income and 

expenses based on crops or livestock produced by a 

tenant, report the income and expenses on 

Schedule E (Form 1040). Don't use Form 4835, Farm Rental 

Income and Expenses, or Schedule F (Form 1040) to report 

such income and expenses and don't include the net profit or 

(loss) from such income and expenses on line 6.

Line 7—Ordinary Gain or (Loss)

Enter from line 17 of Form 4797, Sales of Business Property, 

the ordinary gain or loss from the sale or exchange of 

TIP

CAUTION

!

CAUTION

!

property other than capital assets and also from involuntary 

conversions (other than casualty or theft).

Line 8—Other Income

Enter other items of income not included on lines 1, 2a, and 3 

through 7. List the type and amount on an attached schedule 

if the estate or trust has more than one item.

Items to be reported on line 8 include the following.

• Unpaid compensation received by the decedent's estate 

that is IRD.

• Any part of a total distribution shown on Form 1099-R, 

Distributions From Pensions, Annuities, Retirement or 

Profit-Sharing Plans, IRAs, Insurance Contracts, etc., that is 

treated as ordinary income. For more information, see Form 

4972, Tax on Lump-Sum Distributions, and its instructions.

• Taxable contributions received during the tax year by an 

Alaska Native Settlement Trust from an Alaska Native 

Corporation. Report gain from taxable contributions of 

noncash property on Schedule D (Form 1041).

• The amount of payroll tax credit taken by an employer on 

its 2023 employment tax returns (Forms 941, 943, and 944) 

for qualified paid sick and qualified paid family leave under 

the Families First Coronavirus Response Act (FFCRA) and 

the American Rescue Plan Act of 2021 (ARP) (both the 

nonrefundable and refundable portions). These amounts 

must be included in gross income for the tax year that 

includes the last day of the calendar quarter with respect to 

which the credit is allowed. A credit is available only if the 

leave was taken sometime after March 31, 2020, and before 

October 1, 2021, and only after the qualified leave wages 

were paid, which might under certain circumstances not 

occur until a quarter after September 30, 2021, including 

quarters during 2022. Accordingly, all lines related to 

qualified sick and family leave wages remain on the 

employment tax returns for 2023.

Note. Beginning in tax year 2021, there is no current year 

section 965(a) income inclusion reported on line 8. However, 

see the instructions for Schedule G, Part I, line 8, later, for 

information about a triggering event for a section 965(i) net 

tax liability.

Deductions

Depreciation, Depletion, and Amortization

A trust or decedent's estate is allowed a deduction for 

depreciation, depletion, and amortization only to the extent 

the deductions aren't apportioned to the beneficiaries. An 

estate or trust isn't allowed to make an election under section 

179 to expense depreciable business assets.

The estate's or trust's share of depreciation, depletion, 

and amortization is generally reported on the appropriate 

lines of Schedule C, E, or F (Form 1040), the net income or 

loss from which is shown on line 3, 5, or 6 of Form 1041. If 

the deduction isn't related to a specific business or activity, 

then report it on line 15a.

Depreciation. For a decedent's estate, the depreciation 

deduction is apportioned between the estate and the heirs, 

legatees, and devisees on the basis of the estate's income 

allocable to each.

For a trust, the depreciation deduction is apportioned 

between the income beneficiaries and the trust on the basis 

of the trust income allocable to each, unless the governing 

instrument (or local law) requires or permits the trustee to 

maintain a depreciation reserve. If the trustee is required to 

22 Instructions for Form 1041 (2023)
maintain a reserve, the deduction is first allocated to the trust, 

up to the amount of the reserve. Any excess is allocated 

among the income beneficiaries and the trust in the same 

manner as the trust's accounting income. See Regulations 

section 1.167(h)-1(b).

Depletion. For mineral or timber property held by a 

decedent's estate, the depletion deduction is apportioned 

between the estate and the heirs, legatees, and devisees on 

the basis of the estate's income from such property allocable 

to each.

For mineral or timber property held in trust, the depletion 

deduction is apportioned between the income beneficiaries 

and the trust based on the trust income from such property 

allocable to each, unless the governing instrument (or local 

law) requires or permits the trustee to maintain a reserve for 

depletion. If the trustee is required to maintain a reserve, the 

deduction is first allocated to the trust, up to the amount of 

the reserve. Any excess is allocated among the beneficiaries 

and the trust in the same manner as the trust's accounting 

income. See Regulations section 1.611-1(c)(4).

Amortization. The deduction for amortization is apportioned 

between an estate or trust and its beneficiaries under the 

same principles used to apportion the deductions for 

depreciation and depletion.

The deduction for the amortization of reforestation 

expenditures under section 194 is allowed only to an estate.

Allocable share from a pass-through entity. 

Depreciation, depletion, and amortization received from a 

pass-through entity on a Schedule K-1 are apportioned and 

reported in the same manner as discussed above. A section 

179 expense received from a pass-through entity on a 

Schedule K-1 isn't deductible by the estate or trust.

Allocation of Deductions for Tax-Exempt Income

Generally, no deduction that would otherwise be allowable is 

allowed for any expense (whether for business or for the 

production of income) that is allocable to tax-exempt income. 

Examples of tax-exempt income include:

• Certain death benefits (section 101),

• Interest on state or local bonds (section 103),

• Compensation for injuries or sickness (section 104), and

• Income from discharge of indebtedness in a title 11 case 

(section 108).

Exception. State income taxes and business expenses that 

are allocable to tax-exempt interest are deductible.

Expenses that are directly allocable to tax-exempt income 

are allocated only to tax-exempt income. A reasonable 

proportion of expenses indirectly allocable to both 

tax-exempt income and other income must be allocated to 

each class of income.

Deductions That May Be Allowable for Estate 

Tax Purposes

Administration expenses and casualty and theft losses 

deductible on Form 706 may be deducted, to the extent 

otherwise deductible for income tax purposes, on Form 1041 

if the fiduciary files a statement waiving the right to deduct 

the expenses and losses on Form 706. The statement must 

be filed before the expiration of the statutory period of 

limitations for the tax year the deduction is claimed. See Pub. 

559 for more information.

Accrued Expenses

Generally, an accrual basis taxpayer can deduct accrued 

expenses in the tax year that (a) all events have occurred that 

determine the liability, and (b) the amount of the liability can 

be figured with reasonable accuracy. However, all the events 

that establish liability are treated as occurring only when 

economic performance takes place. There are exceptions for 

recurring items. See section 461(h).

Limitations on Deductions

At-Risk Loss Limitations

Generally, the amount the estate or trust has “at-risk” limits 

the loss it can deduct for any tax year. Use Form 6198, 

At-Risk Limitations, to figure the deductible loss for the year 

and file it with Form 1041. For more information, see Pub. 

925, Passive Activity and At-Risk Rules.

Passive Activity Loss and Credit Limitations

In general. Section 469 and the regulations thereunder 

generally limit losses from passive activities to the amount of 

income derived from all passive activities. Similarly, credits 

from passive activities are generally limited to the tax 

attributable to such activities. These limitations are first 

applied at the estate or trust level.

Generally, an activity is a passive activity if it involves the 

conduct of any trade or business, and the taxpayer does not 

materially participate in the activity. Passive activities don't 

include working interests in oil and gas properties. See 

section 469(c)(3).

Note. Material participation standards for estates and trusts 

haven't been established by regulations.

For a grantor trust, material participation is determined at 

the grantor level.

If the estate or trust distributes an interest in a passive 

activity, the basis of the property immediately before the 

distribution is increased by the passive activity losses 

allocable to the interest, and such losses can't be deducted. 

See section 469(j)(12).

Losses from passive activities are first subject to the 

at-risk rules. When the losses are deductible under 

the at-risk rules, the passive activity rules then apply.

Rental activities. Generally, rental activities are passive 

activities, whether or not the taxpayer materially participates. 

However, certain taxpayers who materially participate in real 

property trades or businesses aren't subject to the passive 

activity limitations on losses from rental real estate activities 

in which they materially participate. For more details, see 

section 469(c)(7).

For tax years of an estate ending less than 2 years after 

the decedent's date of death, up to $25,000 of deductions 

and deduction equivalents of credits from rental real estate 

activities in which the decedent actively participated are 

allowed. Any excess losses or credits are suspended for the 

year and carried forward.

Portfolio income. Portfolio income isn't treated as income 

from a passive activity, and passive losses and credits 

generally may not be applied to offset it. Portfolio income 

generally includes interest, dividends, royalties, and income 

from annuities. Portfolio income of an estate or trust must be 

accounted for separately.

TIP

Instructions for Form 1041 (2023) 23
Forms to file. See Form 8582, Passive Activity Loss 

Limitations, to figure the amount of losses allowed from 

passive activities. See Form 8582-CR, Passive Activity Credit 

Limitations, to figure the amount of credit allowed for the 

current year.

Business Interest

Business interest expense could be limited. For more 

information about limitations on deductions for business 

interest, see section 163(j) and Line 10—Interest, later.

Transactions Between Related Taxpayers

Under section 267, a trust that uses the accrual method of 

accounting may only deduct business expenses and interest 

owed to a related party in the year the payment is included in 

the income of the related party. For this purpose, a related 

party includes:

1. A grantor and a fiduciary of any trust;

2. A fiduciary of a trust and a fiduciary of another trust, if 

the same person is a grantor of both trusts;

3. A fiduciary of a trust and a beneficiary of such trust;

4. A fiduciary of a trust and a beneficiary of another trust, 

if the same person is a grantor of both trusts;

5. A fiduciary of a trust and a corporation more than 50% 

in value of the outstanding stock of which is owned, directly 

or indirectly, by or for the trust or by or for a person who is a 

grantor of the trust; and

6. An executor of an estate and a beneficiary of that 

estate, except for a sale or exchange to satisfy a pecuniary 

bequest (that is, a bequest of a sum of money).

Line 10—Interest

Enter the amount of interest (subject to limitations) paid or 

incurred by the estate or trust on amounts borrowed by the 

estate or trust, or on debt acquired by the estate or trust (for 

example, outstanding obligations from the decedent) that 

isn't claimed elsewhere on the return.

If the proceeds of a loan were used for more than one 

purpose (for example, to purchase a portfolio investment and 

to acquire an interest in a passive activity), the fiduciary must 

make an interest allocation according to the rules in 

Temporary Regulations section 1.163-8T.

Don't include interest paid on indebtedness incurred or 

continued to purchase or carry obligations on which the 

interest is wholly exempt from income tax.

Personal interest isn't deductible. Examples of personal 

interest include interest paid on:

• Revolving charge accounts used to purchase personal-use 

property;

• Personal notes for money borrowed from a bank, a credit 

union, or other person;

• Installment loans on personal-use property; and

• Underpayments of federal, state, or local income taxes.

Interest that is paid or incurred on indebtedness allocable 

to a trade or business (including a rental activity) should be 

deducted on the appropriate line of Schedule C, E, or F 

(Form 1040), the net income or loss from which is shown on 

line 3, 5, or 6 of Form 1041.

Types of interest to include on line 10 are:

1. Any investment interest (subject to limitations—see 

below),

2. Any qualified residence interest (see later), and

3. Any interest payable under section 6601 on any unpaid 

portion of the estate tax attributable to the value of a 

reversionary or remainder interest in property for the period 

during which an extension of time for payment of such tax is 

in effect.

Limitation on deduction of business interest. Business 

interest expense is limited to the sum of business interest 

income, 30% of the adjusted taxable income, and floor plan 

financing interest. Business interest expense includes any 

interest paid or accrued on indebtedness properly allocable 

to a trade or business. A taxpayer, other than a tax shelter, 

that meets the gross receipts test is not required to limit 

business interest expense under section 163(j). A taxpayer 

meets the gross receipts test if the taxpayer has average 

annual gross receipts of $29 million or less for the 3 prior tax 

years. Gross receipts include the aggregate gross receipts 

from all persons treated as a single employer such as a 

controlled group of corporations, commonly controlled 

partnerships or proprietorships, and affiliated service groups. 

If the taxpayer fails to meet the gross receipts test, Form 

8990 is generally required.

Investment interest. Generally, investment interest is 

interest (including amortizable bond premium on taxable 

bonds acquired after October 22, 1986, but before January 1, 

1988) that is paid or incurred on indebtedness that is properly 

allocable to property held for investment. Investment interest 

doesn't include any qualified residence interest, or interest 

that is taken into account under section 469 in figuring 

income or loss from a passive activity.

Generally, net investment income (NII) is the excess of 

investment income over investment expenses. Investment 

expenses (other than interest) are deductible only to the 

extent they are allowable under section 67(e).

The amount of the investment interest deduction may be 

limited. Use Form 4952, Investment Interest Expense 

Deduction, to figure the allowable investment interest 

deduction.

If you must complete Form 4952, check the box on line 10 

of Form 1041 and attach Form 4952. Then, add the 

deductible investment interest to the other types of 

deductible interest and enter the total on line 10.

Qualified residence interest. Interest paid or incurred by 

an estate or trust on indebtedness secured by a qualified 

residence of a beneficiary of an estate or trust is treated as 

qualified residence interest if the residence would be a 

qualified residence (that is, the principal residence or the 

secondary residence selected by the beneficiary) if owned by 

the beneficiary. The beneficiary must have a present interest 

in the estate or trust or an interest in the residuary of the 

estate or trust. See Pub. 936, Home Mortgage Interest 

Deduction, for an explanation of the general rules for 

deducting home mortgage interest.

See section 163(h)(3) for a definition of qualified 

residence interest and for limitations on indebtedness.

Line 11—Taxes

The deduction for state and local taxes is limited to 

$10,000. The limitation applies to the total of your 

state and local income taxes (or general sales taxes, 

if elected instead of income taxes), real estate taxes, and 

personal property taxes. The limitation does not apply to 

foreign income taxes, and state and local taxes paid or 

CAUTION

!

24 Instructions for Form 1041 (2023)
accrued in carrying on a trade or business or for the 

production of income.

Enter any deductible taxes paid or incurred during the tax 

year that aren't deductible elsewhere on Form 1041. 

Deductible taxes include the following.

• State and local income taxes. You can deduct state and 

local income taxes unless you elect to deduct state and local 

general sales taxes. You can't deduct both.

• State and local general sales taxes. You can elect to 

deduct state and local general sales taxes instead of state 

and local income taxes. Generally, you can elect to deduct 

the actual state and local general sales taxes (including 

compensating use taxes) you paid in 2023 if the tax rate was 

the same as the general sales tax rate. However, sales taxes 

on food, clothing, medical supplies, and motor vehicles are 

deductible as a general sales tax even if the tax rate was less 

than the general sales tax rate. Sales taxes on motor vehicles 

are also deductible as a general sales tax if the tax rate was 

more than the general sales tax rate, but the tax is deductible 

only up to the amount of tax that would have been imposed at 

the general sales tax rate. Motor vehicles include cars, 

motorcycles, motor homes, recreational vehicles, sport utility 

vehicles, trucks, vans, and off-road vehicles. Also include any 

state and local general sales taxes paid for a leased motor 

vehicle.

Do not include sales taxes paid on items used in a trade or 

business. An estate or trust cannot use the Optional State 

Sales Tax Tables for individuals in the Instructions for 

Schedule A (Form 1040), Itemized Deductions, to figure its 

deduction.

• State and local real property taxes.

Note. The deduction for foreign real property taxes is no 

longer allowed.

• State and local personal property taxes.

• Foreign or U.S. territory income taxes. You may want to 

take a credit for the tax instead of a deduction. See the 

instructions for Schedule G, Part I, line 2a, later, for more 

details.

• The generation-skipping transfer (GST) tax imposed on 

income distributions.

Don't deduct:

• Federal income taxes;

• Estate, inheritance, legacy, succession, and gift taxes;

• Federal duties and excise taxes; or

• Foreign real property taxes.

Do not deduct the estate's or trust's deduction for social 

security and Medicare taxes by the amount claimed on its 

employment tax returns for the nonrefundable and refundable 

portions of the FFCRA and the ARP credits for qualified sick 

and family leave wages. Instead, report this amount as 

income on line 8.

Safe harbor for certain charitable contributions made in 

exchange for a state or local tax credit. If you made a 

charitable contribution in exchange for a state or local tax 

credit and your charitable contribution deduction must be 

reduced as a result of receiving or expecting to receive the 

tax credit, you may qualify for a safe harbor that allows you to 

treat some or all of the disallowed charitable contribution as a 

payment of state and local taxes. The safe harbor applies if 

you meet the following conditions.

1. You made a cash contribution to an entity described in 

section 170(c).

2. In return for the cash contribution, you received a state 

or local tax credit.

3. You must reduce your charitable contribution 

deduction by the amount of the state or local tax credit you 

receive.

If you meet these conditions, and to the extent you apply the 

state or local tax credit to this or a prior year's state or local 

tax liability, you may include this amount on line 11. To the 

extent you apply a portion of the credit to offset your state or 

local tax liability in a subsequent year (as permitted by law), 

you may treat this amount as state or local tax paid in the 

year the credit is applied. For more information about this 

safe harbor and examples, see Notice 2019-12.

Line 12—Fiduciary Fees

Enter the deductible fees paid or incurred to the fiduciary for 

administering the estate or trust during the tax year.

Fiduciary expenses include probate court fees and costs, 

fiduciary bond premiums, legal publication costs of notices to 

creditors or heirs, the cost of certified copies of the 

decedent's death certificate, and costs related to fiduciary 

accounts.

Fiduciary fees deducted on Form 706 can't be 

deducted on Form 1041.

Note. Fiduciary fees are allowable under section 67(e) if 

they are costs that are paid or incurred in connection with the 

administration of an estate or a non-grantor trust that would 

not have been incurred if the property were not held in such 

estate or trust. See Final Regulations - TD9918 and 

Regulations section 1.67-4 for more information.

Line 14—Attorney, Accountant, and Return 

Preparer Fees

Expenses for preparation of fiduciary income tax returns, the 

decedent's final individual income tax returns, and all estate 

and GST tax returns are fully deductible. However, expenses 

for preparing all other tax returns, including gift tax returns, 

are considered costs commonly and customarily incurred by 

individuals and are not deductible. For more information, see 

Final Regulations - TD9918 and Regulations section 1.67-4.

Line 15a—Other Deductions

Attach your own statement, listing by type and amount all 

allowable deductions that aren't deductible elsewhere on 

Form 1041.

Allowable deductions include all deductions listed in 

section 67(b) (including estate taxes attributable to IRD under 

section 691(c)), and other costs allowable under section 

67(e) paid or incurred in connection with the administration of 

the estate or trust that would not have been incurred if the 

property were not held in the estate or trust.

Don't include any losses on worthless bonds and similar 

obligations and nonbusiness bad debts. Report these losses, 

as applicable, on Form 8949.

Don't deduct medical or funeral expenses on Form 1041. 

Medical expenses of the decedent paid by the estate may be 

deductible on the decedent's income tax return for the year 

incurred. See section 213(c). Funeral expenses are 

deductible only on Form 706.

Other costs paid or incurred by estates and non-grantor 

trusts. Under section 67(e), deductions are allowable for 

TIP

Instructions for Form 1041 (2023) 25
costs which are paid or incurred by an estate or non-grantor 

trust in connection with the administration of the estate or 

trust and would not have been incurred if the property were 

not held in such estate or trust.

In determining whether a cost is deductible by an estate or 

non-grantor trust, it must be determined whether the cost 

would be “commonly or customarily” incurred by a 

hypothetical individual owning the same property. If the cost 

would be deductible by a hypothetical individual, it is not 

deductible by the estate or non-grantor trust.

It is the type of product or service rendered to the estate or 

non-grantor trust in exchange for the cost, rather than the 

description of the cost of that product or service, that is 

determinative.

Costs that are incurred commonly or customarily by 

individuals include costs incurred in defense of a claim 

against the estate, the decedent, or the non-grantor trust that 

are unrelated to the existence, validity, or administration of 

the estate or trust. These amounts are not allowable 

deductions.

Ownership costs. Ownership costs are costs that are 

chargeable to or incurred by an owner of property simply by 

reason of being the owner of the property. These costs are 

commonly or customarily incurred by a hypothetical 

individual owner of such property and are not deductible by 

an estate or non-grantor trust. Under section 67(b), they 

include, but are not limited to, condominium fees, insurance 

premiums, maintenance and lawn services, automobile 

registration and insurance costs, and partnership costs 

deemed to be passed through to and reportable by a partner. 

Other expenses incurred merely by reason of the ownership 

of property may be fully deductible under other provisions of 

the Code.

Appraisal fees. Appraisal fees incurred to determine the 

FMV of assets as of the decedent's date of death (or the 

alternate valuation date), to determine value for purposes of 

making distributions, or as otherwise required to properly 

prepare the estate's or trust's tax returns, or a GST tax return, 

are not incurred commonly or customarily by an individual 

and are deductible. The cost of appraisals for other purposes 

(for example, insurance) is commonly or customarily incurred 

by individuals and is not an allowable deduction.

Investment advisory fees. Fees for investment advice, 

including any related services that would be provided to any 

individual investor as part of an investment advisory fee, are 

incurred commonly or customarily by a hypothetical 

individual investor and are not deductible. However, certain 

incremental costs of investment advice beyond the amount 

that would normally be charged to an individual investor are 

deductible.

An incremental cost is a special, additional charge that is 

added solely because the investment advice is rendered to a 

trust or estate rather than to an individual, including balancing 

beyond the usual varying interests of current beneficiaries 

and remaindermen. The deductible portion of the investment 

advisory fees is limited to the amount of those fees, if any, 

that exceeds the fees normally charged to an individual 

investor. See Regulations section 1.67-4(b)(4).

Bundled fees. If an estate or non-grantor trust pays a single 

fee, commission, or other expense, such as a fiduciary's 

commission, attorney's fee, or accountant's fee for both costs 

that are incurred commonly or customarily by individuals and 

costs (other than a de minimis amount) that are not incurred 

commonly or customarily by individuals, then (except to the 

extent provided otherwise by guidance published in the 

Internal Revenue Bulletin) the single fee, commission, or 

other expense (bundled fee) must be allocated between the 

costs that are incurred commonly or customarily by 

individuals, such costs not being deductible, and costs that 

are not incurred commonly or customarily by individuals, 

such costs being deductible.

There is an exception to the allocation rule if a bundled fee 

is not computed on an hourly basis. In this situation, only the 

portion of that fee that is attributable to investment advice is 

not deductible. The remaining portion is deductible.

Out-of-pocket expenses billed to the estate or non-grantor 

trust are treated as separate from the bundled fee and are not 

subject to allocation.

Estates and non-grantor trusts cannot deduct payments 

made from the bundled fee to third parties if such payments 

would not have been deductible if they had been paid directly 

by the estate or non-grantor trust.

Any reasonable method may be used to allocate a 

bundled fee, including without limitation the allocation of a 

portion of a fiduciary commission that is a bundled fee to 

investment advice. For more information, see Regulations 

section 1.67-4(c)(4).

Note. The reasonable method standard does not apply to 

determine the portion of the bundled fee attributable to 

payments made to third parties commonly or customarily 

incurred by an individual or to any other separately assessed 

expense commonly or customarily incurred by an individual, 

because those payments and expenses are readily 

identifiable without any discretion on the part of the fiduciary 

or return preparer.

For more information, see Regulations section 1.67-4.

Other Deductions Reported on Line 15a

Bond premium(s). For taxable bonds acquired before 

October 23, 1986, if the fiduciary elected to amortize the 

premium, report the amortization on this line. If you made the 

election to amortize the premium, the basis in the taxable 

bond must be reduced by the amount of amortization.

For tax-exempt bonds, you can't deduct the premium that 

is amortized. Although the premium can't be deducted, you 

must amortize the tax-exempt bond by the amount of 

premium amortized.

For more information, see section 171 and Pub. 550.

If you claim a bond premium deduction for the estate or 

trust, figure the deduction on a separate sheet and attach it to 

Form 1041.

Casualty and theft losses. Use Form 4684, Casualties and 

Thefts, to figure any deductible casualty and theft losses.

Estate's or trust's share of amortization, depreciation, 

and depletion not claimed elsewhere. If you can't deduct 

the estate's or trust's apportioned share of amortization, 

depreciation, and depletion as rent or royalty expenses on 

Schedule E (Form 1040), or as business or farm expenses on 

Schedule C or F (Form 1040), itemize the estate's or trust's 

apportioned share of the deductions on an attached sheet 

and include them on line 15a.

Note. Don't report the beneficiary's apportioned share of 

depreciation, depletion, and amortization on line 15a. Report 

26 Instructions for Form 1041 (2023)
the beneficiary's apportioned share of deductions in box 9 of 

Schedule K-1 (Form 1041).

Itemize each beneficiary's apportioned share of the 

deductions and report them in the appropriate box of 

Schedule K-1 (Form 1041).

Section 179D. Enter any applicable deduction under 

section 179D for costs of energy efficient commercial 

business property placed in service during the tax year. 

Complete and attach Form 7205, Energy Efficient 

Commercial Buildings Deduction.

Line 15b—Net Operating Loss Deduction

An estate or trust is allowed an NOLD under section 172.

If you claim an NOLD for the estate or trust, figure the 

deduction on a separate sheet and attach it to the return.

Line 18—Income Distribution Deduction

If the estate or trust was required to distribute income 

currently or if it paid, credited, or was required to distribute 

any other amounts to beneficiaries during the tax year, 

complete Schedule B to determine the estate's or trust's 

income distribution deduction. However, if you are filing for a 

pooled income fund, don't complete Schedule B. Instead, 

attach a statement to support the computation of the income 

distribution deduction. For more information, see Pooled 

Income Funds, earlier.

If the estate or trust claims an income distribution 

deduction, complete and attach:

• Part I (through line 24) and Part II of Schedule I (Form 

1041) to refigure the deduction on a minimum tax basis, and

• Schedule K-1 (Form 1041) for each beneficiary to which a 

distribution was made or required to be made.

Cemetery perpetual care fund. On line 18, deduct the 

amount, not more than $5 per gravesite, paid for 

maintenance of cemetery property. To the right of the entry 

space for line 18, enter the number of gravesites. Also enter 

“Section 642(i) trust” in parentheses after the trust's name at 

the top of Form 1041. You don't have to complete Schedule B 

of Form 1041, and Schedule K-1 (Form 1041).

Don't enter less than zero on line 18.

Line 19—Estate Tax Deduction Including Certain 

Generation-Skipping Transfer Taxes

If the estate or trust includes IRD in its gross income, and 

such amount was included in the decedent's gross estate for 

estate tax purposes, the estate or trust is allowed to deduct in 

the same tax year that the income is included that portion of 

the estate tax imposed on the decedent's estate that is 

attributable to the inclusion of the IRD in the decedent's 

estate. For an example of the computation, see Regulations 

section 1.691(c)-1 and Pub. 559.

If any amount properly paid, credited, or required to be 

distributed by an estate or trust to a beneficiary consists of 

IRD received by the estate or trust, don't include such 

amounts in determining the estate tax deduction for the 

estate or trust. Figure the deduction on a separate sheet. 

Attach the sheet to your return.

If you claim a deduction for estate tax attributable to 

qualified dividends or capital gains, you may have to 

adjust the amount on Form 1041, page 1, line 2b(2); 

or Schedule D (Form 1041), line 22.

CAUTION

!

Also, a deduction is allowed for the GST tax imposed as a 

result of a taxable termination or a direct skip occurring as a 

result of the death of the transferor. See section 691(c)(3). 

Enter the estate's or trust's share of these deductions on 

line 19.

Line 20—Qualified Business Income Deduction

To figure your QBI deduction, use Form 8995 or Form 

8995-A, as applicable.

Use Form 8995 if:

• You have QBI (loss), real estate investment trust (REIT) 

dividends, or PTP income (loss);

• Your 2023 taxable income before the QBI deduction is less 

than or equal to $182,100; and

• You aren’t a patron in a specified agricultural or 

horticultural cooperative.

If you don’t meet these requirements, use Form 8995-A. 

Attach whichever form you use (Form 8995 or 8995-A) to 

your return. Also attach Schedule C, E, or F (Form 1040), 

whichever form you use to report information about your QBI. 

See the instructions for Forms 8995 and 8995-A for more 

information for figuring and reporting your QBI deduction.

Note. Report the beneficiary’s apportioned share of items of 

QBI (loss) subject to beneficiary specific determinations, W-2 

wages, unadjusted basis immediately after acquisition (UBIA) 

of qualified property, qualified REIT dividends, and qualified 

PTP income on a statement attached to Schedule K-1 (Form 

1041). See the instructions for box 14, code I, of 

Schedule K-1 (Form 1041), later.

Line 21—Exemption

Decedents' estates. A decedent's estate is allowed a $600 

exemption.

Trusts required to distribute all income currently. A trust 

whose governing instrument requires that all income be 

distributed currently is allowed a $300 exemption, even if it 

distributed amounts other than income during the tax year.

Qualified disability trusts. A qualified disability trust is 

allowed a $4,700 exemption. This amount is not subject to 

phaseout.

A qualified disability trust is any trust:

1. Described in 42 U.S.C. 1396p(c)(2)(B)(iv) and 

established solely for the benefit of an individual under 65 

years of age who is disabled, and

2. All of the beneficiaries of which are determined by the 

Commissioner of Social Security to have been disabled for 

some part of the tax year within the meaning of 42 U.S.C. 

1382c(a)(3).

A trust will not fail to meet item 2 above just because the 

trust's corpus may revert to a person who isn't disabled after 

the trust ceases to have any disabled beneficiaries.

All other trusts. A trust not described above is allowed a 

$100 exemption.

Tax and Payments

Line 23—Taxable Income

Minimum taxable income. Line 23 can't be less than the 

larger of:

Instructions for Form 1041 (2023) 27
• The inversion gain of the estate or trust, as figured under 

section 7874, if the estate or trust is an expatriated entity or a 

partner in an expatriated entity; or

• The sum of the excess inclusions of the estate or trust from 

Schedule Q (Form 1066), Quarterly Notice to Residual 

Interest Holder of REMIC Taxable Income or Net Loss 

Allocation, line 2c.

Net operating loss (NOL). If line 23 (figured without regard 

to the minimum taxable income rule stated above) is a loss, 

the estate or trust may have an NOL. Don't include the 

deductions claimed on lines 13, 18, and 21 when figuring the 

amount of the NOL.

Generally, an NOL can only be carried forward to 

subsequent years and cannot be carried back. The 2-year 

carryback period only applies to the portion of an NOL 

attributable to a farming loss. For more information, see Pub. 

536.

Complete Schedule A of Form 1045, Application for 

Tentative Refund, to figure the amount of the NOL that is 

available for carryback or carryover. Use Form 1045 or file an 

amended return to apply for a refund based on an NOL 

carryback. For more information, see the Instructions for 

Form 1045.

On the termination of the estate or trust, any unused NOL 

carryover that would be allowable to the estate or trust in a 

later tax year but for the termination is allowed to the 

beneficiaries succeeding to the property of the estate or trust. 

See the instructions for box 11, codes E and F, of 

Schedule K-1 (Form 1041), later.

Excess deductions on termination. If the estate or trust 

has for its final year deductions (excluding the charitable 

deduction and personal exemption) in excess of its gross 

income, the excess deductions are allowed to the 

beneficiaries succeeding to the property of the estate or trust 

and retain their separate character as an amount allowed in 

arriving at AGI, a non-miscellaneous itemized deduction, or a 

miscellaneous itemized deduction. In general, an unused 

NOL carryover that is allowed to beneficiaries (as explained 

above) can't also be treated as an excess deduction. 

However, if the final year of the estate or trust is also the last 

year of the NOL carryover period, the NOL carryover not 

absorbed in that tax year by the estate or trust is included as 

an excess deduction. See the instructions for box 11, codes 

A and B, of Schedule K-1 (Form 1041), later.

Line 25—Current Payment on Deferred Net 965 

Tax Liability

If you made a payment with respect to a current net 965 tax 

liability, enter the amount of the payment from Form 965-A, 

Part II, column (k).

Line 27—Estimated Tax Penalty

If line 28 is at least $1,000 and more than 10% of the tax 

shown on Form 1041, or the estate or trust underpaid its 

2023 estimated tax liability for any payment period, it may 

owe a penalty. See Form 2210 to determine whether the 

estate or trust owes a penalty and to figure the amount of the 

penalty.

Note. The penalty may be waived or reduced under certain 

conditions. See Pub. 505, Tax Withholding and Estimated 

Tax, and the Instructions for Form 2210 for details.

Line 28—Tax Due

You must pay the tax in full when the return is filed. You may 

pay by EFTPS. For more information about EFTPS, see 

Electronic Deposits, earlier. Also, you may pay by check or 

money order or by credit or debit card.

To pay by check or money order. If you pay by check or 

money order:

• Make it payable to “United States Treasury”;

• Make sure the name of the estate or trust appears on the 

payment;

• Write the estate’s or trust’s EIN and “2023 Form 1041” on 

the payment;

• Consider completing the 2023 Form 1041-V; and

• Enclose, but don't attach, the payment (and Form 1041-V, 

if completed) with Form 1041.

Note. The IRS can't accept a single check (including a 

cashier's check) for amounts of $100,000,000 ($100 million) 

or more. If you're sending $100 million or more by check, 

you'll need to spread the payments over two or more checks 

with each check made out for an amount less than $100 

million. The $100 million or more amount limit doesn't apply 

to other methods of payment (such as electronic payments), 

so please consider paying by means other than checks.

To pay by credit or debit card. For information on paying 

your taxes electronically, including by credit or debit card, go 

to IRS.gov/E-pay.

Line 30a—Credited to 2024 Estimated Tax

Enter the amount from line 29 that you want applied to the 

estate's or trust's 2024 estimated tax.

Schedule A—Charitable Deduction

General Instructions

Generally, any part of the gross income of an estate or trust 

(other than a simple trust) that, under the terms of the will or 

governing instrument, is paid (or treated as paid) during the 

tax year for a charitable purpose specified in section 170(c) is 

allowed as a deduction to the estate or trust. It isn't 

necessary that the charitable organization be created or 

organized in the United States.

A pooled income fund or a section 4947(a)(1) nonexempt 

charitable trust treated as a private foundation must attach a 

separate sheet to Form 1041 instead of using Schedule A of 

Form 1041 to figure the charitable deduction.

Additional return to be filed by trusts. Trusts, other than 

split-interest trusts or nonexempt charitable trusts, that claim 

a charitable deduction also file Form 1041-A unless the trust 

is required to distribute currently to the beneficiaries all the 

income for the year determined under section 643(b) and 

related regulations.

Pooled income funds and charitable lead trusts also file 

Form 5227. See Form 5227 for information about any 

exceptions.

Election to treat contributions as paid in the prior tax 

year. The fiduciary of an estate or trust may elect to treat as 

paid during the tax year any amount of gross income 

received during that tax year or any prior tax year that was 

paid in the next tax year for a charitable purpose.

For example, if a calendar year estate or trust makes a 

qualified charitable contribution on February 7, 2024, from 

28 Instructions for Form 1041 (2023)
income earned in 2023 or prior, then the fiduciary can elect to 

treat the contribution as paid in 2023.

To make the election, the fiduciary must file a statement 

with Form 1041 for the tax year in which the contribution is 

treated as paid. This statement must include:

1. The name and address of the fiduciary;

2. The name of the estate or trust;

3. An indication that the fiduciary is making an election 

under section 642(c)(1) for contributions treated as paid 

during such tax year;

4. The name and address of each organization to which 

any such contribution is paid; and

5. The amount of each contribution and date of actual 

payment or, if applicable, the total amount of contributions 

paid to each organization during the next tax year, to be 

treated as paid in the prior tax year.

The election must be filed by the due date (including 

extensions) for Form 1041 for the next tax year. If the original 

return was filed on time, you may make the election on an 

amended return filed no later than 6 months after the due 

date of the return (excluding extensions). Enter “Filed 

pursuant to section 301.9100-2” at the top of the amended 

return and file it at the same address you used for your 

original return.

For more information about the charitable deduction, see 

section 642(c) and the related regulations.

Specific Instructions

Line 1—Amounts Paid or Permanently Set Aside 

for Charitable Purposes From Gross Income

Enter amounts that were paid for a charitable purpose out of 

the estate's or trust's gross income, including any capital 

gains that are attributable to income under the governing 

instrument or local law. Include amounts paid during the tax 

year from gross income received in a prior tax year, but only if 

no deduction was allowed for any prior tax year for these 

amounts.

Estates, and certain trusts, may claim a deduction for 

amounts permanently set aside for a charitable purpose from 

gross income. Such amounts must be permanently set aside 

during the tax year to be used exclusively for religious, 

charitable, scientific, literary, or educational purposes, or for 

the prevention of cruelty to children or animals, or for the 

establishment, acquisition, maintenance, or operation of a 

public cemetery not operated for profit.

For a trust to qualify, the trust may not be a simple trust, 

and the set-aside amounts must be required by the terms of a 

trust instrument that was created on or before October 9, 

1969.

Further, the trust instrument must provide for an 

irrevocable remainder interest to be transferred to or for the 

use of an organization described in section 170(c) or the trust 

must have been created by a grantor who was at all times 

after October 9, 1969, under a mental disability to change the 

terms of the trust.

Also, certain testamentary trusts that were established by 

a will that was executed on or before October 9, 1969, may 

qualify. See Regulations section 1.642(c)-2(b).

Don't include any capital gains for the tax year allocated to 

corpus and paid or permanently set aside for charitable 

purposes. Instead, enter these amounts on line 4.

Line 2—Tax-Exempt Income Allocable to 

Charitable Contributions

Any estate or trust that pays or sets aside any part of its 

income for a charitable purpose must reduce the deduction 

by the portion allocable to any tax-exempt income. If the 

governing instrument specifically provides as to the source 

from which amounts are paid, permanently set aside, or to be 

used for charitable purposes, the specific provisions control. 

In all other cases, determine the amount of tax-exempt 

income allocable to charitable contributions by multiplying 

line 1 by a fraction, the numerator of which is the total 

tax-exempt income of the estate or trust, and the 

denominator of which is the gross income of the estate or 

trust. Don't include in the denominator any losses allocated to 

corpus.

Line 4—Capital Gains for the Tax Year Allocated to 

Corpus and Paid or Permanently Set Aside for 

Charitable Purposes

Enter the total of all capital gains for the tax year that are:

• Allocated to corpus, and

• Paid or permanently set aside for charitable purposes.

Line 6—Section 1202 Exclusion Allocable to 

Capital Gains Paid or Permanently Set Aside for 

Charitable Purposes

If the exclusion of gain from the sale or exchange of qualified 

small business (QSB) stock was claimed, enter the part of 

the gain included on Schedule A, lines 1 and 4, that was 

excluded under section 1202.

Schedule B—Income Distribution 

Deduction

General Instructions

If the estate or trust was required to distribute income 

currently or if it paid, credited, or was required to distribute 

any other amounts to beneficiaries during the tax year, 

complete Schedule B to determine the estate's or trust's 

income distribution deduction.

Note. Use Schedule I (Form 1041) to compute the DNI and 

income distribution deduction on a minimum tax basis.

Pooled income funds. Don't complete Schedule B for 

these funds. Instead, attach a separate statement to support 

the computation of the income distribution deduction. See 

Pooled Income Funds, earlier, for more information.

Separate share rule. If a single trust or an estate has more 

than one beneficiary, and if different beneficiaries have 

substantially separate and independent shares, their shares 

are treated as separate trusts or estates for the sole purpose 

of determining the DNI allocable to the respective 

beneficiaries.

If the separate share rule applies, figure the DNI allocable 

to each beneficiary on a separate sheet and attach the sheet 

Instructions for Form 1041 (2023) 29
to this return. Any deduction or loss that is applicable solely 

to one separate share of the trust or estate isn't available to 

any other share of the same trust or estate.

For more information, see section 663(c) and related 

regulations.

Withholding of tax on foreign persons. The fiduciary may 

be liable for withholding tax on distributions to beneficiaries 

who are foreign persons. For more information, see Pub. 515, 

and Forms 1042 and 1042-S.

Specific Instructions

Line 1—Adjusted Total Income

Generally, enter on Schedule B, line 1, the amount from 

line 17 on page 1 of Form 1041. However, if both line 4 and 

line 17 on page 1 of Form 1041 are losses, enter on 

Schedule B, line 1, the smaller of those losses. If line 4 is 

zero or a gain and line 17 is a loss, enter zero on line 1 of 

Schedule B.

If you are filing for a simple trust, subtract from adjusted 

total income any extraordinary dividends or taxable stock 

dividends included on page 1, line 2, and determined under 

the governing instrument and applicable local law to be 

allocable to corpus.

Line 2—Adjusted Tax-Exempt Interest

To figure the adjusted tax-exempt interest, follow the steps 

below.

Step 1. Add tax-exempt interest income on line 2 of 

Schedule A, any expenses allowable under section 212 

allocable to tax-exempt interest, and any interest expense 

allocable to tax-exempt interest.

Step 2. Subtract the Step 1 total from the amount of 

tax-exempt interest (including exempt-interest dividends) 

received.

Section 212 expenses that are directly allocable to 

tax-exempt interest are allocated only to tax-exempt interest. 

A reasonable proportion of section 212 expenses that are 

indirectly allocable to both tax-exempt interest and other 

income must be allocated to each class of income.

Figure the interest expense allocable to tax-exempt 

interest according to the guidelines in Rev. Proc. 72-18, 

1972-1 C.B. 740.

See Regulations sections 1.643(a)-5 and 1.265-1 for more 

information.

Line 3

Include all capital gains, whether or not distributed, that are 

attributable to income under the governing instrument or local 

law. For example, if the trustee distributed 50% of the current 

year's capital gains to the income beneficiaries (and reflects 

this amount on Schedule D (Form 1041), line 19, column (1)), 

but under the governing instrument all capital gains are 

attributable to income, then include 100% of the capital gains 

on line 3. If the amount on Schedule D (Form 1041), line 19, 

column (1), is a net loss, enter zero.

If the exclusion of gain from the sale or exchange of QSB 

stock was claimed, don't reduce the gain on line 3 by any 

amount excluded under section 1202.

Line 5

In figuring the amount of long-term and short-term capital 

gain for the tax year included on Schedule A, line 1, the 

specific provisions of the governing instrument control if the 

instrument specifically provides as to the source from which 

amounts are paid, permanently set aside, or to be used for 

charitable purposes.

In all other cases, determine the amount to enter by 

multiplying line 1 of Schedule A by a fraction, the numerator 

of which is the amount of net capital gains that are included in 

the accounting income of the estate or trust (that is, not 

allocated to corpus) and are distributed to charities, and the 

denominator of which is all items of income (including the 

amount of such net capital gains) included in the DNI.

Reduce the amount on line 5 by any allocable section 

1202 exclusion.

Line 8—Accounting Income

If you are filing for a decedent's estate or a simple trust, skip 

this line. If you are filing for a complex trust, enter the income 

for the tax year determined under the terms of the governing 

instrument and applicable local law. Don't include 

extraordinary dividends or taxable stock dividends 

determined under the governing instrument and applicable 

local law to be allocable to corpus.

Lines 9 and 10

Don't include any:

• Amount that was deducted on the prior year's return that 

was required to be distributed in the prior year,

• Amount that is paid or permanently set aside for charitable 

purposes or otherwise qualifying for the charitable deduction, 

or

• Amount that is properly paid or credited as a gift or 

bequest of a specific amount of money or specific property.

Note. An amount that can be paid or credited only from 

income isn't considered a gift or bequest. Also, to qualify as a 

gift or bequest, the amount must be paid in three or fewer 

installments.

Line 9—Income Required To Be Distributed 

Currently

Line 9 is to be completed by all simple trusts as well as 

complex trusts and decedents’ estates that are required to 

distribute income currently, whether it is distributed or not. 

The determination of whether trust income is required to be 

distributed currently depends on the terms of the governing 

instrument and the applicable local law.

The line 9 distributions are referred to as “first-tier 

distributions” and are deductible by the estate or trust to the 

extent of the DNI. The beneficiary includes such amounts in 

their income to the extent of their proportionate share of the 

DNI.

30 Instructions for Form 1041 (2023)
Line 10—Other Amounts Paid, Credited, or 

Otherwise Required To Be Distributed

Line 10 is to be completed only by a decedent's estate or 

complex trust. These distributions consist of any other 

amounts paid, credited, or required to be distributed and are 

referred to as “second-tier distributions.” Such amounts 

include annuities to the extent not paid out of income, 

mandatory and discretionary distributions of corpus, and 

distributions of property in kind.

If Form 1041-T was timely filed to elect to treat estimated 

tax payments as made by a beneficiary, the payments are 

treated as paid or credited to the beneficiary on the last day 

of the tax year and must be included on line 10.

Unless a section 643(e)(3) election is made, the value of 

all noncash property actually paid, credited, or required to be 

distributed to any beneficiaries is the smaller of:

1. The estate's or trust's adjusted basis in the property 

immediately before distribution, plus any gain or minus any 

loss recognized by the estate or trust on the distribution 

(basis of beneficiary); or

2. The FMV of such property.

If a section 643(e)(3) election is made by the fiduciary, then 

the amount entered on line 10 will be the FMV of the property.

A fiduciary of a complex trust or a decedent's estate may 

elect to treat any amount paid or credited to a beneficiary 

within 65 days following the close of the tax year as being 

paid or credited on the last day of that tax year. To make this 

election, see Question 6 under Other Information, later.

The beneficiary includes the amounts on line 10 in their 

income only to the extent of their proportionate share of the 

DNI.

Complex trusts. If the second-tier distributions exceed the 

DNI allocable to the second tier, the trust may have an 

accumulation distribution. See the line 11 instructions below.

Line 11—Total Distributions

If line 11 is more than line 8, and you are filing for a complex 

trust that has previously accumulated income, see the 

instructions for Schedule J, later, to see if you must complete 

Schedule J (Form 1041), Accumulation Distribution for 

Certain Complex Trusts.

Line 12—Adjustment for Tax-Exempt Income

In figuring the income distribution deduction, the estate or 

trust isn't allowed a deduction for any item of the DNI that isn't 

included in the gross income of the estate or trust. Thus, for 

purposes of figuring the allowable income distribution 

deduction, the DNI (line 7) is figured without regard to any 

tax-exempt interest.

If tax-exempt interest is the only tax-exempt income 

included in the total distributions (line 11), and the DNI 

(line 7) is less than or equal to line 11, then enter on line 12 

the amount from line 2.

If tax-exempt interest is the only tax-exempt income 

included in the total distributions (line 11), and the DNI is 

more than line 11 (that is, the estate or trust made a 

distribution that is less than the DNI), then figure the 

adjustment by multiplying line 2 by a fraction, the numerator 

of which is the total distributions (line 11), and the 

denominator of which is the DNI (line 7). Enter the result on 

line 12.

If line 11 includes tax-exempt income other than 

tax-exempt interest, figure line 12 by subtracting the total of 

the following from tax-exempt income included on line 11.

1. The charitable contribution deduction allocable to such 

tax-exempt income.

2. Expenses allocable to tax-exempt income.

Expenses that are directly allocable to tax-exempt income 

are allocated only to tax-exempt income. A reasonable 

proportion of expenses indirectly allocable to both 

tax-exempt income and other income must be allocated to 

each class of income.

Schedule G—Tax Computation and 

Payments

Part I—Tax Computation

Line 1a

2023 Tax Rate Schedule. For tax years beginning in 2023, 

figure the tax using the following Tax Rate Schedule and 

enter the tax on line 1a. However, see the Instructions for 

Schedule D (Form 1041) and the Qualified Dividends Tax 

Worksheet, later.

2023 Tax Rate Schedule

If taxable 

income is:

Over— But not over

—

Its tax is:

Of the 

amount over

—

$0 $2,900 10% $0

2,900 10,550 $290 + 24% 2,900

10,550 14,450 $2,126 + 35% 10,550

14,450 ----- $3,491 + 37% 14,450

Schedule D (Form 1041) and Schedule D Tax Worksheet. Use Part V of Schedule D (Form 1041), or the 

Schedule D Tax Worksheet, whichever is applicable, to figure 

the estate's or trust's tax if the estate or trust files Schedule D 

(Form 1041) and has:

• A net capital gain and any taxable income, or

• Qualified dividends on line 2b(2) of Form 1041 and any 

taxable income.

Qualified Dividends Tax Worksheet. If you don't have to 

complete Part I or Part II of Schedule D and the estate or trust 

has an amount entered on line 2b(2) of Form 1041 and any 

taxable income (line 23), then figure the estate's or trust's tax 

using the worksheet, later, and enter the tax on line 1a.

Note. You must reduce the amount you enter on line 2b(2) of 

Form 1041 by the portion of the section 691(c) deduction 

claimed on line 19 of Form 1041 if the estate or trust received 

qualified dividends that were IRD.

Line 1c—Alternative minimum tax. Attach Schedule I 

(Form 1041) if any of the following apply.

• The estate or trust must complete Schedule B.

Instructions for Form 1041 (2023) 31
• The estate or trust claims a credit on line 2b, 2c, or 2d of 

Schedule G.

• The estate's or trust's share of alternative minimum taxable 

income (line 27 of Schedule I (Form 1041)) exceeds $28,400.

Enter the amount from line 54 of Schedule I (Form 1041) on 

line 1c.

Line 1d—Total. If the amount from line 14 of Form 8978 is a 

positive amount, include it in the total reported on line 1d. On 

the dotted line next to line 1d, enter “From Form 8978” and 

the amount. Attach Form 8978.

Line 2a—Foreign Tax Credit

Attach Form 1116, Foreign Tax Credit (Individual, Estate, or 

Trust), if you elect to claim credit for income or profits taxes 

paid or accrued to a foreign country or a U.S. territory. The 

estate or trust may claim credit for that part of the foreign 

taxes not allocable to the beneficiaries (including charitable 

beneficiaries). Enter the estate's or trust's share of the credit 

on line 2a. See Pub. 514, Foreign Tax Credit for Individuals, 

for details.

Line 2b—General Business Credit

Don't include any amounts that are allocated to a 

beneficiary. Credits that are allocated between the 

estate or trust and the beneficiaries are listed in the 

instructions for box 13 of Schedule K-1, later. Generally, 

these credits are apportioned on the basis of the income 

allocable to the estate or trust and the beneficiaries.

Enter on line 2b the estate's or trust's total general 

business credit allowed for the current year from Form 3800. 

The estate or trust must file Form 3800 to claim any of the 

general business credits. Generally, if the estate's or trust's 

only source of a credit is from a pass-through entity and the 

beneficiary isn't entitled to an allocable share of a credit, you 

aren't required to complete the source form for that credit. 

However, certain credits have limitations and special 

computations that may require you to complete the source 

form. See the Instructions for Form 3800 for more 

information.

Line 2c—Credit for Prior Year Minimum Tax

An estate or trust that paid AMT in a previous year may be 

eligible for a minimum tax credit in 2023. See Form 8801, 

CAUTION

!

Qualified Dividends Tax Worksheet—Schedule G, Part I, Line 1a Keep for Your Records

Caution: Don’t use this worksheet if the estate or trust must complete Schedule D (Form 1041).

1. Enter the amount from Form 1041, line 23 ............................. 1.

2. Enter the amount from Form 1041, line 2b(2) ........ 2.

3. If you are claiming investment interest expense on Form 

4952, enter the amount from line 4g; otherwise, 

enter -0- ....................................... 3.

4. Subtract line 3 from line 2. If zero or less, enter -0- ...................... 4.

5. Subtract line 4 from line 1. If zero or less, enter -0- ...................... 5.

6. Enter the smaller of the amount on line 1 or $3,000 .................... 6.

7. Enter the smaller of the amount on line 5 or line 6 ...................... 7.

8. Subtract line 7 from line 6. If zero or less, enter -0-. This amount is taxed at 0% ................ 8.

9. Enter the smaller of line 1 or line 4 ................................... 9.

10. Subtract line 8 from line 4 .......................................... 10.

11. Enter the smaller of line 1 or $14,650 ................................ 11.

12. Add lines 5 and 8 ................................................. 12.

13. Subtract line 12 from line 11. If zero or less, enter -0- .................... 13.

14. Enter the smaller of line 10 or line 13 ................................ 14.

15. Multiply line 14 by 15% (0.15) ......................................................... 15.

16. Enter the amount from line 9 ........................................ 16.

17. Add lines 8 and 14 ................................................ 17.

18. Subtract line 17 from line 16. If zero or less, enter -0- .................... 18.

19. Multiply line 18 by 20% (0.20) ......................................................... 19.

20. Figure the tax on the amount on line 5. Use the 2023 Tax Rate Schedule ...................... 20.

21. Add lines 15, 19, and 20 ............................................................. 21.

22. Figure the tax on the amount on line 1. Use the 2023 Tax Rate Schedule ...................... 22.

23. Tax on all taxable income. Enter the smaller of line 21 or line 22 here and on 

Schedule G, line 1a ................................................................. 23.

32 Instructions for Form 1041 (2023)
Credit for Prior Year Minimum Tax—Individuals, Estates, and 

Trusts.

Line 2d—Bond Credits

Complete and attach Form 8912, Credit to Holders of Tax 

Credit Bonds, if the estate or trust claims a credit for holding 

a tax credit bond. Also, be sure to include the credit in 

interest income.

Line 2e—Total Credits

To claim a credit allowable to the estate or trust other than the 

credits entered on lines 2a through 2d, include the allowable 

credit in the total for line 2e. Complete and attach the 

appropriate form and enter the form number and amount of 

the allowable credit on the dotted line to the left of the entry 

space.

If the amount from line 14 of Form 8978 is a negative 

amount, treat it as a positive amount and add it to the total 

reported on line 2e. On the dotted line next to line 2e, enter 

“From Form 8978” and the amount. Attach Form 8978.

Line 4—Tax on the ESBT Portion of the Trust

Use the ESBT Tax Worksheet above to figure the ESBT tax. 

Enter the amount from line 17 of the ESBT Tax Worksheet on 

line 4.

See Electing Small Business Trusts (ESBTs), earlier, for 

the special tax computation rules that apply to the portion of 

an ESBT consisting of stock in one or more S corporations.

Line 5—Net Investment Income Tax (NIIT)

Enter the amount of NIIT calculated and attach Form 8960. 

See the Instructions for Form 8960 to calculate the tax, and 

Net Investment Income Tax (NIIT), later, for more information.

Line 6a—Recapture of Investment Credit

If the estate or trust disposed of investment credit property or 

changed its use before the end of the recapture period, see 

Form 4255, Recapture of Investment Credit, to figure the 

recapture tax allocable to the estate or trust. Include the tax 

on line 6a and enter “ICR” on the dotted line to the left of the 

entry space.

ESBT Tax Worksheet—Schedule G, Part I, Line 4 Keep for Your Records

 ESBT Tax Computation

1. Ordinary income (loss) from Schedule K-1 (Form 1120-S) ................................... 1.

2a. Total ordinary dividends from Schedule K-1 (Form 1120-S) .................................. 2a.

2b. Qualified dividends from Schedule K-1 (Form 1120-S) ................... 2b.

3. Capital gain. See instructions and attach Schedule D (Form 1041) ............................ 3.

4. Other income (loss) reported on Schedule K-1 (Form 1120-S) ............................... 4.

5. Total income. Add lines 1, 2a, 3, and 4 .................................................. 5.

6. Other allowable deductions from Schedule K-1 (Form 1120-S) ............................... 6.

7. Administrative expenses (allocated to the S portion) ....................................... 7.

8. State and local income taxes (allocated to the S portion) .................................... 8.

9. Interest expense on indebtedness to acquire S corporation stock ............................. 9.

10. Charitable contribution deduction. Check here if deduction includes prior year carryover [ ] ...... 10.

11. Qualified business income deduction (S portion). Attach Form 8995 or 8995-A ................. 11.

12. Total deductions. Add lines 6 through 11 ................................................ 12.

13. Taxable income (S portion). Subtract line 12 from line 5 ..................................... 13.

14a. Tax. Tax on taxable income. See instructions .......................... 14a.

14b. Alternative minimum tax (S portion). Attach Schedule I (Form 1041) ....... 14b.

14c. Total. Add lines 14a and 14b ..........................................................14c.

15a. Foreign tax credit (S portion). Attach Form 1116 ........................ 15a.

15b. General business credit (S portion). Attach Form 3800 .................. 15b.

15c. Credit for prior year minimum tax (S portion). Attach Form 8801 ........... 15c.

15d. Bond credits (S portion). Attach Form 8912 ............................ 15d.

15e. Total credits. Add lines 15a through 15d ................................................15e.

16. Recapture taxes (S portion). Check if from: Form 4255 [ ] or Form 8611 [ ] .................. 16.

17. Total ESBT tax. Subtract line 15e from line 14c and add line 16. Enter here and on Form 1041, 

Schedule G, Part I, line 4 .............................................................. 17.

Instructions for Form 1041 (2023) 33
Line 6b—Recapture of Low-Income Housing 

Credit

If the estate or trust disposed of property (or there was a 

reduction in the qualified basis of the property) on which the 

low-income housing credit was claimed, see Form 8611, 

Recapture of Low-Income Housing Credit, to figure any 

recapture tax allocable to the estate or trust. Include the tax 

on line 6b and enter “LIHCR” on the dotted line to the left of 

the entry space.

Line 6c—Other Recapture Taxes

Recapture of qualified electric vehicle credit. If the 

estate or trust claimed the qualified electric vehicle credit in a 

prior tax year for a vehicle that ceased to qualify for the credit, 

part or all of the credit may have to be recaptured. See 

Regulations section 1.30-1(b) for details. If the estate or trust 

owes any recapture tax, include it on line 6c and enter 

“QEVCR” on the dotted line to the left of the entry space.

Recapture of the new markets credit. If the estate or trust 

owes any new markets recapture tax, include it on line 6c and 

enter “NMCR” on the dotted line to the left of the entry space. 

For more information, including how to figure the recapture 

amount, see section 45D(g).

Recapture of the credit for employer-provided childcare 

facilities and services. If the facility ceased to operate as a 

qualified childcare facility or there was a change in 

ownership, part or all of the credit may have to be recaptured. 

See Form 8882, Credit for Employer-Provided Childcare 

Facilities and Services, for details. If the estate or trust owes 

any recapture tax, include it on line 6c and enter “ECCFR” on 

the dotted line to the left of the entry space.

Recapture of the alternative motor vehicle credit. See 

section 30B(h)(8) for details. Include the tax on line 6c and 

enter “AMVCR” on the dotted line to the left of the entry 

space.

Recapture of the alternative fuel vehicle refueling property credit. See section 30C(e)(5) for details. Include the tax 

on line 6c and enter “ARPCR” on the dotted line to the left of 

the entry space.

Recapture of the section 45Q carbon oxide sequestration credit. See Form 8933, Part III, line 22. Include the 

section 45Q recapture amount on line 6c and enter “COSCR” 

on the dotted line to the left of the entry space.

Line 7—Household Employment Taxes

If any of the following apply, get Schedule H (Form 1040) and 

its instructions to see if the estate or trust owes these taxes.

1. The estate or trust paid any one household employee 

cash wages of $2,600 or more in 2023. Cash wages include 

wages paid by checks, money orders, etc. When figuring the 

amount of cash wages paid, combine cash wages paid by 

the estate or trust with cash wages paid to the household 

employee in the same calendar year by the household of the 

decedent or beneficiary for whom the administrator, executor, 

or trustee of the estate or trust is acting.

2. The estate or trust withheld federal income tax during 

2023 at the request of any household employee.

3. The estate or trust paid total cash wages of $1,000 or 

more in any calendar quarter of 2022 or 2023 to household 

employees.

Enter on line 7 any household employment taxes owed 

from Schedule H (Form 1040), Part I, line 8d, or Part III, 

line 26.

Note. See Amended Schedule H (Form 1040 ) under F. 

Initial Return, Amended Return, etc., earlier, for information 

on filing an amended Schedule H (Form 1040) for a Form 

1041.

Line 8—Other Taxes and Amounts Due

Triggering event under section 965(i). If you had a 

triggering event under section 965(i) during the year, enter on 

line 8 the current year tax liability from the triggered deferred 

net 965 tax liability from Form 965-A, Part IV, column (f).

ESBTs. If a triggering event occurred in the S portion of 

the ESBT, also include on the attachment that shows the 

amount of the net 965 tax liability attributable to the S portion 

of the trust the triggered deferred net 965 tax liability from 

Form 965-A, Part IV, column (f).

Interest on deferred tax attributable to installment sales 

of certain timeshares and residential lots and certain 

nondealer real property installment obligations. If an 

obligation arising from the disposition of real property to 

which section 453(l) or 453A applies is outstanding at the 

close of the year, the estate or trust must include the interest 

due under section 453(l)(3)(B) or 453A(c), whichever is 

applicable, in the amount to be entered on Form 1041, 

Schedule G, line 8, with the notation “Section 453(l) interest” 

or “Section 453A(c) interest,” whichever is applicable. Attach 

a schedule showing the computation.

Form 4970, Tax on Accumulation Distribution of Trusts. 

Include on this line any tax due on an accumulation 

distribution from a trust. To the left of the entry space, enter 

“From Form 4970” and the amount of the tax.

Form 8697, Interest Computation Under the Look-Back 

Method for Completed Long-Term Contracts. Include the 

interest due under the look-back method of section 460(b)

(2). To the left of the entry space, enter “From Form 8697” 

and the amount of interest due.

Form 8866, Interest Computation Under the Look-Back 

Method for Property Depreciated Under the Income 

Forecast Method. Include the interest due under the 

look-back method of section 167(g)(2). To the left of the entry 

space, enter “From Form 8866” and the amount of interest 

due.

Interest on deferral of gain from certain constructive 

ownership transactions. Include the interest due under 

section 1260(b) on any deferral of gain from certain 

constructive ownership transactions. To the left of the entry 

space, enter “1260(b)” and the amount of interest due.

Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts. If the estate 

or trust fails to receive the minimum distribution under section 

4974, use Form 5329 to pay the excise tax. To the left of the 

entry space, enter “From Form 5329” and the amount of the 

tax.

Additional tax on the early disposition of noncash property for which a section 247(g)(3) election was made by 

an Alaska Native Settlement Trust. This additional 10% 

tax only should be shown on an amended return filed by a 

Settlement Trust for the year in which the Settlement Trust 

received a contribution of noncash property from an Alaska 

Native Corporation and elected to defer the recognition of 

34 Instructions for Form 1041 (2023)
income related to such property, but disposed of the property 

within the first tax year subsequent to the tax year the 

Settlement Trust received the property. Determine the 

increase in tax due to the inclusion of the deferred income 

and include on this line the additional tax due, equal to 10% 

of the increase in tax due to the inclusion of the deferred 

income. The increase in tax due to the inclusion of the 

deferred income, which is the base amount for the 

computation of the additional 10% tax shown on this line, 

should be shown elsewhere on Schedule G. If the amended 

return also shows changes to income, deductions, or credits 

unrelated to the inclusion of the deferred income, attach a 

schedule showing the computation of the additional tax due 

only to the inclusion of the deferred income. To the left of the 

entry space, enter “Section 247(g)(3) tax.”

Form 8978 Worksheet. If you have a negative amount from 

Form 8978, line 14, that was not used to reduce Schedule G, 

line 3, to zero, and you have chapter 1 taxes and/or tax and 

interest from Form 8621, Information Return by a 

Shareholder of a Passive Foreign Investment Company or 

Qualified Electing Fund, then complete the Form 8978 

Worksheet—Schedule G, Part I, Line 8 to figure the amount 

to enter on line 8.

Line 9—Total Tax

Add Schedule G, Part I, lines 3 through 8. Enter the total on 

Schedule G, Part I, line 9; and page 1 of Form 1041, line 24.

Part II—Payments

Line 10—2023 Estimated Tax Payments and 

Amount Applied From 2022 Return

Enter the amount of any estimated tax payment you made 

with Form 1041-ES for 2023 plus the amount of any 

overpayment from the 2022 return that was applied to the 

2023 estimated tax.

If the estate or trust is the beneficiary of another trust and 

received a payment of estimated tax that was credited to the 

trust (as reflected on the Schedule K-1 issued to the trust), 

then report this amount separately with the notation “Section 

643(g)” in the space next to line 10 and include this amount in 

the amount entered on line 10.

Don't include on Form 1041 estimated tax paid by an 

individual before death. Instead, include those 

payments on the decedent's final income tax return.

Line 11—Estimated Tax Payments Allocated to 

Beneficiaries (From Form 1041-T)

The trustee (or executor, for the final year of the estate) may 

elect under section 643(g) to have any portion of its 

estimated tax treated as a payment of estimated tax made by 

a beneficiary or beneficiaries. The election is made on Form 

1041-T, which must be filed by the 65th day after the close of 

the trust's tax year. Form 1041-T shows the amounts to be 

allocated to each beneficiary. This amount is reported in 

box 13, code A, of the beneficiary's Schedule K-1 (Form 

1041).

Attach Form 1041-T to your return only if you haven't yet 

filed it; however, attaching Form 1041-T to Form 1041 doesn't 

extend the due date for filing Form 1041-T. If you have 

already filed Form 1041-T, don't attach a copy to your return.

Failure to file Form 1041-T by the due date (March 5, 

2024, for calendar year estates and trusts) will result 

in an invalid election. An invalid election will require 

the filing of an amended Schedule K-1 for each beneficiary 

who was allocated a payment of estimated tax.

Line 13—Tax Paid With Form 7004

If you filed Form 7004 to request an extension of time to file 

Form 1041, enter the amount that you paid with the extension 

request.

Line 14—Federal Income Tax Withheld

Use line 14 to claim a credit for any federal income tax 

withheld (and not repaid) by (a) an employer on wages and 

salaries of a decedent received by the decedent's estate; (b) 

a payer of certain gambling winnings (for example, state 

lottery winnings); or (c) a payer of distributions from 

pensions, annuities, retirement or profit-sharing plans, IRAs, 

insurance contracts, etc., received by a decedent's estate or 

trust. Attach a copy of Form W-2, Form W-2G, or Form 

1099-R to the front of the return.

CAUTION

!

CAUTION

!

Form 8978 Worksheet—Schedule G, Part I, Line 8 Keep for Your Records

Use this worksheet if (a) Schedule G, line 3, is zero; (b) after line 3 was reduced to zero, you have a negative 

amount from Form 8978, line 14, that was not used to reduce line 3 to zero; and (c) you have chapter 1 taxes 

entered on Schedule G, line 4; Schedule G, lines 6a–6c; Schedule G, line 8; and/or tax and interest from Form 

8621.

1. Enter the total amount of chapter 1 taxes from Schedule G, line 4; Schedule G, lines 6a–6c; 

Schedule G, line 8; and tax and interest from Form 8621 ................................... 1.

2. Enter the negative amount from Form 8978, line 14, that has not already been used to reduce 

Schedule G, line 3, to zero ............................................................ 2. ( )

3. Combine line 1 and line 2 ............................................................ 3.

4. Enter the amount of non-chapter 1 taxes included on Schedule G, line 8 ..................... 4.

5. If line 3 is negative, enter as a negative the amount from line 1. Otherwise, enter the amount from 

line 2 ............................................................................. 5. ( )

6. Combine line 4 and line 5. Enter the result on Schedule G, line 8. This amount may be a negative 

number ........................................................................... 6.

Instructions for Form 1041 (2023) 35
Except for backup withholding (as explained below), 

withheld income tax can't be passed through to 

beneficiaries on either Schedule K-1 or Form 1041-T.

Backup withholding. If the estate or trust received a 2023 

Form 1099 showing federal income tax withheld (that is, 

backup withholding) on interest income, dividends, or other 

income, check the box and include the amount withheld on 

income retained by the estate or trust in the total for line 14.

Report in box 13, code B, of Schedule K-1 (Form 1041) 

any credit for backup withholding on income distributed to the 

beneficiary.

Line 15—Current Net 965 Tax Liability—Eligible 

for Installment Payment Election

If you have a section 965(i) net tax liability for which a 

triggering event has occurred in the current year and you are 

making a section 965(h) election with respect to that section 

965 net tax liability, enter this amount from Form 965-A, Part 

I, column (f).

Line 16—Credit for Tax Paid on Undistributed 

Capital Gains

Attach Copy B of Form 2439, Notice to Shareholder of 

Undistributed Long-Term Capital Gains.

Line 17—Credit for Federal Tax on Fuels

Enter any credit for federal excise taxes paid on fuels that are 

ultimately used for nontaxable purposes (for example, an 

off-highway business use). Attach Form 4136, Credit for 

Federal Tax Paid on Fuels. See Pub. 510, Excise Taxes, for 

more information.

Line 18a—Elective Payment Election Amount 

From Form 3800

Enter any elective payment election amount from Form 3800, 

Part III, line 6, column (i).

Line 18b—Other Credits or Payments

Enter the refundable portion of the qualified sick and family 

leave credit from Schedule H (Form 1040), Part I, lines 8e 

and 8f, on line 18b only if qualified sick and family leave 

wages were paid in 2023 for leave taken before April 1, 2021, 

or for leave taken after March 31, 2021, and before October 

1, 2021.

Net Investment Income Tax (NIIT)

Certain estates and trusts may be subject to the NIIT. Estates 

and trusts use Form 8960 to report their NII and calculate the 

tax. The amount of NIIT payable by the estate or trust is 

reported on Form 1041, Schedule G, line 5.

The NIIT is imposed on estates and trusts to the extent 

that they have undistributed NII and AGI exceeding $14,450. 

See Definitions, earlier, for the calculation of an estate’s or 

trust’s AGI. The following types of estates and trusts may owe 

the NIIT in addition to their regular income tax liability.

• Decedents’ estates.

• Simple and complex trusts.

• ESBTs.

• Pooled income funds.

• Bankruptcy estates.

However, in the case of bankruptcy estates, the AGI 

threshold is $125,000.

CAUTION

!

Calculation of NII. In general, an estate’s or trust’s NII is 

calculated in the same way as an individual's. However, there 

are special rules for the calculation of NII in the case of an 

ESBT. See the Instructions for Form 8960 and Regulations 

section 1.1411-3(e) for information on the calculation (and 

Regulations section 1.1411-3(c)(1) for information on the 

ESBT calculation).

Distributions on NII. The NIIT is imposed on estates and 

trusts to the extent they have undistributed NII. In order to 

arrive at the estate’s or trust’s undistributed NII, the estate’s 

or trust’s NII is reduced for (1) distributions of NII to 

beneficiaries, and (2) NII allocable to charities when the 

estate or trust is allowed a deduction under section 642(c). 

The instructions for Form 8960, line 18b, provide more 

information on the calculation of undistributed NII.

NII allocable to the deduction under section 642(c). An 

estate’s, trust’s, or pooled income fund’s NII is reduced by the 

amount of NII allocable to the charitable deduction allowed 

under section 642(c). In the case of an estate, trust, or 

pooled income fund that has NII and non-NII income in a year 

when a section 642(c) deduction is claimed, the amount of 

the NII deduction allocable to the section 642(c) deduction 

will be less than the amount reported on Form 1041, 

Schedule A, line 7 (or on the separate calculation in the case 

of a pooled income fund).

Beneficiary reporting. In general, the amount of the 

income distribution deduction (from Form 1041, Schedule B, 

line 15) that reduces the estate’s or trust’s NII will be the 

amount of NII that will be taxable to the beneficiaries on their 

Schedules K-1 (Form 1041).

The Schedule K-1 has code H in box 14 to report the 

amount of NII distributed to the beneficiary. The amount 

reported in code H represents an adjustment (either positive 

or negative) that the beneficiary must use in completing its 

Form 8960 (if necessary). In the case where the trust’s 

income distribution deduction allowed in calculating 

undistributed NII is less than the amount on Schedule B, 

line 15, then code H will show a negative number that is the 

difference between the two amounts. In the case of an estate 

or trust that issues more than one Schedule K-1 for a year, 

the sum of the amounts reported in code H on all of the 

Schedules K-1 will be the difference between Schedule B, 

line 15, and the amount deducted on Form 8960, line 18b, for 

amounts of NII distributed to a beneficiary.

The beneficiary's NII will equal all taxable amounts 

reported on the Schedule K-1, adjusted by the 

amount reported in box 14, code H.

The only instance where code H will be a positive 

number is when:

• The estate or trust owns directly, or indirectly, an (a) 

interest in a section 1291 fund, or (b) interest in a controlled 

foreign corporation or qualified electing fund and no election 

under Regulations section 1.1411-10(g) has been made with 

respect to that interest; and

• The distribution from one of the entities described above is 

(a) NII to the estate or trust, but not included in its taxable 

income; and (b) the distributions from the estate or trust to 

the beneficiary(ies) in the year exceed the amount of the 

income distribution deduction allowed for regular tax 

purposes (from Schedule B, line 15).

TIP TIP

36 Instructions for Form 1041 (2023)
Special rules. In the final year of an estate or trust, 

deductions in excess of income may be reported to the 

beneficiary in box 11 of Schedule K-1. These deductions 

may also be deductible by the beneficiary for NIIT purposes. 

In this situation, the terminating estate or trust should provide 

the beneficiary information regarding whether the amounts 

reported in box 11, codes A through E, include any amounts 

that are deductible for NIIT purposes. See Regulations 

section 1.1411-4(g)(4).

Other Information

Question 1

If the estate or trust received tax-exempt income, figure the 

allocation of expenses between tax-exempt and taxable 

income on a separate sheet and attach it to the return. Enter 

only the deductible amounts on the return. Don't figure the 

allocation on the return itself. For more information, see 

Allocation of Deductions for Tax-Exempt Income, earlier.

Report the amount of tax-exempt interest income received 

or accrued in the space provided below Question 1.

Also, include any exempt-interest dividends the estate or 

trust received as a shareholder in a mutual fund or other 

regulated investment company (RIC).

Question 2

All salaries, wages, and other compensation for personal 

services must be included on the return of the person who 

earned the income, even if the income was irrevocably 

assigned to a trust by a contract assignment or similar 

arrangement.

The grantor or person creating the trust is considered the 

owner if they keep “beneficial enjoyment” of or substantial 

control over the trust property. The trust's income, 

deductions, and credits are allocable to the owner.

If you checked “Yes” for Question 2, see Special Reporting 

Instructions, earlier.

Question 3

Check the “Yes” box and enter the name of the foreign 

country if either (1) or (2) below applies.

1. The estate or trust owns more than 50% of the stock in 

any corporation that owns one or more foreign bank 

accounts.

2. At any time during the year, the estate or trust had an 

interest in or signature or other authority over a bank, 

securities, or other financial account in a foreign country.

Exception. Check “No” if either of the following applies to 

the estate or trust.

• The combined value of the accounts was $10,000 or less 

during the whole year.

• The accounts were with a U.S. military banking facility 

operated by a U.S. financial institution.

If you checked “Yes” for Question 3, electronically file 

FinCEN Form 114, Report of Foreign Bank and Financial 

Accounts (FBAR), with the Department of the Treasury using 

FinCEN's BSA E-Filing System. Because FinCEN Form 114 

isn't a tax form, don't file it with Form 1041.

Go to FinCEN.gov for more information.

If you are required to file FinCEN Form 114 but don't, 

you may have to pay a penalty of up to $10,000 (or 

more in some cases).

Question 4

The estate or trust may be required to file Form 3520, Annual 

Return To Report Transactions With Foreign Trusts and 

Receipt of Certain Foreign Gifts, if:

• It directly or indirectly transferred property or money to a 

foreign trust—for this purpose, any U.S. person who created 

a foreign trust is considered a transferor;

• It is treated as the owner of any part of the assets of a 

foreign trust under the grantor trust rules; or

• It received a distribution from a foreign trust.

An owner of a foreign trust must ensure that the trust 

files an annual information return on Form 3520-A.

Question 5

An estate or trust claiming an interest deduction for qualified 

residence interest (as defined in section 163(h)(3)) on 

seller-provided financing must include on an attachment to 

the 2023 Form 1041 the name, address, and TIN of the 

person to whom the interest was paid or accrued (that is, the 

seller).

If the estate or trust received or accrued such interest, it 

must provide identical information on the person liable for 

such interest (that is, the buyer). This information doesn't 

need to be reported if it duplicates information already 

reported on Form 1098.

Question 6

To make the section 663(b) election to treat any amount paid 

or credited to a beneficiary within 65 days following the close 

of the tax year as being paid or credited on the last day of 

that tax year, check the box. This election can be made by 

the fiduciary of a complex trust or the executor of a 

decedent's estate. For the election to be valid, you must file 

Form 1041 by the due date (including extensions). Once 

made, the election is irrevocable.

Question 7

To make the section 643(e)(3) election to recognize gain on 

property distributed in kind, check the box and see the 

Instructions for Schedule D (Form 1041).

Question 9

Generally, a beneficiary is a skip person if the beneficiary is in 

a generation that is 2 or more generations below the 

generation of the transferor to the trust.

To determine if a beneficiary that is a trust is a skip person, 

and for exceptions to the general rules, see the definition of a 

skip person in the instructions for Schedule R of Form 706.

Question 10

A domestic trust that is a specified domestic entity must file 

Form 8938 along with Form 1041 for the tax year. Form 8938 

must be filed each year the value of the trust's specified 

foreign financial assets meets or exceeds the reporting 

threshold. A trust exceeds the threshold amount if the total 

value of the specified foreign financial assets is more than 

$50,000 on the last day of the tax year or more than $75,000 

at any time during the tax year. For more information on 

domestic trusts that are specified domestic entities, the filing 

CAUTION

!

TIP

Instructions for Form 1041 (2023) 37
threshold, and the types of foreign financial assets that must 

be reported, see the Instructions for Form 8938.

A domestic trust that is required to file Form 8938 along 

with Form 1041 for the tax year must check “Yes” to Question 

10.

Question 11a

A distribution of S corporation stock by an estate or trust that 

results in a change of ownership for federal income tax 

purposes is a triggering event described in Regulations 

section 1.965-7(c)(3). If the estate or trust transfers less than 

all of its shares of stock of the S corporation, the transfer will 

be a triggering event only with respect to the portion of the 

estate’s or trust’s section 965(i) net tax liability that is properly 

allocable to the transferred shares. If the person who 

received the distribution of S corporation stock is an eligible 

section 965(i) transferee, the estate or trust may enter into a 

transfer agreement with the eligible section 965(i) transferee 

to prevent the assessment of the estate’s or trust’s section 

965(i) net tax liability in the tax year that includes the 

triggering event.

The estate or trust must report in Part IV, column (g), of 

Form 965-A the transfer out of the section 965 tax liability 

properly allocable to S corporation shares for which the 

estate or trust entered into a transfer agreement with an 

eligible section 965(i) transferee. See the Instructions for 

Form 965-A for additional information.

The transfer agreement must be filed within 30 days 

of the triggering event. See Form 965-D, Transfer 

Agreement Under Section 965(i)(2), and the related 

instructions for additional information.

Question 11b

If the estate or trust distributed S corporation shares and the 

estate or trust did not enter into a timely transfer agreement 

for all shares transferred during the tax year, the transfer of 

shares not covered by a transfer agreement is a triggering 

event. See Triggering event under section 965(i), earlier.

The estate or trust may file a consent agreement under 

section 965(i)(4)(D) to make the election under section 

965(h) to pay in installments the triggered section 965(i) net 

tax liability. See Form 965-E, Consent Agreement Under 

Section 965(i)(4)(D), and the related instructions for how to 

file the consent agreement. See Triggered deferred S 

corporation-related net 965 tax liability under Part I in the 

Instructions for Form 965-A for how to make the installment 

election.

The due date of the original Form 965-E is within 30 

days of the triggering event.

The due date of the election to pay in installments is 

the due date of the return for the tax year, including 

extensions. The actual payment of the first 

installment is due no later than the due date of the return for 

the tax year without extensions, even if the election is made 

on a return filed by the extended due date.

Question 12

Check the “Yes” box if the estate or trust entered into a 

transfer agreement as an eligible 965(i) transferee.

If, during the tax year, the estate or trust entered into a 

transfer agreement as an eligible 965(i) transferee, the estate 

CAUTION

!

CAUTION

!

CAUTION

!

or trust must report the transfer in of that liability on Part IV of 

Form 965-A. See the Instructions for Form 965-A for 

additional information.

Question 13

Digital assets are any digital representations of value that are 

recorded on a cryptographically secured distributed ledger or 

any similar technology. For example, digital assets include 

non-fungible tokens (NFTs) and virtual currencies, such as 

cryptocurrencies and stablecoins. If a particular asset has the 

characteristics of a digital asset, it will be treated as a digital 

asset for federal income tax purposes.

Check the “Yes” box next to the question on digital assets 

if at any time during 2023, you (a) received (as a reward, 

award, or payment for property or services); or (b) sold, 

exchanged, or otherwise disposed of a digital asset (or any 

financial interest in any digital asset).

For example, check “Yes” if at any time during 2023 you:

• Received digital assets as payment for property or 

services provided;

• Received digital assets as a result of a reward or award;

• Received new digital assets as a result of mining, staking, 

and similar activities;

• Received digital assets as a result of a hard fork;

• Disposed of digital assets in exchange for property or 

services;

• Disposed of a digital asset in exchange or trade for another 

digital asset;

• Sold a digital asset; or

• Otherwise disposed of any other financial interest in a 

digital asset.

You have a financial interest in a digital asset if you are the 

owner of record of a digital asset, or have an ownership stake 

in an account that holds one or more digital assets, including 

the rights and obligations to acquire a financial interest, or 

you own a wallet that holds digital assets.

The following actions or transactions in 2023, alone, 

generally don’t require you to check “Yes”:

• Holding a digital asset in a wallet or account;

• Transferring a digital asset from one wallet or account you 

own or control to another wallet or account that you own or 

control; or

• Purchasing digital assets using U.S. or other real currency, 

including through the use of electronic platforms such as 

PayPal and Venmo.

Do not leave the question unanswered. You must answer 

“Yes” or “No” checking the appropriate box. For more 

information, go to IRS.gov/VirtualCurrencyFAQs.

How to report digital asset transactions. If, in 2023, you 

disposed of any digital asset, which you held as a capital 

asset, through a sale, trade, exchange, payment, or other 

transfer, check “Yes” and use Form 8949 to calculate your 

capital gain or loss and report that gain or loss on 

Schedule D (Form 1041).

If you received any digital asset as compensation for 

services or disposed of any digital asset that you held for sale 

to customers in a trade or business, you must report the 

income as you would report other income of the same type.

Question 14

If the deemed owner of a grantor portion of the ESBT is a 

nonresident alien, the items of income, deduction, and credit 

from that grantor portion must be reallocated to the S portion. 

38 Instructions for Form 1041 (2023)
See Schedule G, Part I, line 4, Tax on the ESBT Portion of the 

Trust, earlier, for how to figure the tax on the S portion of the 

trust.

Question 15

The S portion of the ESBT must take into account the 

qualified items of income, gain, deduction, and loss and other 

items from any S corporation owned by the ESBT, and any 

qualified items of income, gain, deduction, and loss and other 

items reallocated to the S portion. See Question 14, earlier. 

For purposes of determining whether the taxable income of 

an ESBT exceeds the threshold amount, the S portion and 

the non-S portion of an ESBT are treated as a single trust. 

See Regulations section 1.199A-6(d)(3)(vi).

Schedule J (Form 

1041)—Accumulation Distribution for 

Certain Complex Trusts

General Instructions

Use Schedule J (Form 1041) to report an accumulation 

distribution for a domestic complex trust that was:

• Previously treated at any time as a foreign trust (unless an 

exception is provided in future regulations); or

• Created before March 1, 1984, unless that trust would not 

be aggregated with other trusts under the rules of section 

643(f) if that section applied to the trust.

An accumulation distribution is the excess of amounts 

properly paid, credited, or required to be distributed (other 

than income required to be distributed currently) over the DNI 

of the trust reduced by income required to be distributed 

currently. To have an accumulation distribution, the 

distribution must exceed the accounting income of the trust.

Specific Instructions

Part I—Accumulation Distribution in 2023

Line 1—Distribution Under Section 661(a)(2)

Enter the amount from Form 1041, Schedule B, line 10, for 

2023. This is the amount properly paid, credited, or required 

to be distributed other than the amount of income for the 

current tax year required to be distributed currently.

Line 2—Distributable Net Income

Enter the amount from Form 1041, Schedule B, line 7, for 

2023. This is the amount of DNI for the current tax year 

determined under section 643(a).

Line 3—Distribution Under Section 661(a)(1)

Enter the amount from Form 1041, Schedule B, line 9, for 

2023. This is the amount of income for the current tax year 

required to be distributed currently.

Line 5—Accumulation Distribution

If line 11 of Form 1041, Schedule B, is more than line 8 of 

Form 1041, Schedule B, complete the rest of Schedule J and 

file it with Form 1041, unless the trust has no previously 

accumulated income.

Generally, amounts accumulated before a beneficiary 

reaches age 21 may be excluded by the beneficiary. See 

sections 665 and 667(c) for exceptions relating to multiple 

trusts. The trustee reports to the IRS the total amount of the 

accumulation distribution before any reduction for income 

accumulated before the beneficiary reaches age 21. If the 

multiple trust rules don't apply, the beneficiary claims the 

exclusion when filing Form 4970, as you may not be aware 

that the beneficiary may be a beneficiary of other trusts with 

other trustees.

For examples of accumulation distributions that include 

payments from one trust to another trust, and amounts 

distributed for a dependent's support, see Regulations 

section 1.665(b)-1A(b).

Part II—Ordinary Income Accumulation 

Distribution

Enter the applicable year at the top of each column for each 

throwback year.

Line 6—DNI for Earlier Years

Enter the applicable amounts as follows:

Throwback year(s) Amount from line

1969–1977 ........ Form 1041, Schedule C, line 5

1978–1979 ........ Form 1041, line 61

1980 ............ Form 1041, line 60

1981–1982 ........ Form 1041, line 58

1983–1996 ........ Form 1041, Schedule B, line 9

1997–2022 ........ Form 1041, Schedule B, line 7

For information about throwback years, see the 

instructions for line 13. For purposes of line 6, in figuring the 

DNI of the trust for a throwback year, subtract any estate tax 

deduction for IRD if the income is includible in figuring the 

DNI of the trust for that year.

Line 7—Distributions Made During Earlier Years

Enter the applicable amounts as follows:

Throwback year(s) Amount from line

1969–1977 ........ Form 1041, Schedule C, line 8

1978 ............ Form 1041, line 64

1979 ............ Form 1041, line 65

1980 ............ Form 1041, line 64

1981–1982 ........ Form 1041, line 62

1983–1996 ........ Form 1041, Schedule B, line 13

1997–2022 ........ Form 1041, Schedule B, line 11

Line 11—Prior Accumulation Distribution Thrown 

Back to Any Throwback Year

Enter the amount of prior accumulation distributions thrown 

back to the throwback years. Don't enter distributions 

excluded under section 663(a)(1) for gifts, bequests, etc.

Line 13—Throwback Years

Allocate the amount on line 5 that is an accumulation 

distribution to the earliest applicable year first, but don't 

allocate more than the amount on line 12 for any throwback 

Instructions for Form 1041 (2023) 39
year. An accumulation distribution is thrown back first to the 

earliest preceding tax year in which there is undistributed net 

income (UNI). Then, it is thrown back beginning with the next 

earliest year to any remaining preceding tax years of the 

trust. The portion of the accumulation distribution allocated to 

the earliest preceding tax year is the amount of the UNI for 

that year. The portion of the accumulation distribution 

allocated to any remaining preceding tax year is the amount 

by which the accumulation distribution is larger than the total 

of the UNI for all earlier preceding tax years.

A tax year of a trust during which the trust was a simple 

trust for the entire year isn't a preceding tax year unless (a) 

during that year, the trust received outside income; or (b) the 

trustee didn't distribute all of the trust's income that was 

required to be distributed currently for that year. In this case, 

UNI for that year must not be more than the greater of the 

outside income or income not distributed during that year.

The term “outside income” means amounts that are 

included in the DNI of the trust for that year but that aren't 

“income” of the trust as defined in Regulations section 

1.643(b)-1. Some examples of outside income are (a) 

income taxable to the trust under section 691, (b) unrealized 

accounts receivable that were assigned to the trust, and (c) 

distributions from another trust that include the DNI or UNI of 

the other trust.

Line 16—Tax-Exempt Interest Included on Line 13

For each throwback year, divide line 15 by line 6 and multiply 

the result by the following:

Throwback year(s) Amount from line

1969–1977 ........ Form 1041, Schedule C, line 2(a)

1978–1979 ........ Form 1041, line 58(a)

1980 ............ Form 1041, line 57(a)

1981–1982 ........ Form 1041, line 55(a)

1983–2022 ........ Form 1041, Schedule B, line 2

Part III—Taxes Imposed on Undistributed Net 

Income

For the regular tax computation, if there is a capital gain, 

complete lines 18 through 25 for each throwback year. If the 

trustee elected the alternative tax on capital gains, complete 

lines 26 through 31 instead of lines 18 through 25 for each 

applicable year. If there is no capital gain for any year, or 

there is a capital loss for every year, enter on Part II, line 9, 

the amount of the tax for each year identified in the 

instruction for line 18 and don't complete Part III. If the trust 

received an accumulation distribution from another trust, see 

Regulations section 1.665(b)-1A.

Note. The alternative tax on capital gains was repealed for 

tax years beginning after December 31, 1978. The maximum 

rate on net capital gain for 1981, 1987, and 1991 through 

2022 isn't an alternative tax for this purpose.

Line 18—Regular Tax

Enter the applicable amounts as follows:

Throwback year(s) Amount from line

1969–1976 ......... Form 1041, page 1, line 24

1977 ............. Form 1041, page 1, line 26

1978–1979 ......... Form 1041, line 27

1980–1984 ......... Form 1041, line 26c

1985–1986 ......... Form 1041, line 25c

1987 ............. Form 1041, line 22c

1988–2022 ......... Form 1041, Schedule G, line 1a

Line 19—Trust's Share of Net Short-Term Gain

For each throwback year, enter the smaller of the capital gain 

from the two lines indicated. If there is a capital loss or a zero 

on either or both of the two lines indicated, enter zero on 

line 19.

Throwback year(s) Amount from line

1969–1970 ............. Schedule D, line 10, column 2, or

Schedule D, line 12, column 2

1971–1978 ............. Schedule D, line 14, column 2, or

Schedule D, line 16, column 2

1979 ................. Schedule D, line 18, column (b), or

Schedule D, line 20, column (b)

1980–1981 ............. Schedule D, line 14, column (b), or

Schedule D, line 16, column (b)

1982 ................. Schedule D, line 16, column (b), or

Schedule D, line 18, column (b)

1983–1996 ............. Schedule D, line 15, column (b), or

Schedule D, line 17, column (b)

1997–2002 ............. Schedule D, line 14, column (2), or

Schedule D, line 16, column (2)

2003 ................. Schedule D, line 14a, column (2), or

Schedule D, line 16a, column (2)

2004–2012 ............. Schedule D, line 13, column (2), or

Schedule D, line 15, column (2)

2013–2022 ........ Schedule D, line 17, column (2), or

Schedule D, line 19, column (2)

Line 20—Trust's Share of Net Long-Term Gain

Enter the applicable amounts as follows:

Throwback year(s) Amount from line

1969–1970 ............ 50% of Schedule D, line 13(e)

1971–1977 ............ 50% of Schedule D, line 17(e)

1978 ................ Schedule D, line 17(e) or line

31, whichever is applicable,

less Form 1041, line 23

1979 ................ Schedule D, line 25 or line 27,

whichever is applicable, less

Form 1041, line 23

1980–1981 ............ Schedule D, line 21, less

Schedule D, line 22

1982 ................ Schedule D, line 23, less

Schedule D, line 24

1983–1986 ............ Schedule D, line 22, less

Schedule D, line 23

1987–1996 ............ Schedule D, the smaller 

of any gain on line 16 

 or line 17, column (b)

1997–2001 ............ Schedule D, the smaller

of any gain on line 15c or

line 16, column (2)

2002 ................ Schedule D, the smaller

of any gain on line 15a or

line 16, column (2)

2003 ................ Schedule D, the smaller

40 Instructions for Form 1041 (2023)
Throwback year(s) Amount from line

of any gain on line 15a or

line 16a, column (2)

2004–2012 ............ Schedule D, the smaller 

of any gain on line 14a

 or line 15, column (2)

2013–2022 ............ Schedule D, the smaller

of any gain on line 18a or

line 19, column (2)

Line 22—Taxable Income

Enter the applicable amounts as follows:

Throwback year(s) Amount from line

1969–1976 .......... Form 1041, page 1, line 23

1977 .............. Form 1041, page 1, line 25

1978–1979 .......... Form 1041, line 26

1980–1984 .......... Form 1041, line 25

1985–1986 .......... Form 1041, line 24

1987 .............. Form 1041, line 21

1988–1996 .......... Form 1041, line 22

1997 .............. Form 1041, line 23

1998–2018 .......... Form 1041, line 22

2019–2022 .......... Form 1041, line 23

Line 26—Tax on Income Other Than Long-Term 

Capital Gain

Enter the applicable amounts as follows:

Throwback year(s) Amount from line

1969 .............. Schedule D, line 20

1970 .............. Schedule D, line 19

1971 .............. Schedule D, line 50

1972–1975 .......... Schedule D, line 48

1976–1978 .......... Schedule D, line 27

Line 27—Trust's Share of Net Short-Term Gain

If there is a loss on any of the following lines, enter zero on 

line 27 for the applicable throwback year. Otherwise, enter 

the applicable amounts as follows:

Throwback year(s) Amount from line

1969–1970 ....... Schedule D, line 10, column 2

1971–1978 ....... Schedule D, line 14, column 2

Line 28—Trust's Share of Taxable Income Less 

Section 1202 Deduction

Enter the applicable amounts as follows:

Throwback year(s) Amount from line

1969 ................ Schedule D, line 19

1970 ................ Schedule D, line 18

1971 ................ Schedule D, line 38

1972–1975 ............ Schedule D, line 39

1976–1978 ............ Schedule D, line 21

Part IV—Allocation to Beneficiary

Complete Part IV for each beneficiary. If the accumulation 

distribution is allocated to more than one beneficiary, attach 

an additional copy of Schedule J with Part IV completed for 

each additional beneficiary. Give each beneficiary a copy of 

their respective Part IV information. If more than 5 throwback 

years are involved, use another Schedule J, completing Parts 

II and III for each additional throwback year.

If the beneficiary is a nonresident alien individual or a 

foreign corporation, see section 667(e) about retaining the 

character of the amounts distributed to determine the amount 

of the U.S. withholding tax.

The beneficiary uses Form 4970 to figure the tax on the 

distribution. The beneficiary also uses Form 4970 for the 

section 667(b)(6) tax adjustment if an accumulation 

distribution is subject to estate or GST tax. This is because 

the trustee can't be the estate or GST tax return filer.

Schedule K-1 (Form 

1041)—Beneficiary's Share of 

Income, Deductions, Credits, etc.

General Instructions

Use Schedule K-1 (Form 1041) to report the beneficiary's 

share of income, deductions, and credits from a trust or a 

decedent's estate.

Grantor type trusts don't use Schedule K-1 (Form 

1041) to report the income, deductions, or credits of 

the grantor (or other person treated as owner). See 

Grantor Type Trusts, earlier.

Who Must File

The fiduciary (or one of the joint fiduciaries) must file 

Schedule K-1. A copy of each beneficiary's Schedule K-1 is 

attached to the Form 1041 filed with the IRS, and each 

beneficiary is given a copy of their respective Schedule K-1. 

One copy of each Schedule K-1 must be retained for the 

fiduciary's records.

Beneficiary's Identifying Number

As a payer of income, you are required to request and 

provide a proper identifying number for each recipient of 

income. Enter the beneficiary's number on the respective 

Schedule K-1 when you file Form 1041. Individuals and 

business recipients are responsible for giving you their TINs 

upon request. You may use Form W-9 to request the 

beneficiary's identifying number.

Penalty. You may be charged a $50 penalty for each failure 

to provide a required TIN, unless reasonable cause is 

established for not providing it. Explain any reasonable cause 

in a signed affidavit and attach it to this return.

Truncating recipient's identification number on beneficiary's statement. The estate or trust can truncate a 

beneficiary’s identifying number on the Schedule K-1 the 

estate or trust sends to the beneficiary. Truncation isn't 

allowed on the Schedule K-1 the estate or trust files with the 

IRS. Also, the estate or trust can't truncate its own 

identification number on any form.

CAUTION

!

Instructions for Form 1041 (2023) 41
To truncate, where allowed, replace the first five digits of 

the nine-digit number with asterisks (*) or Xs (for example, an 

SSN xxx-xx-xxxx would appear as ***-**-xxxx or 

XXX-XX-xxxx). For more information, see Regulations 

section 301.6109-4.

Substitute Forms

You don't need IRS approval to use a substitute Schedule K-1 

if it is an exact copy of the IRS schedule. The boxes must use 

the same numbers and titles and must be in the same order 

and format as on the comparable IRS Schedule K-1. The 

substitute schedule must include the OMB number and the 

six-digit form ID code in the upper right-hand corner of the 

schedule.

You must provide each beneficiary with the Instructions for 

Schedule K-1 (Form 1041) for a Beneficiary Filing Form 1040 

or 1040-SR, or other prepared specific instructions for each 

item reported on the beneficiary's Schedule K-1.

Inclusion of Amounts in Beneficiaries' Income

Simple trust. The beneficiary of a simple trust must include 

in their gross income the amount of the income required to be 

distributed currently, whether or not distributed, or if the 

income required to be distributed currently to all beneficiaries 

exceeds the DNI, their proportionate share of the DNI. The 

determination of whether trust income is required to be 

distributed currently depends on the terms of the trust 

instrument and applicable local law. See Regulations section 

1.652(c)-4 for a comprehensive example.

Estates and complex trusts. The beneficiary of a 

decedent's estate or complex trust must include in their gross 

income the sum of:

1. The amount of the income required to be distributed 

currently, or if the income required to be distributed currently 

to all beneficiaries exceeds the DNI (figured without taking 

into account the charitable deduction), their proportionate 

share of the DNI (as so figured); and

2. All other amounts properly paid, credited, or required 

to be distributed, or if the sum of the income required to be 

distributed currently and other amounts properly paid, 

credited, or required to be distributed to all beneficiaries 

exceeds the DNI, their proportionate share of the excess of 

DNI over the income required to be distributed currently.

See Regulations section 1.662(c)-4 for a comprehensive 

example.

For complex trusts that have more than one beneficiary, 

and if different beneficiaries have substantially separate and 

independent shares, their shares are treated as separate 

trusts for the sole purpose of determining the amount of DNI 

allocable to the respective beneficiaries. A similar rule 

applies to treat substantially separate and independent 

shares of different beneficiaries of an estate as separate 

estates. For examples of the application of the separate 

share rule, see the regulations under section 663(c).

Gifts and bequests. Don't include in the beneficiary's 

income any gifts or bequests of a specific sum of money or of 

specific property under the terms of the governing instrument 

that are paid or credited in three installments or less.

Amounts that can be paid or credited only from income of 

the estate or trust don't qualify as a gift or bequest of a 

specific sum of money.

Past years. Don't include in the beneficiary's income any 

amounts deducted on Form 1041 for an earlier year that were 

credited or required to be distributed in that earlier year.

Character of income. The beneficiary's income is 

considered to have the same proportion of each class of 

items entering into the computation of DNI that the total of 

each class has to the DNI (for example, half dividends and 

half interest if the income of the estate or trust is half 

dividends and half interest).

Allocation of deductions. Generally, items of deduction 

that enter into the computation of DNI are allocated among 

the items of income to the extent such allocation isn't 

inconsistent with the rules set out in section 469 and its 

regulations, relating to passive activity loss limitations, in the 

following order.

First, all deductions directly attributable to a specific class 

of income are deducted from that income. For example, 

rental expenses, to the extent allowable, are deducted from 

rental income.

Second, deductions that aren't directly attributable to a 

specific class of income may generally be allocated to any 

class of income, as long as a reasonable portion is allocated 

to any tax-exempt income. Deductions considered not 

directly attributable to a specific class of income under this 

rule include fiduciary fees, and state income and personal 

property taxes. The charitable deduction, however, must be 

ratably apportioned among each class of income included in 

DNI.

Finally, any excess deductions that are directly attributable 

to a class of income may be allocated to another class of 

income. However, in no case can excess deductions from a 

passive activity be allocated to income from a nonpassive 

activity, or to portfolio income earned by the estate or trust. 

Excess deductions attributable to tax-exempt income can't 

offset any other class of income.

In no case can deductions be allocated to an item of 

income that isn't included in the computation of DNI, or 

attributable to corpus.

You can't show any negative amounts for any class of 

income shown in boxes 1 through 8 of Schedule K-1. 

However, for the final year of the estate or trust, certain 

deductions or losses can be passed through to the 

beneficiary(ies). See the instructions for box 11 for more 

information on these deductions and losses. Also, the 

beneficiary's share of depreciation and depletion is 

apportioned separately. These deductions may be allocated 

to the beneficiary(ies) in amounts greater than their income. 

See Depreciation, Depletion, and Amortization, earlier, and 

Rev. Rul. 74-530, 1974-2 C.B. 188.

Beneficiary's Tax Year

The beneficiary's income from the estate or trust must be 

included in the beneficiary's tax year during which the tax 

year of the estate or trust ends. See Pub. 559 for more 

information, including the effect of the death of a beneficiary 

during the tax year of the estate or trust.

General Reporting Information

If the return is for a fiscal year or a short tax year, fill in the tax 

year space at the top of each Schedule K-1. On each 

Schedule K-1, enter the information about the estate or trust 

and the beneficiary in Parts I and II (items A through H). In 

Part III, enter the beneficiary's share of each item of income, 

42 Instructions for Form 1041 (2023)
deduction, credit, and any other information the beneficiary 

needs to file their income tax return.

Codes. In box 9 and boxes 11 through 14, identify each item 

by entering a code in the column to the left of the entry space 

for the dollar amount. These codes are identified in these 

instructions and on the back of the Schedule K-1.

Attached statements. Enter an asterisk (*) after the code, if 

any, in the column to the left of the dollar amount entry space 

for each item for which you have attached a statement 

providing additional information. For those informational 

items that can't be reported as a single dollar amount, enter 

the code and asterisk (*) in the left-hand column and enter 

“STMT” in the entry space to the right to indicate that the 

information is provided on an attached statement. More than 

one attached statement can be placed on the same sheet of 

paper and should be identified in alphanumeric order by box 

number followed by the letter code (if any). For example: “Box 

9, Code A—Depreciation” (followed by the information the 

beneficiary needs).

Too few entry spaces on Schedule K-1? If the estate or 

trust has more coded items than the number of spaces in 

box 9 or boxes 11 through 14, don't enter a code or dollar 

amount in the last entry space of the box. In the last entry 

space, enter an asterisk (*) in the left column and enter 

“STMT” in the entry space to the right. Report the additional 

items on an attached statement and provide the box number, 

code, description, and dollar amount or information for each 

additional item. For example: “Box 13, Code H—Biofuel 

Producer Credit, $500.00.”

Specific Instructions

Part I. Information About the Estate or Trust

On each Schedule K-1, enter the name, address, and 

identifying number of the estate or trust. Also, enter the name 

and address of the fiduciary.

Item D

If the fiduciary of a trust or decedent's estate filed Form 

1041-T, you must check this box and enter the date it was 

filed.

Item E

If this is the final year of the estate or trust, you must check 

this box.

Note. If this is the final K-1 for the beneficiary, check the 

“Final K-1” box at the top of Schedule K-1.

Part II. Information About the Beneficiary

Complete a Schedule K-1 for each beneficiary. On each 

Schedule K-1, enter the beneficiary's name, address, and 

identifying number.

Item H

Check the “Foreign beneficiary” box if the beneficiary is a 

nonresident alien individual, a foreign corporation, or a 

foreign estate or trust. Otherwise, check the “Domestic 

beneficiary” box.

Part III. Beneficiary's Share of Current Year 

Income, Deductions, Credits, and Other Items

Box 1—Interest

Enter the beneficiary's share of the taxable interest income 

minus allocable deductions.

Box 2a—Total Ordinary Dividends

Enter the beneficiary's share of ordinary dividends minus 

allocable deductions.

Box 2b—Total Qualified Dividends

Enter the beneficiary's share of qualified dividends minus 

allocable deductions.

Box 3—Net Short-Term Capital Gain

Enter the beneficiary's share of the net short-term capital 

gain from Schedule D (Form 1041), line 17, column (1), 

minus allocable deductions. Don't enter a loss in box 3. If, for 

the final year of the estate or trust, there is a capital loss 

carryover, enter in box 11, code C, the beneficiary's share of 

short-term capital loss carryover. However, if the beneficiary 

is a corporation, enter in box 11, code C, the beneficiary's 

share of all short- and long-term capital loss carryovers as a 

single item. See section 642(h) and related regulations for 

more information.

Boxes 4a Through 4c—Net Long-Term Capital Gain

Enter the beneficiary's share of the net long-term capital gain 

from Schedule D (Form 1041), lines 18a through 18c, column 

(1), minus allocable deductions.

Don't enter a loss in boxes 4a through 4c. If, for the final 

year of the estate or trust, there is a capital loss carryover, 

enter in box 11, code D, the beneficiary's share of the 

long-term capital loss carryover. (If the beneficiary is a 

corporation, see the instructions for box 3.) See section 

642(h) and related regulations for more information.

Gains or losses from the complete or partial disposition of 

a rental, rental real estate, or trade or business activity that is 

a passive activity must be shown on an attachment to 

Schedule K-1.

Box 5—Other Portfolio and Nonbusiness Income

Enter the beneficiary's share of annuities, royalties, or any 

other income, minus allocable deductions (other than directly 

apportionable deductions), that isn't subject to any passive 

activity loss limitation rules at the beneficiary level. Use boxes 

6 through 8 to report income items subject to the passive 

activity rules at the beneficiary's level.

Boxes 6 Through 8—Ordinary Business Income, 

Rental Real Estate, and Other Rental Income

Enter the beneficiary's share of trade or business, rental real 

estate, and other rental income, minus allocable deductions 

(other than directly apportionable deductions). To assist the 

beneficiary in figuring any applicable passive activity loss 

limitations, also attach a separate schedule showing the 

Instructions for Form 1041 (2023) 43
beneficiary's share of income derived from each trade or 

business, rental real estate, and other rental activity.

Box 9—Directly Apportioned Deductions

The limitations on passive activity losses and credits 

under section 469 apply to estates and trusts. 

Estates and trusts that distribute income to 

beneficiaries are allowed to apportion depreciation, 

depletion, and amortization deductions to the beneficiaries. 

These deductions are referred to as “directly apportionable 

deductions.”

Rules for treating a beneficiary's income and directly 

apportionable deductions from an estate or trust and other 

rules for applying the passive loss and credit limitations to 

beneficiaries of estates and trusts haven't yet been issued.

Any directly apportionable deduction, such as 

depreciation, is treated by the beneficiary as having been 

incurred in the same activity as incurred by the estate or trust. 

However, the character of such deduction may be 

determined as if the beneficiary incurred the deduction 

directly.

To assist the beneficiary in figuring any applicable passive 

activity loss limitations, also attach a separate schedule 

showing the beneficiary's share of directly apportionable 

deductions derived from each trade or business, rental real 

estate, and other rental activity.

Enter the beneficiary's share of directly apportioned 

deductions using codes A through C.

Depreciation (code A). Enter the beneficiary's share of the 

depreciation deductions directly apportioned to each activity 

reported in boxes 5 through 8. See Depreciation, Depletion, 

and Amortization, earlier, for a discussion of how the 

depreciation deduction is apportioned between the 

beneficiaries and the estate or trust. Report any AMT 

adjustment or tax preference item attributable to depreciation 

separately in box 12, using code G.

Note. An estate or trust can't make an election under section 

179 to expense certain depreciable business assets.

Depletion (code B). Enter the beneficiary's share of the 

depletion deduction under section 611 directly apportioned 

to each activity reported in boxes 5 through 8. See 

Depreciation, Depletion, and Amortization, earlier, for a 

discussion of how the depletion deduction is apportioned 

between the beneficiaries and the estate or trust. Report any 

tax preference item attributable to depletion separately in 

box 12, using code H.

Amortization (code C). Itemize the beneficiary's share of 

the amortization deductions directly apportioned to each 

activity reported in boxes 5 through 8. Apportion the 

amortization deductions between the estate or trust and the 

beneficiaries in the same way that the depreciation and 

depletion deductions are divided. Report any AMT 

adjustment attributable to amortization separately in box 12, 

using code I.

Box 10—Estate Tax Deduction (Including Certain 

Generation-Skipping Transfer Taxes)

If the distribution deduction consists of any IRD, and the 

estate or trust was allowed a deduction under section 691(c) 

CAUTION

!

for the estate tax paid attributable to such income (see the 

line 19 instructions), then the beneficiary is allowed an estate 

tax deduction in proportion to their share of the distribution 

that consists of such income. For an example of the 

computation, see Regulations section 1.691(c)-2. Figure the 

computation on a separate sheet and attach it to the return.

Box 11, Code A—Excess Deductions on 

Termination—Section 67(e) Expenses

If this is the final return of the estate or trust, and there are 

excess deductions on termination (see the instructions for 

line 23), enter the beneficiary's share of excess deductions 

for section 67(e) expenses (amounts allowed in arriving at 

AGI) in box 11, using code A. See Final Regulations - 

TD9918 for examples of allowable excess deductions on 

termination of an estate or trust.

Note. The beneficiary may deduct the excess deductions 

shown in box 11, code A, as an adjustment to income on 

Schedule 1 (Form 1040), Part II, line 24k.

Excess deductions on termination occur only during the 

last tax year of the trust or decedent's estate when the total 

deductions (excluding the charitable deduction and 

exemption) are greater than the gross income during that tax 

year.

Generally, a deduction based on an NOL carryover isn't 

available to a beneficiary as an excess deduction. However, if 

the last tax year of the estate or trust is also the last year in 

which an NOL carryover may be taken (see section 172(b)), 

the NOL carryover is considered an excess deduction on the 

termination of the estate or trust to the extent it isn't absorbed 

by the estate or trust during its final tax year. For more 

information, see Regulations section 1.642(h)-4 for a 

discussion of the allocation of the carryover among the 

beneficiaries.

Only the beneficiary of an estate or trust that succeeds to 

its property is allowed to deduct that entity's excess 

deductions on termination. A beneficiary who doesn't have 

enough income in that year to absorb the entire deduction 

can't carry the balance over to any succeeding year.

Box 11, Code B—Excess Deductions on 

Termination—Non-Miscellaneous Itemized 

Deductions

If this is the final return of the estate or trust, and there are 

excess deductions on termination (see the instructions for 

line 23), enter the beneficiary's share of excess deductions 

for non-miscellaneous itemized deductions in box 11, using 

code B. Figure the deductions on a separate sheet and 

attach it to the return.

An individual beneficiary must be able to itemize 

deductions in order to claim excess deductions that are 

non-miscellaneous itemized deductions in determining 

taxable income.

Note. Section 67(g) suspends miscellaneous itemized 

deductions subject to the 2% floor for tax years 2018 through 

2025. Therefore, miscellaneous itemized deductions are not 

deductible as excess deductions on termination of an estate 

or trust. Consult your state taxing authority for information 

44 Instructions for Form 1041 (2023)
about deducting miscellaneous itemized deductions on your 

state tax return.

Box 11, Codes C and D—Unused Capital Loss 

Carryover

Upon termination of the trust or decedent's estate, the 

beneficiary succeeding to the property is allowed as a 

deduction any unused capital loss carryover under section 

1212. If the estate or trust incurs capital losses in the final 

year, use the Capital Loss Carryover Worksheet in the 

Instructions for Schedule D (Form 1041) to figure the amount 

of capital loss carryover to be allocated to the beneficiary.

Box 11, Codes E and F—NOL Carryover

Upon termination of a trust or decedent's estate, a 

beneficiary succeeding to its property is allowed to deduct 

any unused NOL (and any alternative tax net operating loss) 

carryover for regular and AMT purposes if the carryover 

would be allowable to the estate or trust in a later tax year but 

for the termination. Enter in box 11, using codes E and F, the 

unused carryover amounts.

Box 12—AMT Items

Adjustment for minimum tax purposes (code A). Enter 

the beneficiary's share of the adjustment for minimum tax 

purposes.

To figure the adjustment, subtract the beneficiary's share 

of the income distribution deduction figured on Schedule B, 

line 15, from the beneficiary's share of the income distribution 

deduction on a minimum tax basis figured on Schedule I 

(Form 1041), line 42. The difference is the beneficiary's share 

of the adjustment for minimum tax purposes.

Note. Schedule B, line 15, equals the sum of boxes 1, 2a, 3, 

4a, 5, 6, 7, and 8 of all Schedules K-1.

AMT adjustment attributable to qualified dividends, net 

short-term capital gains, or net long-term capital gains 

(codes B through D). If any part of the amount reported in 

box 12, code A, is attributable to qualified dividends (code B), 

net short-term capital gain (code C), or net long-term capital 

gain (code D), enter that part using the applicable code.

AMT adjustment attributable to unrecaptured section 

1250 gain or 28% rate gain (codes E and F). Enter the 

beneficiary's distributive share of any AMT adjustments to the 

unrecaptured section 1250 gain (code E) or 28% rate gain 

(code F), whichever is applicable, in box 12.

Accelerated depreciation, depletion, and amortization 

(codes G through I). Enter any adjustments or tax 

preference items attributable to accelerated depreciation 

(code G), depletion (code H), or amortization (code I) that 

were directly apportioned to the beneficiary. For property 

placed in service before 1987, report separately the 

accelerated depreciation of real and leased personal 

property.

Exclusion items (code J). Enter the beneficiary's share of 

the adjustment for minimum tax purposes from box 12, code 

A, of Schedule K-1 that is attributable to exclusion items 

(Schedule I (Form 1041), lines 2, 3, 4, 5, and 7).

Box 13—Credits and Credit Recapture

Enter each beneficiary's share of the credits and credit 

recapture using the applicable codes. Listed below are the 

credits that can be allocated to the beneficiary(ies). Attach a 

statement if additional information must be provided to the 

beneficiary as explained below.

• Credit for estimated taxes (code A). Payment of estimated 

tax to be credited to the beneficiary (section 643(g)).

See the instructions for Schedule G, Part II, line 11, 

before you make an entry to allocate any estimated 

tax payments to a beneficiary. If the fiduciary doesn't 

make a valid election, then the IRS will disallow the estimated 

tax payment that is reported on Schedule K-1 and claimed on 

the beneficiary's return.

• Credit for backup withholding (code B).

Income tax withheld on wages can't be distributed to 

the beneficiary.

• The low-income housing credit (code C). Attach a 

statement that shows the beneficiary's share of the amount, if 

any, entered on line 6 of Form 8586, Low-Income Housing 

Credit, with instructions to report that amount on Form 8586, 

line 4, or Form 3800, Part III, line 4d, if the beneficiary's only 

source for the credit is a pass-through entity.

• Advanced manufacturing production credit (code D). 

Attach a statement showing the amount of the credit the 

beneficiary must report on line 7 of Form 7207, with 

instructions to report the amount directly on Form 3800, Part 

III, line 1b, if the beneficiary's only source for the credit is a 

pass-through entity.

• Work opportunity credit (code F).

• Credit for small employer health insurance premiums 

(code G).

• Biofuel producer credit (code H).

• Credit for increasing research activities (code I).

• Renewable electricity production credit (code J). Attach a 

statement that shows separately the amount of the credit the 

beneficiary must report on line 14 of Form 8835, including the 

allocation of the credit for production during the 4-year period 

beginning on the date the facility was placed in service and 

for production after that period.

• Empowerment zone employment credit (code K).

• Orphan drug credit (code M).

• Credit for employer-provided childcare facilities and 

services (code N).

• Biodiesel, renewable diesel, or sustainable aviation fuels 

credit (code O). If the credit includes the small agri-biodiesel 

credit, attach a statement that shows the beneficiary's share 

of the small agri-biodiesel credit, the number of gallons 

claimed for the small agri-biodiesel credit, and the estate's or 

trust's productive capacity for agri-biodiesel.

• Credit to holders of tax credit bonds (code P).

• Credit for employer differential wage payments (code Q).

• Recapture of credits (code R). On an attached statement 

to Schedule K-1, provide any information the beneficiary will 

need to report recapture of credits.

• Other credits (code ZZ). This code is used to report the 

beneficiary's share of all other credits.

Box 14—Other Information

Enter the dollar amounts and applicable codes for the items 

listed under Other information.

CAUTION

!

CAUTION

!

Instructions for Form 1041 (2023) 45
Foreign taxes (code B). Enter the beneficiary's allocable 

share of taxes paid or accrued to a foreign country. Attach a 

statement reporting the beneficiary's share of foreign tax 

(paid or accrued) and income by category including interest, 

dividends, rents and royalties, and other income. See Form 

1116 and Pub. 514 for more information.

Qualified rehabilitation expenditures (code C). Provide 

the beneficiary with a statement of their share of qualified 

rehabilitation expenditures and other information needed to 

complete Part VII of Form 3468, Investment Credit. If there 

are expenditures and other information from more than one 

activity, the attached statement will separately identify the 

expenditures and other information for each property. See the 

instructions for Form 3468, Part VII, for details.

Note. Expenditures related to rental real estate activities are 

subject to different passive activity limitation rules than other 

qualified rehabilitation expenditures. See the Instructions for 

Form 8582-CR for details.

Basis of energy property (code D). Provide the 

beneficiary with a statement with the distributive share of 

amounts needed to complete Form 3468, Part VI. If there is 

information for more than one property, the attached 

statement will separately identify the information for each 

property. See the instructions for Form 3468, Part VI, for 

details.

Foreign trading gross receipts (code G). Enter the 

beneficiary's share, if any, of foreign trading gross receipts. 

See Form 8873 for more information.

NIIT (code H). Use code H to identify the amount of the 

beneficiary's adjustment for section 1411 NII or deductions. 

See the Instructions for Form 8960. An attachment may be 

provided with the Schedule K-1 informing the beneficiary of 

the detailed items to be reported on Form 1040 or 1040-SR. 

See Net Investment Income Tax (NIIT), earlier, for more 

information on these amounts.

Section 199A information (code I). In the case of a trust 

or estate, the QBI deduction, also known as the section 199A 

deduction, is determined at the beneficiary level for the 

portions of QBI, qualified REIT dividends, and qualified PTP 

items apportioned to the beneficiaries. To allow beneficiaries 

to correctly figure their QBI deduction, the trust or estate 

must enter an asterisk (*) on each beneficiary’s Schedule K-1 

next to code I and enter “STMT” in the right column to 

indicate that the information is provided on an attached 

statement. Do not add amounts into a single number and 

report it on Schedule K-1. The information must be 

separately identified for each trade or business the trust or 

estate directly conducts, including specified service trades or 

businesses (SSTBs). The trust or estate must attach the 

statement to each Schedule K-1, separately identifying the 

beneficiary’s allocable share of:

1. Qualified items of income, gain, deduction, and loss;

2. W-2 wages;

3. UBIA of qualified property;

4. Qualified PTP items; and

5. Section 199A dividends, also known as qualified REIT 

dividends.

The trust or estate must make an initial determination of 

which items are qualified items of income, gain, deduction, 

and loss at its level and report to each beneficiary their share 

of all items that may be qualified items at the beneficiary 

level. See Determining the trust’s or estate’s QBI or qualified 

PTP items, later. The beneficiary must then determine 

whether each item is includible in QBI.

In addition, the trust or estate must also report on whether 

any of its trades or businesses are SSTBs and identify on the 

statement any trades or businesses that are aggregated.

Trusts and estates should use Statement A—QBI 

Pass-Through Entity Reporting, in these instructions, or a 

substantially similar statement, to report each beneficiary’s 

allocable information from each trade or business, including 

QBI items, W-2 wages, UBIA of qualified property, qualified 

PTP items, and section 199A dividends by attaching the 

completed statement(s) to each beneficiary’s Schedule K-1. 

The trust or estate should also use Statement A—QBI 

Pass-Through Entity Reporting to report each beneficiary’s 

share of QBI items, W-2 wages, UBIA of qualified property, 

qualified PTP items, and section 199A dividends reported to 

the trust or estate by another entity.

Note. The estate or trust must report each beneficiary's 

share of qualified items of income, gain, deduction, and loss 

from a PTP. The PTP component is not limited by the W-2 

wages and UBIA of qualified property limitations. Therefore, 

neither the PTP nor its owners (including estates and trusts) 

are required to report W-2 wages or UBIA of qualified 

property amounts related to a trade or business operated by 

a PTP.

Trusts and estates should use Statement B—QBI 

Pass-Through Entity Aggregation Election(s), in these 

instructions, or a substantially similar statement, to report 

aggregated trades or businesses and provide supporting 

information to beneficiaries on each Schedule K-1.

Trusts and estates should use Statement C—QBI 

Pass-Through Entity Reporting—Patrons of Specified 

Agricultural and Horticultural Cooperatives, in these 

instructions, or a substantially similar statement, to report 

allocable QBI and W-2 wages allocable to qualified payments 

from a specified agricultural or horticultural cooperative for 

each trade or business. This statement should also be used 

to report each beneficiary’s allocable section 199A(g) 

deduction reported to the trust or estate by the specified 

cooperative.

Determining the trust’s or estate’s qualified trades or 

businesses. The trust’s or estate’s qualified trades or 

businesses include its section 162 trades or businesses, 

except for SSTBs, or the trade or business of providing 

services as an employee. A section 162 trade or business 

generally includes any activity carried on to make a profit and 

with considerable, regular, and continuous activity. For more 

information on what qualifies as a trade or business for 

purposes of section 199A, see the instructions for Form 8995 

or Form 8995-A.

Rental real estate. Rental real estate may constitute a 

trade or business for purposes of the QBI deduction if the 

rental real estate:

• Rises to the level of a trade or business under section 162;

• Satisfies the requirements for the rental real estate safe 

harbor in Rev. Proc. 2019-38, 2019-42 I.R.B. 942; or

• Meets the self-rental exception (that is, the rental or 

licensing of property to a commonly controlled trade or 

business conducted by an individual or relevant pass-through 

entity (RPE)) in Regulations section 1.199A-1(b)(14).

The determination of whether rental real estate constitutes a 

trade or business for purposes of the QBI deduction is made 

46 Instructions for Form 1041 (2023)
by the trust or estate. The trust or estate must first make this 

determination and then only include the allocable share of 

rental real estate items of income, gain, loss, and deduction 

on the statement provided to beneficiaries. Rental real estate 

that does not meet one of the three conditions noted above 

does not constitute a trade or business for purposes of the 

QBI deduction and must not be included in the QBI 

information provided to beneficiaries.

SSTBs excluded from qualified trades or businesses. 

SSTBs are generally excluded from the definition of a 

qualified trade or business. An SSTB is any trade or business 

providing services in the field of health, law, accounting, 

actuarial science, performing arts, consulting, athletics, 

financial services, brokerage services, investing and 

investment management, trading or dealing in securities, 

trust or estate interests, or commodities or any other trade or 

business where the principal asset is the reputation or skill of 

one or more of its employees or owners. The term “any trade 

or business where the principal asset is the reputation or skill 

of one or more of its employees or owners” means any trade 

or business that consists of any of the following: (a) a trade or 

business in which a person receives fees, compensation, or 

other income for endorsing products or services; (b) a trade 

or business in which a person licenses or receives fees, 

compensation, or other income for the use of an individual’s 

image, likeness, name, signature, voice, trademark, or any 

other symbols associated with the individual’s identity; or (c) 

receiving fees, compensation, or other income for appearing 

at an event or on radio, television, or another media format.

Exception. If the beneficiary’s taxable income is equal to 

or less than the threshold for the reporting 2023 tax year, 

$182,100 ($364,200 if married filing jointly), the QBI from the 

SSTB may be used by the beneficiary to compute their QBI 

deduction. If the beneficiary’s taxable income is within the 

phase-in range, the threshold amount plus $50,000 

($100,000 if married filing jointly), an applicable percentage 

of the QBI, W-2 wages, and UBIA of qualified property from 

an SSTB may be used by the beneficiary to compute their 

QBI deduction. Therefore, the statement attached to the 

Schedule K-1 issued to each beneficiary must identify any 

items relating to SSTBs.

Aggregation. A trust or estate engaged in more than one 

trade or business may choose to aggregate multiple trades or 

businesses into a single trade or business for purposes of 

section 199A if it meets the following requirements.

1. The same person, or group of persons, either directly 

or through attribution, owns 50% or more of each trade or 

business for a majority of the tax year, including the last day 

of the tax year, and all trades or businesses use the same tax 

year-end.

2. None of the trades or businesses are SSTBs.

3. The trades or businesses to be aggregated meet at 

least two of the following three factors.

a. They provide products, property, or services that are 

the same or that are customarily offered together.

b. They share facilities or share significant centralized 

business elements, such as personnel, accounting, legal, 

manufacturing, purchasing, human resources, or information 

technology resources.

c. They are operated in coordination with, or reliance 

upon, one or more of the businesses in the aggregated 

group.

If the trust or estate chooses to aggregate multiple trades 

or businesses, it must report the aggregation on Statement B, 

or a substantially similar statement, and attach it to each 

Schedule K-1. The statement must provide the information 

necessary to identify each separate trade or business 

included in each aggregation, a description of the aggregated 

trades or businesses, and an explanation of the factors met 

that allow the aggregation in accordance with Regulations 

section 1.199A-4. The aggregation statement must be 

completed each year to show the trust’s or estate's trade or 

business aggregations. Failure to disclose the aggregations 

may cause them to be disaggregated.

The trust’s or estate's aggregations must be reported 

consistently for all subsequent years, unless there is a 

change in facts and circumstances that changes or 

disqualifies the aggregation. The trust or estate must provide 

a written explanation for any changes to prior year 

aggregations that describes the change in facts and 

circumstances.

If the trust or estate directly or indirectly owns an interest in 

an RPE that aggregates multiple trades or businesses, it 

must attach a copy of the RPE’s aggregation to each 

Schedule K-1. The trust or estate cannot break apart the 

aggregation of another RPE, but it may add trades or 

businesses to the aggregation, assuming the requirements 

above are satisfied.

Determining the trust’s or estate’s QBI or qualified 

PTP items. The trust’s or estate’s items of QBI that must be 

reported to beneficiaries include the allocated amounts of 

qualified items of income, gain, deduction, and loss from the 

trust’s or estate’s trades or businesses that are effectively 

connected with the conduct of a trade or business within the 

United States. This may include, but is not limited to, items 

such as ordinary business income or (losses), section 1231 

gains or (losses), section 179 deductions, and interest from 

debt-financed distributions.

QBI may also include rental income (losses) or royalty 

income, if the activity rises to the level of a trade or business; 

and gambling gains or (losses), but only if the trust or estate 

is engaged in the trade or business of gambling. Whether an 

activity rises to the level of a trade or business must be 

determined at the entity level and, once made, is binding on 

beneficiaries.

Qualified PTP items that must be reported to the 

beneficiaries include the allocated amounts of the trust’s or 

estate’s share of qualified items of income, gain, deduction, 

and loss from a PTP and may also include gain or loss 

recognized on the disposition of the trust’s or estate’s 

partnership interest that is not treated as a capital gain or 

loss.

However, QBI and qualified PTP items don’t include any of 

the following.

• Items that are treated as capital gain or loss under any 

provision of the Code.

• Dividends or dividend equivalents, including qualified REIT 

dividends.

• Interest income (unless received in connection with the 

trade or business).

• Wage income.

• Income that is not effectively connected with the conduct 

of a trade or business within the United States (for more 

information, go to IRS.gov and type in the key word 

“effectively connected income”).

• Commodities transactions, or foreign currency gains or 

losses described in section 954(c)(1)(C) or (D).

• Income, loss, or deductions from notional principal 

contracts under section 954(c)(1)(F).

Instructions for Form 1041 (2023) 47
• Annuities (unless received in connection with the trade or 

business).

• Guaranteed payments described in section 707(c) 

received by the entity for services rendered to a partnership.

• Payments described in section 707(a) received by the 

entity for services rendered to a partnership.

QBI Flowchart. Trusts or estates may use the QBI 

Flowchart to help them determine if an allocated item of 

income, gain, deduction, or loss is includible in QBI 

reportable to beneficiaries.

QBI Flowchart

Questions Yes No

Is the item effectively connected with the conduct of a trade or business within the United 

States? 

Continue Stop, this item isn’t QBI.

Is the item attributable to a trade or business (this may include section 1231 gain (loss), 

section 179 deductions, interest from debt-financed distributions, etc.)? Examples of an item 

not considered attributable to the trade or business at the entity level include gambling income 

(loss) where the entity isn’t engaged in the trade or business of gambling, income (loss) from 

vacation properties when the entity isn’t in that trade or business, activities not engaged in for 

profit, etc. 

Continue Stop, this item isn’t QBI.

Is the item treated as a capital gain or loss under any provision of the Internal Revenue Code 

or is it a dividend or dividend equivalent? 

Stop, this item isn’t QBI. Continue

Is the item interest income other than interest income properly allocable to a trade or 

business? (Note that interest income attributable to an investment of working capital, 

reserves, or similar accounts isn’t properly allocable to a trade or business.)

Stop, this item isn’t QBI. Continue

Is the item an annuity, other than an annuity received in connection with the trade or business? Stop, this item isn’t QBI. Continue

Is the item gain or loss from a commodities transaction or foreign currency gain or loss 

described in section 954(c)(1)(C) or (D)? 

Stop, this item isn’t QBI. Continue

Is the item gain or loss from a notional principal contract under section 954(c)(1)(F)? Stop, this item isn’t QBI. Continue

Is the item of income or loss from a qualified PTP? This item is a qualified PTP 

item. Report this item as 

qualified PTP income or 

loss, subject to 

beneficiary-specific 

determinations, and check 

the “PTP” box.

This item is QBI. Report this 

item as QBI subject to 

beneficiary-specific 

determinations.

Specific Instructions for Statement A—QBI 

Pass-Through Entity Reporting. 

QBI or qualified PTP items. The trust or estate must first 

determine if it is engaged in one or more trades or 

businesses. It must then determine if any of its trades or 

businesses are SSTBs. The trust or estate must also 

determine whether it has qualified PTP items from an interest 

in a PTP. The trust or estate must indicate the status on the 

appropriate checkboxes for each trade or business (or 

aggregated trade or business) or PTP interest reported.

Note. SSTBs and PTPs cannot be aggregated with any 

other trade or business. So, if the aggregation box is 

checked, the “SSTB” and “PTP” boxes for that specific 

aggregated trade or business should not be checked.

Next, the trust or estate must report to each beneficiary 

their allocable share of all apportioned items that are QBI or 

qualified PTP items for each trade or business the trust or 

estate owns directly or indirectly. Use the QBI Flowchart to 

determine if an allocated item is reportable as a QBI item or 

qualified PTP item subject to beneficiary-specific 

determinations. Each item included under “Other” must be 

stated separately, identifying the nature and amount of each 

item.

W-2 wages and UBIA of qualified property. The trust or 

estate must determine the W-2 wages and UBIA of qualified 

property properly allocable to QBI for each qualified trade or 

business and report the allocable share to each beneficiary 

on Statement A, or a substantially similar statement, attached 

to Schedule K-1. This includes the allocable share of W-2 

wages and UBIA of qualified property reported to the trust or 

estate from any qualified trades or businesses of an RPE the 

trust or estate owns directly or indirectly. However, trusts or 

estates that own a direct or indirect interest in a PTP may not 

include any amounts for W-2 wages or UBIA of qualified 

property from the PTP, as the W-2 wages and UBIA of 

qualified property from a PTP are not allowed in computing 

the W-2 wage and UBIA limitations.

The W-2 wages are amounts paid to employees described 

in sections 6051(a)(3) and (8). If the trust or estate conducts 

more than one trade or business, it must allocate the W-2 

wages among its trades or businesses. See Rev. Proc. 

2019-11, 2019-09 I.R.B. 742, for more information.

The unadjusted basis of qualified property is figured by 

adding the unadjusted basis of all qualified assets 

immediately after acquisition. Qualified property includes all 

tangible property subject to depreciation under section 167 

for which the depreciable period hasn't ended that is held 

and used for the production of QBI by the trade or business 

during the tax year and held on the last day of the tax year. 

The depreciable period ends on the later of 10 years after the 

property is placed in service or the last day of the full year for 

the applicable recovery period under section 168.

Section 199A dividends. The trust or estate must report 

the apportioned allocable share of any REIT dividends to 

each beneficiary on Statement A, or a substantially similar 

statement, attached to Schedule K-1. Section 199A 

dividends do not have to be reported by trade or business 

and can be reported as a single amount to beneficiaries. 

Section 199A dividends include dividends the trust or estate 

48 Instructions for Form 1041 (2023)
receives from a REIT held for more than 45 days, for which 

the payment is not obligated to someone else, is not a capital 

gain dividend under section 857(b)(3), and is not a qualified 

dividend under section 1(h)(11), plus any apportioned 

qualified REIT dividends received from a RIC.

Fiscal year trusts and estates. For purposes of 

determining the QBI or qualified PTP items, UBIA of qualified 

property, and the aggregate amount of qualified section 199A 

dividends, fiscal year trusts or estates include all items from 

the fiscal tax year.

For purposes of determining W-2 wages, fiscal year trusts 

or estates include apportioned amounts paid to employees 

under sections 6051(a)(3) and (8) for the calendar year 

ended with or within the trust’s or estate’s tax year. If the trust 

or estate conducts more than one trade or business, it must 

allocate W-2 wages among its trades or businesses. See 

Rev. Proc. 2019-11 for more information.

Note. The trust or estate must report each beneficiary’s 

share of qualified items of income, gain, deduction, and loss 

from a PTP, but the W-2 wages and UBIA of qualified 

property from the PTP should not be reported, as the 

beneficiary cannot use that information in computing their 

QBI deduction.

Statement A—QBI Pass-Through Entity Reporting

Pass-through entity’s name: Pass-through entity’s EIN:

Beneficiary’s name: Beneficiary’s identifying number:

Beneficiary's Share of:

 PTP

 Aggregated

 SSTB 

 PTP

 Aggregated

 SSTB 

 PTP

 Aggregated

 SSTB 

QBI or Qualified PTP Items Subject to Beneficiary-Specific Determinations TB1 TB2 TB3

 Ordinary business income 

Rental income 

Other

W-2 Wages

UBIA of Qualified Property

Section 199A Dividends

Specific Instructions for Statement B—QBI 

Pass-Through Entity Aggregation Election(s). If the trust 

or estate elects to aggregate more than one trade or 

business that meet all the requirements to aggregate, the 

trust or estate must report the aggregation to beneficiaries on 

Statement B, or a substantially similar statement, and attach 

it to each Schedule K-1. The trust or estate must indicate 

trades or businesses that were aggregated by checking the 

appropriate box for each aggregated trade or business. The 

trust or estate must also provide a description of the 

aggregated trade or business and an explanation of the 

factors met that allow the aggregation.

The aggregation statement must be completed each year 

to show the trust’s or estate’s trade or business aggregations. 

Failure to disclose the aggregations may cause them to be 

disaggregated. The trust’s or estate’s aggregations must be 

reported consistently for all subsequent years, unless there is 

a change in facts and circumstances that changes or 

disqualifies the aggregation. The trust or estate must provide 

a written explanation for any changes to prior year 

aggregations that describes the change in facts and 

circumstances.

If the trust or estate holds a direct or indirect interest in an 

RPE that aggregates multiple trades or businesses, the trust 

or estate must also include a copy of the RPE’s aggregations 

with each beneficiary’s Schedule K-1. The trust or estate 

cannot break apart the aggregation of another RPE, but it 

may add trades or businesses to the aggregation, assuming 

the aggregation requirements are satisfied.

Instructions for Form 1041 (2023) 49
Statement B—QBI Pass-Through Entity Aggregation Election(s)

Pass-through entity’s name: Pass-through entity’s EIN:

Aggregation of Pass-Through Business Operations 

Aggregation 1

Provide a description of the aggregated trades or businesses and an explanation of the factors met that allow the aggregation in accordance with 

Regulations section 1.199A-4. In addition, if the pass-through entity holds a direct or indirect interest in a relevant pass-through entity (RPE) that 

aggregates multiple trades or businesses, attach a copy of the RPE's aggregations.

Has this trade or business aggregation changed from the prior year? This includes changes in the aggregation due to a trade or business being 

formed, acquired, disposed, or ceasing operations. If yes, explain.

Note. If you have more than one aggregated group, attach additional Statements B. Name the additional aggregations 2, 3, 4, and so forth.

Specific Instructions for Statement C—QBI 

Pass-Through Entity Reporting—Patrons of Specified 

Agricultural and Horticultural Cooperatives. 

QBI items and wages allocable to qualified payments. 

If the trust or estate is a patron of a specified agricultural or 

horticultural cooperative, the trust or estate must provide the 

allocable share of QBI items and W-2 wages allocable to 

qualified payments from each trade or business to each of its 

beneficiaries on Statement C, or a substantially similar 

statement, and attach it to Schedule K-1 so each beneficiary 

can compute their patron reduction under section 199A(b)(7).

QBI items and W-2 wages allocable to qualified payments 

include apportioned QBI items included on Statement A that 

are allocable to the qualified payments reported to the trust or 

estate on Form 1099-PATR from the cooperative.

Section 199A(g) deduction. The trust or estate must 

report to its beneficiaries their allocable shares of any 

apportioned section 199A(g) deduction passed through the 

cooperative, as reported on Form 1099-PATR. Section 

199A(g) deductions do not have to be reported by trade or 

business and can be reported as a single amount to 

beneficiaries.

Statement C—QBI Pass-Through Entity Reporting—Patrons of Specified Agricultural and Horticultural 

Cooperatives

Pass-through entity’s name: Pass-through entity’s EIN:

Beneficiary’s name: Beneficiary's identifying number:

Beneficiary’s Share of:

 PTP

 Aggregated

 SSTB 

 PTP

 Aggregated

 SSTB 

 PTP

 Aggregated

 SSTB 

QBI Items Allocable to Qualified Payments Subject to Beneficiary-Specific 

Determinations TB1 TB2 TB3

Ordinary business income 

Rental income 

Other

W-2 Wages Allocable to Qualified Payments

Section 199A(g) Deduction

Code J. Qualifying advanced coal project property and 

qualifying gasification project property. Provide the 

beneficiary with a statement with the distributive share of 

amounts that the beneficiary will need to complete Form 

50 Instructions for Form 1041 (2023)
3468, Part II, Sections A and B. If there is information for 

more than one property, the attached statement will 

separately identify the information for each property. See the 

instructions for Form 3468, Part II, Sections A and B, for 

details.

Code K. Qualifying advanced energy project property. 

Provide the beneficiary with a statement with the distributive 

share of amounts that the beneficiary will need to complete 

Form 3468, Part III. If there is information for more than one 

property, the attached statement will separately identify the 

information for each property. See the instructions for Form 

3468, Part III, for details.

Code L. Advanced manufacturing investment property. 

Provide the beneficiary with a statement with the distributive 

share of amounts that the beneficiary will need to complete 

Form 3468, Part IV. If there is information for more than one 

property, the attached statement will separately identify the 

information for each property. See the instructions for Form 

3468, Part IV, for details.

Other information (code ZZ). List on a separate sheet the 

tax information the beneficiary will need to complete their 

return that isn't entered elsewhere on Schedule K-1.

For example, if the estate or trust participates in a 

transaction that must be disclosed on Form 8886 (see 

earlier), both the estate or trust and its beneficiaries may be 

required to file Form 8886. The estate or trust must determine 

if any of its beneficiaries are required to disclose the 

transaction and provide those beneficiaries with information 

they will need to file Form 8886. This determination is based 

on the category(ies) under which a transaction qualified for 

disclosure. See the Instructions for Form 8886 for details.

In addition, if the beneficiary is a “covered person” in 

connection with a foreign tax credit splitter arrangement 

under section 909, attach a statement that identifies the 

arrangement including the foreign taxes paid or accrued.

Inclusion of global intangible low-taxed income (GILTI). 

Section 951A requires U.S. shareholders of controlled foreign 

corporations to report their ratable share of GILTI in taxable 

income. If applicable, provide the information necessary to 

figure the GILTI inclusion to each beneficiary. See the 

Instructions for Form 8992 for details.

Foreign-derived intangible income (FDII). Public Law 

115-97 enacted section 250, which allows a domestic 

corporation a deduction for the eligible percentage of FDII 

and GILTI. Section 250 is effective for tax years beginning 

after 2017. If applicable, provide the necessary information to 

each domestic corporate beneficiary for its calculation of FDII 

benefit. See section 250 for more information. See the 

Instructions for Form 8993 for details.

Limitation on business interest expense. If an estate or 

trust is required to file Form 8990, the adjusted taxable 

income of an estate or trust beneficiary is reduced by any 

income (including any DNI) received from the estate or trust 

by the beneficiary to the extent such income supported a 

deduction for business interest expense under section 163(j)

(1)(B) in computing the estate's or trust's taxable income. If 

applicable, provide the beneficiary the necessary information 

to calculate this amount in an attachment to Schedule K-1. 

See Form 8990 and the Instructions for Form 8990 for 

additional information.

Instructions for Form 1041 (2023) 51
Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws of the 

United States. You are required to give us the information. We need it to ensure that you are complying with these laws and to 

allow us to figure and collect the right amount of tax.

You aren't required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the 

form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as 

their contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return 

information are confidential, as required by Code section 6103.

The time needed to complete and file this form and related schedules will vary depending on individual circumstances. The 

estimated average times are:

Form 1041 Schedule D Schedule I Schedule J Schedule K-1 Form 1041-V

Recordkeeping. . . . 25 hr., 49min. 14 hr., 35 min. 17 hr., 42 min. 11 hr., 00 min. 6 hr., 27 min. 43 min.

Learning about the law 

or the form. . . . 16 hr., 21min. 3 hr., 38 min. 4 hr., 22 min. 1 hr., 27 min. 35 min. - - - -

Preparing the form. . . . 31 hr., 27min. 4 hr., 58 min. 4 hr., 51 min. 2 hr., 37 min. 43 min. - - - -

Copying, assembling, and sending 

the form to the IRS. . . . 4 hr., 01min. 16 min. - - - - 16 min. - - - - - - - -

Comments and suggestions. We welcome your comments concerning the accuracy of these time estimates or 

suggestions for making this form and related schedules simpler. You can send us comments through IRS.gov/FormComments. 

Or, you can write to the Internal Revenue Service, Tax Forms and Publications, 1111 Constitution Ave. NW, IR-6526, 

Washington, DC 20224. Although we can't respond individually to each comment received, we do appreciate your feedback 

and will consider your comments and suggestions as we revise our tax forms, instructions, and publications. Don't send Form 

1041 to this address. Instead, see Where To File, earlier.

52 Instructions for Form 1041 (2023)
Index

A

Accounting income 3

Adjusted gross income (AGI) 2, 4, 10, 15, 

17, 28, 36, 44

Alaska Native Settlement Trusts 7

Amended return 20

Amounts paid or permanently set 

aside 29

Assembly 13

Attachments 13

B

Bankruptcy estate 7, 16, 19

Bankruptcy information 16

Beneficiary 4

Allocation of estimated tax payment 10

Complex trust 42

Estate 42

Simple trust 42

Tax year for inclusion 42

Withholding on foreign person 30

Blind trust 21

C

Cemetery perpetual care fund 27

Charitable deduction 28

Charitable remainder trusts 20

Common trust fund 7

D

Decedent's Estate 4

Definitions:

Accumulation distribution 39

Adjusted gross income (AGI) 4

Beneficiary 4

Complex trust 18

Decedent's estate 18

Decedent's Estate 4

DNI 4

Fiduciary 4

Grantor trusts 19

IRD 4

Outside income 40

Pooled income fund 19

Revocable Living Trust 4

Simple trust 18

Trust 4

Trusts 4

Distributable net income (See DNI)

DNI 4, 29

E

Electing small business trusts 15

ESBT (S portion only) 19

S portion 15

Elections:

Section 643(e)(3) 31

Section 643(g) 10

Section 645 5

Special rule for qualified revocable trusts 5

Treating contributions as paid in prior tax 

year 28

Electronic deposits 10

ESBTs (See Electing small business trusts)

Estate 5, 42

Bankruptcy 7, 19

Exemption for 27

Foreign 5

Who must file 5

Estate tax deduction 27

Estimated tax 10, 28

Allocation of payments to beneficiaries 10

Penalty 28

Exemption 27

Extraterritorial income exclusion 21

F

Fiduciary 4, 5, 9

Fiduciary accounting income (FAI) 

(See Accounting income)

Final return 20

First-tier distributions 30

Foreign tax credit 32

Form 1041-T 10

Form 8855 5

Form 8886 12, 13, 51

G

General business credit 32

Grantor trusts 3, 5, 13, 19

Backup withholding 15

Nonqualified deferred compensation 

plans 19

Optional filing methods 14

Pre-need funeral trusts 19

Special filing instructions 13

GST tax deduction 27

I

Income distribution deduction 3, 27, 29

Inter vivos 3, 4

Interest income 21

IRD:

Deduction 27

M

Minimum taxable income 27

N

Net investment income tax 36

Net operating loss 28

Nonexempt charitable deduction 19

Nonexempt charitable trust 19, 28

Nonqualified deferred compensation 

plans 19

P

Paid preparer 9

Paid preparer authorization 9

Penalties:

Estimated tax 28

Failure to provide a required TIN 41

Failure to provide information timely 11

Late filing of return 11

Late payment of tax 11

Other 11

Trust fund recovery 11

Underpaid estimated tax 11

Pooled income funds 15, 19, 28, 29

Pre-need funeral trusts 19

Q

Qualified business income deduction 27

Qualified disability trust 27

Qualified revocable trust 5

Qualified settlement funds 8

Qualified small business stock 30

Qualified subchapter S trust (QSST) 5, 14, 

19

R

Returns:

Amended 20

Common trust fund 7

Electronic and magnetic media 8

Final 20

Nonexempt charitable trust 19, 20

Qualified settlement funds 8

Split-interest trust 20

When to file 8

Who must file 5

Revocable Living Trusts:

Section 645 Election 20

S

Second-tier distributions 31

Separate share rule 29

Special filing instructions:

Bankruptcy estates 18

Electing small business trusts 15

Grantor trusts 13

Pooled income funds 15

Split-interest trust 20

Substitute forms 42

T

Tax rate schedule 31

Taxable income 27

Throwback years 39

Trusts 4

Alaska Native Settlement 7

Blind 21

Common trust fund 7

Complex 42

Domestic 5

Exemption for 27

Foreign 37

Grantor 3

Inter vivos 3, 4

Nonexempt charitable 19, 28

Pre-need funeral 19

Qualified disability 27

Qualified revocable 5

Simple 42

Split-interest 20

Testamentary 3, 4

Who must file 5, 41

W

Where to file 9

Who must file:

Decedent's estate 5

Trust 5

Withholding on foreign person 30

53