Certain 2010 Cash Contributions for Haiti Relief Can Be Deducted As 

If Made on December 31, 2009 

A new law allows the option of treating certain charitable contributions of money 

made after January 11, 2010, and before March 1, 2010, for the relief of victims 

in areas affected by the January 12, 2010, earthquake in Haiti as if they were 

made on December 31, 2009. Contributions of money include contributions made 

by cash, check, money order, credit card, charge card, debit card, or via cell 

phone. 

The new law was enacted after the 2009 forms, instructions, and publications 

had already been printed, so this alert is being added to the electronic version of 

certain impacted products. 

The contribution must be made to a qualified organization and meet all other 

requirements for charitable contribution deductions. However, if the contribution 

was made by phone or text message, a telephone bill showing the name of the 

donee organization, the date of the contribution, and the amount of the 

contribution will satisfy the recordkeeping requirement. Therefore, for example, 

for a $10 charitable contribution made by text message that was charged to a 

telephone or wireless account, a telecommunications company bill containing this 

information satisfies the recordkeeping requirement. 
Department of the Treasury 2009 Internal Revenue Service

Instructions for Form 1041

and Schedules A, B, G, J,

and K-1

U.S. Income Tax Return for Estates and Trusts

Section references are to the Internal Contents Page

Revenue Code unless otherwise noted. G. Section 645 Election . . . . . . . . . .17 Photographs of Missing

Contents Page Income . . . . . . . . . . . . . . . . . . . . . .17 Children

What’s New . . . . . . . . . . . . . . . . . . . .1 Deductions . . . . . . . . . . . . . . . . . . .18 The Internal Revenue Service is a Reminder . . . . . . . . . . . . . . . . . . . . .1 Tax and Payments . . . . . . . . . . . . .23 proud partner with the National Center Photographs of Missing Schedule A—Charitable for Missing and Exploited Children. Children . . . . . . . . . . . . . . . . . . . . .1 Deduction . . . . . . . . . . . . . . . . . .25 Photographs of missing children Unresolved Tax Issues . . . . . . . . . . .1 Schedule B—Income selected by the Center may appear in How To Get Forms and Distribution Deduction . . . . . . . . .25 instructions on pages that would Publications . . . . . . . . . . . . . . . . . .2 Schedule G—Tax otherwise be blank. You can help bring

General Instructions . . . . . . . . . . . .2 Computation . . . . . . . . . . . . . . . .27 these children home by looking at the

Purpose of Form . . . . . . . . . . . . . . . .2 Other Information . . . . . . . . . . . . . .29 photographs and calling

Income Taxation of Trusts and Schedule J (Form 1041)— 1-800-THE-LOST (1-800-843-5678) if

Decedents’ Estates . . . . . . . . . . . .2 Accumulation Distribution for you recognize a child.

Abusive Trust Arrangements . . . . . . .2 Certain Complex Trusts . . . . . . . .30

Definitions . . . . . . . . . . . . . . . . . . . . .3 Schedule K-1 (Form 1041)— Unresolved Tax Issues Who Must File . . . . . . . . . . . . . . . . . .3 Beneficiary’s Share of If you have attempted to deal with an Electronic Filing . . . . . . . . . . . . . . . . .6 Income, Deductions, Credits,

When To File IRS problem unsuccessfully, you . . . . . . . . . . . . . . . . . .6 etc. . . . . . . . . . . . . . . . . . . . . . . .32 should contact the Taxpayer Advocate. Period Covered . . . . . . . . . . . . . . . . .7 Index . . . . . . . . . . . . . . . . . . . . . . .37 The Taxpayer Advocate independently Where To File . . . . . . . . . . . . . . . . . .7 represents the estate’s or trust’s Who Must Sign . . . . . . . . . . . . . . . . .7 What’s New interests and concerns within the IRS Accounting Methods . . . . . . . . . . . . .8 • For tax years beginning in 2009, the by protecting its rights and resolving Accounting Periods . . . . . . . . . . . . . .8 requirement to file a return for a problems that have not been fixed Rounding Off to Whole Dollars . . . . .8 bankruptcy estate applies only if gross through normal channels. Estimated Tax . . . . . . . . . . . . . . . . . .8 income is at least $9,350. While Taxpayer Advocates cannot Interest and Penalties . . . . . . . . . . . .9 • For 2009, qualified disability trusts Other Forms That May Be change the tax law or make a technical can claim an exemption of up to Required tax decision, they can clear up . . . . . . . . . . . . . . . . . . . .9 $3,650. A trust with modified adjusted problems that resulted from previous Additional Information . . . . . . . . . . .10 gross income above $166,800 loses contacts and ensure that the estate’s or Assembly and Attachments . . . . . . .11 part of the exemption deduction. See trust’s case is given a complete and Special Reporting the instructions for line 20 on page 23 impartial review. Instructions . . . . . . . . . . . . . . . .11 for more details.

Grantor Type Trusts . . . . . . . . . . .11 • Act section 13 of the Worker, The estate’s or trust’s assigned

Pooled Income Funds . . . . . . . . .12 Homeownership, and Business personal advocate will listen to its point

Electing Small Business Assistance Act of 2009 allows you to of view and will work with the estate or

Trusts . . . . . . . . . . . . . . . . . . . .12 make, for one tax year, an election to trust to address its concerns. The

Bankruptcy Estates. . . . . . . . . . . .13 carry back an applicable NOL for a estate or trust can expect the advocate

Specific Instructions . . . . . . . . . . .14 period of 3, 4, or 5 years instead of 2 to provide:

Name of Estate or Trust . . . . . . . . . .14 years. See Rev. Proc. 2009-52, • An impartial and independent look at

Name and Title of Fiduciary . . . . . . .14 2009-49 I.R.B. 744, available at your problem,

Address www.irs.gov/irb/2009-49_IRB/ar11.html. . . . . . . . . . . . . . . . . . . . . .15 • Timely acknowledgment, • You can now pay the balance of A. Type of Entity . . . . . . . . . . . . . . .15 • The name and phone number of the taxes due on Form 1041 by credit or B. Number of Schedules K-1 individual assigned to its case, debit card. See the instructions for line Attached . . . . . . . . . . . . . . . . . . .15 • Updates on progress, 27 on page 24. C. Employer Identification • Timeframes for action, Number . . . . . . . . . . . . . . . . . . . .15 • Speedy resolution, and D. Date Entity Created . . . . . . . . . . .16 Reminder • Courteous service. E. Nonexempt Charitable and • Review a copy of the trust instrument Split-Interest Trusts . . . . . . . . . . .16 (including any amendments) or the will, When contacting the Taxpayer

F. Initial Return, Amended if any, before preparing an estate’s or Advocate, you should provide the

Return, etc. . . . . . . . . . . . . . . . . .16 trust’s return. following information.

Cat. No. 11372D
• The estate’s or trust’s name, www.irs.gov/cdorders for $30 (no beneficiaries of the amounts to be

address, and employer identification handling fee) or call 1-877-233-6767 toll included on their income tax returns.

number (EIN). free to buy the DVD for $30 (plus a $6 Before preparing Form 1041, the • The name and telephone number of handling fee). fiduciary must figure the accounting an authorized contact person and the By phone and in person. You can income of the estate or trust under the hours he or she can be reached. order forms and publications by calling will or trust instrument and applicable • The type of tax return and year(s) 1-800-TAX-FORM (1-800-829-3676). local law to determine the amount, if involved. You can also get most forms and any, of income that is required to be • A detailed description of the problem. publications at your local IRS office. distributed, because the income • Previous attempts to solve the distribution deduction is based, in part, problem and the office that had been on that amount. contacted.

• A description of the hardship the General Instructions

estate or trust is facing and supporting Abusive Trust

documentation (if applicable). Purpose of Form Arrangements You can contact a Taxpayer

Advocate as follows: The fiduciary of a domestic decedent’s Certain trust arrangements purport to

• Call the Taxpayer Advocate’s toll-free estate, trust, or bankruptcy estate uses reduce or eliminate federal taxes in

number: 1-877-777-4778. Form 1041 to report: ways that are not permitted under the

• Call, write, or fax the Taxpayer • The income, deductions, gains, law. Abusive trust arrangements

Advocate office in its area (see Pub. losses, etc. of the estate or trust; typically are promoted by the promise

1546, Taxpayer Advocate Service, Your • The income that is either of tax benefits with no meaningful

Voice At The IRS, for addresses and accumulated or held for future change in the taxpayer’s control over or

phone numbers). distribution or distributed currently to benefit from the taxpayer’s income or

• TTY/TDD help is available by calling the beneficiaries; assets. The promised benefits may

1-800-829-4059. • Any income tax liability of the estate include reduction or elimination of

• Visit the website at www.irs.gov/ or trust; and income subject to tax; deductions for

advocate personal expenses paid by the trust; . • Employment taxes on wages paid to

household employees. depreciation deductions of an owner’s

How To Get Forms and personal residence and furnishings; a

stepped-up basis for property Income Taxation of Publications transferred to the trust; the reduction or

Trusts and Decedents’ elimination of self-employment taxes; Internet. You can access the IRS and the reduction or elimination of gift website 24 hours a day, 7 days a week Estates and estate taxes. These promised at www.irs.gov to: A trust or a decedent’s estate is a benefits are inconsistent with the tax • Download forms, instructions, and separate legal entity for federal tax rules applicable to trust arrangements. publications; purposes. A decedent’s estate comes • Order IRS products online; Abusive trust arrangements often into existence at the time of death of an • Research your tax questions online; use trusts to hide the true ownership of individual. A trust may be created • Search publications online by topic or assets and income or to disguise the during an individual’s life (inter vivos) keyword; substance of transactions. These or at the time of his or her death under • View Internal Revenue Bulletins arrangements frequently involve more a will (testamentary). If the trust (IRBs) published in the last few years; than one trust, each holding different instrument contains certain provisions, and assets of the taxpayer (for example, the then the person creating the trust (the • Sign up to receive local and national taxpayer’s business, business grantor) is treated as the owner of the tax news by email. equipment, home, automobile, etc.). trust’s assets. Such a trust is a grantor DVD for tax products. You can order Some trusts may hold interests in other type trust. See page 11 for special rules Pub. 1796, IRS Tax Products DVD, and trusts, purport to involve charities, or for grantor trusts. obtain: are foreign trusts. Funds may flow from

• Current-year forms, instructions, and A trust or decedent’s estate figures one trust to another trust by way of

publications. its gross income in much the same rental agreements, fees for services,

• Prior-year forms, instructions, and manner as an individual. Most purchase agreements, and

publications. deductions and credits allowed to distributions.

• Tax Map: an electronic research tool individuals are also allowed to estates Some of the abusive trust and finding aid. and trusts. However, there is one major arrangements that have been identified • Tax Law frequently asked questions. distinction. A trust or decedent’s estate include unincorporated business trusts • Tax Topics from the IRS telephone is allowed an income distribution (or organizations), equipment or service response system. deduction for distributions to trusts, family residence trusts, • Internal Revenue Code - Title 26. beneficiaries. To figure this deduction, charitable trusts, and final trusts. In • Fill-in, print, and save features for the fiduciary must complete Schedule each of these trusts, the original owner most tax forms. B. The income distribution deduction of the assets nominally subject to the • Internal Revenue Bulletins. determines the amount of any trust effectively retains the authority to • Toll-free and email technical support. distributions taxed to the beneficiaries. cause financial benefits of the trust to

The DVD is released twice during For this reason, a trust or decedent’s be directly or indirectly returned or the year. The first release will ship the estate sometimes is referred to as a made available to the owner. For

beginning of January 2010. The final “pass-through” entity. The beneficiary, example, the trustee may be the release will ship the beginning of March and not the trust or decedent’s estate, promoter, a relative, or a friend of the 2010. pays income tax on his or her owner who simply carries out the

Purchase the DVD from National directions of the owner whether or not distributive share of income. Schedule

Technical Information Service at permitted by the terms of the trust. K-1 (Form 1041) is used to notify the

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When trusts are used for legitimate • All accrued income of a decedent representative, or person in possession

business, family, or estate planning who reported his or her income on the of property of a decedent’s estate.

purposes, either the trust, the cash method of accounting, Note. Any reference in these beneficiary, or the transferor to the trust • Income accrued solely because of instructions to “you” means the fiduciary will pay the tax on income generated by the decedent’s death in the case of a of the estate or trust.

the trust property. Trusts cannot be decedent who reported his or her Trust. A trust is an arrangement used to transform a taxpayer’s income on the accrual method of created either by a will or by an inter personal, living, or educational accounting, and vivos declaration by which trustees take expenses into deductible items, and • Income to which the decedent had a title to property for the purpose of cannot seek to avoid tax liability by contingent claim at the time of his or protecting or conserving it for the ignoring either the true ownership of her death. beneficiaries under the ordinary rules income and assets or the true Some examples of IRD for a applied in chancery or probate courts. substance of transactions. Therefore, decedent who kept his or her books on the tax results promised by the Revocable living trust. A revocable the cash method are: promoters of abusive trust living trust is an arrangement created • Deferred salary payments that are arrangements are not allowable under by a written agreement or declaration payable to the decedent’s estate, the law, and the participants in and during the life of an individual and can • Uncollected interest on U.S. savings promoters of these arrangements may be changed or ended at any time bonds, be subject to civil or criminal penalties during the individual’s life. A revocable • Proceeds from the completed sale of in appropriate cases. living trust is generally created to farm produce, and manage and distribute property. Many For more details, including the legal • The portion of a lump-sum people use this type of trust instead of principles that control the proper tax distribution to the beneficiary of a (or in addition to) a will. treatment of these abusive trust decedent’s IRA that equals the balance Because this type of trust is arrangements, see Notice 97-24, in the IRA at the time of the owner’s revocable, it is treated as a grantor type 1997-1 C.B. 409. death. This includes unrealized trust for tax purposes. See Grantor For additional information about appreciation and income accrued to Type Trusts later for special filing that date, less the aggregate amount of abusive tax arrangements, visit the IRS instructions that apply to grantor type website at www.irs.gov the owner’s nondeductible contributions and type in the trusts. to the IRA. Such amounts are included keyword “Scams” in the search box. in the beneficiary’s gross income in the Be sure to read Optional Filing

Definitions tax year that the distribution is received. Methods for Certain Grantor

Type Trusts. Generally, most

TIP

The IRD has the same character it Beneficiary. A beneficiary includes an would have had if the decedent had people that have revocable living trusts heir, a legatee, or a devisee. will be able to use Optional Method 1. lived and received such amount.

Decedent’s estate. The decedent’s This method is the easiest and least Deductions and credits. The estate is an entity that is formed at the burdensome way to meet your following deductions and credits, when obligations. time of an individual’s death and paid by the decedent’s estate, are generally is charged with gathering the

decedent’s assets, paying the allowed on Form 1041 even though Who Must File they were not allowable on the decedent’s debts and expenses, and decedent’s final income tax return. distributing the remaining assets. Decedent’s Estate • Business expenses deductible under Generally, the estate consists of all the section 162. The fiduciary (or one of the joint property, real or personal, tangible or • Interest deductible under section fiduciaries) must file Form 1041 for a intangible, wherever situated, that the 163. domestic estate that has: decedent owned an interest in at death. • Taxes deductible under section 164. 1. Gross income for the tax year of Distributable net income (DNI). The • Investment expenses described in $600 or more, or income distribution deduction allowable section 212 (in excess of 2% of 2. A beneficiary who is a to estates and trusts for amounts paid, adjusted gross income (AGI)). nonresident alien. credited, or required to be distributed to • Percentage depletion allowed under beneficiaries is limited to DNI. This section 611. An estate is a domestic estate if it is

amount, which is figured on Schedule • Foreign tax credit. not a foreign estate. A foreign estate is

B, line 7, is also used to determine how one the income of which is from For more information, see section much of an amount paid, credited, or sources outside the United States that 691 or IRD in Pub. 559, Survivors, required to be distributed to a is not effectively connected with the Executors, and Administrators. beneficiary will be includible in his or conduct of a U.S. trade or business and

her gross income. Income required to be distributed is not includible in gross income. If you

Income, deductions, and credits in currently. Income required to be are the fiduciary of a foreign estate, file

respect of a decedent. distributed currently is income that is Form 1040NR, U.S. Nonresident Alien

required under the terms of the Income Tax Return, instead of Form Income. When completing Form governing instrument and applicable 1041. 1041, you must take into account any local law to be distributed in the year it items that are income in respect of a is received. The fiduciary must be Trust

decedent (IRD). under a duty to distribute the income The fiduciary (or one of the joint

In general, IRD is income that a currently, even if the actual distribution fiduciaries) must file Form 1041 for a

decedent was entitled to receive but is not made until after the close of the domestic trust taxable under section

that was not properly includible in the trust’s tax year. See Regulations 641 that has:

decedent’s final income tax return section 1.651(a)-2. 1. Any taxable income for the tax under the decedent’s method of Fiduciary. A fiduciary is a trustee of a year, accounting. trust, or an executor, executrix, 2. Gross income of $600 or more

IRD includes: administrator, administratrix, personal (regardless of taxable income), or

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3. A beneficiary who is a related estate during the election and the electing trust had filed a return

nonresident alien. period. This election may be made by a as an estate under the trust’s TIN, or

QRT even if no executor is appointed • No executor was appointed and the Two or more trusts are treated as for the related estate. QRT was the filing trust (as explained one trust if such trusts have later). In general, Form 8855, Election To substantially the same grantor(s) and Treat a Qualified Revocable Trust as A related estate that continues after substantially the same primary Part of an Estate, must be filed by the the termination of the election period beneficiary(ies) and a principal purpose due date for Form 1041 for the first tax does not need to obtain a new TIN. of such trusts is avoidance of tax. This

year of the related estate. This applies provision applies only to that portion of For more information about TINs, even if the combined related estate and the trust that is attributable to including trusts with multiple owners, electing trust do not have sufficient contributions to corpus made after see Regulations sections 1.645-1 and

March 1, 1984. income to be required to file Form 301.6109-1(a). 1041. However, if the estate is granted A trust is a domestic trust if: an extension of time to file Form 1041 General procedures for completing • A U.S. court is able to exercise for its first tax year, the due date for Form 1041 during the election primary supervision over the Form 8855 is the extended due date. period. administration of the trust (court test), If there is an executor. The and Once made, the election is following rules apply to filing Form 1041 • One or more U.S. persons have the irrevocable. while the election is in effect. authority to control all substantial Qualified revocable trusts. In • The executor of the related estate is decisions of the trust (control test). general, a QRT is any trust (or part of a responsible for filing Form 1041 for the See Regulations section 301.7701-7 trust) that, on the day the decedent estate and all electing trusts. The return for more information on the court and died, was treated as owned by the is filed under the name and TIN of the

control tests. decedent because the decedent held related estate. Be sure to check the

Also treated as a domestic trust is a the power to revoke the trust as Decedent’s estate box at the top of

trust (other than a trust treated as described in section 676. An electing Form 1041. The executor continues to

wholly owned by the grantor) that: trust is a QRT for which a section 645 file Form 1041 during the election

• Was in existence on August 20, election has been made. period even if the estate distributes all

1996, of its assets before the end of the Election period. The election period • Was treated as a domestic trust on election period. is the period of time during which an August 19, 1996, and • The Form 1041 includes all items of electing trust is treated as part of its • Elected to continue to be treated as a income, deduction, and credit for the related estate.

domestic trust. estate and all electing trusts.

A trust that is not a domestic trust is The election period begins on the • The executor must attach a

date of the decedent’s death and statement to Form 1041 providing the treated as a foreign trust. If you are the terminates on the earlier of: following information for each electing trustee of a foreign trust, file Form • The day on which the electing trust trust: (a) the name of the electing trust, 1040NR instead of Form 1041. Also, a and related estate, if any, distribute all (b) the TIN of the electing trust, and (c) foreign trust with a U.S. owner of their assets, or the name and address of the trustee of generally must file Form 3520-A, • The day before the applicable date. Annual Information Return of Foreign the electing trust. To determine the applicable date, first • The related estate and the electing Trust With a U.S. Owner. determine whether a Form 706, United trust are treated as separate shares for If a domestic trust becomes a foreign States Estate (and Generation-Skipping purposes of computing DNI and trust, it is treated under section 684 as Transfer) Tax Return, is required to be applying distribution provisions. Also, having transferred all of its assets to a filed as a result of the decedent’s each of those shares can contain two foreign trust, except to the extent a death. If no Form 706 is required to be or more separate shares. For more grantor or another person is treated as filed, the applicable date is 2 years after information, see Separate share rule on the owner of the trust when the trust the date of the decedent’s death. If page 26 and Regulations section becomes a foreign trust. Form 706 is required, the applicable 1.645-1(e)(2)(iii).

Grantor Type Trusts date is the later of 2 years after the • The executor is responsible for date of the decedent’s death or 6 insuring that the estate’s share of the If all or any portion of a trust is a months after the final determination of combined tax obligation is paid. grantor type trust, then that trust or liability for estate tax. For additional portion of a trust must follow the special For additional information, including information, see Regulations section reporting requirements discussed on treatment of transfers between shares 1.645-1(f). page 11. See Grantor Type Trust and charitable contribution deductions, on

page 15 for more details on what Taxpayer identification number (TIN). see Regulations section 1.645-1(e).

makes a trust a grantor type trust. All QRTs must obtain a new TIN If there is no executor. If no following the death of the decedent Qualified subchapter S trusts executor has been appointed for the whether or not a section 645 election is (QSSTs). QSSTs must follow the related estate, the trustee of the made. (Use Form W-9, Request for special reporting requirements for these electing trust files Form 1041 as if it Taxpayer Identification Number and trusts discussed on page 11. was an estate. File using the TIN that Certification, to notify payers of the new the QRT obtained after the death of the Special Rule for Certain TIN.) decedent. The trustee can choose a Revocable Trusts An electing trust that continues after fiscal year as the trust’s tax year during

Section 645 provides that if both the the termination of the election period the election period. Be sure to check

executor (if any) of an estate (the does not need to obtain a new TIN the Decedent’s estate box at the top of

related estate) and the trustee of a following the termination unless: page 1 during the election period. The

qualified revocable trust (QRT) elect the • An executor was appointed and electing trust is entitled to a single $600

treatment in section 645, the trust must agreed to the election after the electing personal exemption on returns filed for

be treated and taxed as part of the trust made a valid section 645 election, the election period.

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If there is more than one electing electing trust and treated as distributed. Special filing instructions.

trust, the trusts must appoint one The distribution rules of sections 661 When the election is not made by trustee as the filing trustee. Form 1041 and 662 apply to this deemed the due date of the QRT’s Form 1041.

is filed under the name and TIN of the distribution. The combined entity is If the section 645 election has not been

filing trustee’s trust. A statement entitled to an income distribution made by the time the QRT’s first providing the same information deduction for this deemed distribution, income tax return would be due for the

regarding the electing trusts (except the and the ‘‘new’’ trust must include its tax year beginning with the decedent’s filing trust) that is listed under If there is share of the distribution in its income. death, but the trustee and executor (if an executor above must be attached to See Regulations sections any) have decided to make a section these Forms 1041. All electing trusts 1.645-1(e)(2)(iii) and 1.645-1(h) for 645 election, then the QRT is not must choose the same tax year. more information. required to file a Form 1041 for the

If there is more than one electing short tax year beginning with the

trust, the filing trustee is responsible for If the electing trust continues in decedent’s death and ending on

ensuring that the filing trust’s share of existence after the termination of the December 31 of that year. However, if

the combined tax liability is paid. election period, the trustee must file a valid election is not subsequently Form 1041 under the name and TIN of made, the QRT may be subject to For additional information on filing the trust, using the calendar year as its penalties and interest for failure to file requirements when there is no accounting period, if it is otherwise and failure to pay. executor, including application of the required to file. separate share rule, see Regulations If the QRT files a Form 1041 for this

section 1.645-1(e). For information on short period, and a valid section 645 If there is no executor. If there is

the requirements when an executor is election is subsequently made, then the no executor, the following rules apply to appointed after an election is made and trustee must file an amended Form filing Form 1041 for the tax year in 1041 for the electing trust, excluding all the executor does not agree to the which the election period ends. election, see below. items of income, deduction, and credit • The tax year of the electing trust of the electing trust. These amounts are Responsibilities of the trustee closes on the last day of the election then included on the first Form 1041 when there is an executor (or there period, and the Form 1041 filed for that filed by the executor for the related is no executor and the trustee is not tax year includes all items of income, estate (or the filing trustee for the the filing trustee). When there is an deduction, and credit for the electing electing trust filing as an estate). executor (or there is no executor and trust for the period beginning with the the trustee is not the filing trustee), the Later appointed executor. If an first day of the tax year and ending with executor for the related estate is not trustee of an electing trust is the last day of the election period. appointed until after the trustee has responsible for the following during the

election period. • The deemed distribution rules made a valid section 645 election, the discussed above apply. • To timely provide the executor with executor must agree to the trustee’s

all the trust information necessary to • Check the box to indicate that this election and they must file a revised

allow the executor to file a complete, Form 1041 is a final return. Form 8855 within 90 days of the

accurate, and timely Form 1041. • If the filing trust continues after the appointment of the executor. If the

• To ensure that the electing trust’s termination of the election period, the executor does not agree to the election,

trustee must obtain a new TIN. If the the election terminates as of the date of share of the combined tax liability is

paid. trust meets the filing requirements, the appointment of the executor.

trustee must file a Form 1041 under the If the executor agrees to the The trustee does not file a Form new TIN for the period beginning with election, the trustee must amend any 1041 during the election period (except the day after the close of the election Form 1041 filed under the name and for a final return if the trust terminates period and, in general, ending TIN of the electing trust for the period during the election period as explained December 31 of that year. beginning with the decedent’s death. later). The amended returns are still filed Procedures for completing Form Responsibilities of the trustee under the name and TIN of the electing 1041 for the year in which the when there is an executor (or there trust, and they must include the items election terminates. is no executor and the trustee is not of income, deduction, and credit for the

If there is an executor. If there is the filing trustee). In addition to the related estate for the periods covered

an executor, the Form 1041 filed under requirements listed above under this by the returns. Also, attach a statement

the name and TIN of the related estate same heading, the trustee is to the amended Forms 1041 identifying responsible for the following. for the tax year in which the election the name and TIN of the related estate,

terminates includes (a) the items of • If the trust will not continue after the and the name and address of the

income, deduction, and credit for the close of the election period, the trustee executor. Check the Final return box on

related estate for its entire tax year, and must file a Form 1041 under the name the amended return for the tax year that

(b) the income, deductions, and credits and TIN of the trust. Complete the ends with the appointment of the

for the electing trust for the period that entity information and items A, C, D, executor. Except for this amended

ends with the last day of the election and F. Indicate in item F that this is a return, all returns filed for the combined

period. If the estate will not continue final return. Do not report any items of entity after the appointment of the

after the close of the tax year, indicate income, deduction, or credit. executor must be filed under the name

that this Form 1041 is a final return. • and TIN of the related estate. If the trust will continue after the

At the end of the last day of the If the election terminates as the close of the election period, the trustee

election period, the combined entity is result of a later appointed executor, the must file a Form 1041 for the trust for

deemed to distribute the share executor of the related estate must file the tax year beginning the day after the

comprising the electing trust to a new Forms 1041 under the name and TIN of close of the election period and, in

trust. All items of income, including net the related estate for all tax years of the general, ending December 31 of that

capital gains, that are attributable to the related estate beginning with the year. Use the TIN obtained after the

share comprising the electing trust are decedent’s death. The electing trust’s decedent’s death. Follow the general

included in the calculation of DNI of the election period and tax year terminate rules for completing the return.

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the day before the appointment of the attachment described under Electing Small Business Grantor

executor. The trustee is not required to Type Trusts. At the top of the election Trusts amend any of the returns filed by the statement, write “Section 1.468B-1(k)

electing trust for the period prior to the Election” and include the transferor’s: Electing small business trusts file Form

appointment of the executor. The trust 1041. However, see page 12 for a • Name,

must file a final Form 1041 following the discussion of the special reporting • Address,

requirements for these trusts. instructions above for completing Form • TIN, and

1041 in the year in which the election • A statement that he or she will treat

terminates and there is no executor. the qualified settlement fund as a Pooled Income Funds

Pooled income funds file Form 1041. grantor type trust. Termination of the trust during the See page 12 for the special reporting election period. If an electing trust requirements for these trusts. Widely Held Fixed

terminates during the election period, Additionally, pooled income funds must Investment Trust (WHFITs) the trustee of that trust must file a final file Form 5227, Split-Interest Trust Trustees and middlemen of WHFITs do Form 1041 by completing the entity Information Return. not file Form 1041. Instead, they report information (using the trust’s EIN),

Qualified Funeral Trusts all items of gross income and proceeds checking the Final return box, and on the appropriate Form 1099. For the signing and dating the form. Do not Trustees of pre-need funeral trusts who definition of a WHFIT, see Regulations report items of income, deduction, and elect treatment under section 685 file section 1.671-5(b)(22). A tax credit. These items are reported on the Form 1041-QFT, U.S. Income Tax information statement that includes the related estate’s return. Return for Qualified Funeral Trusts. All information given to the IRS on Forms other pre-need funeral trusts, see 1099, as well as additional information Alaska Native Settlement Grantor Type Trusts on page 11 for identified in Regulations section Form 1041 reporting requirements. Trusts 1.671-5(e) must be given to trust

interest holders. See the General The trustee of an Alaska Native Qualified Settlement Funds Instructions for Certain Information Settlement Trust may elect the special The trustee of a designated or qualified Returns (Forms 1098, 1099, 3921, tax treatment for the trust and its settlement fund (QSF) generally must 3922, 5498, and W-2G) for more beneficiaries provided for in section file Form 1120-SF, U.S. Income Tax information. 646. The election must be made by the Return for Settlement Funds, instead of due date (including extensions) for filing

the trust’s tax return for its first tax year Form 1041. Electronic Filing

ending after June 7, 2001. Do not use Special election. If a QSF has only Qualified fiduciaries or transmitters may

Form 1041. Use Form 1041-N, U.S. one transferor, the transferor may elect be able to file Form 1041 and related to treat the QSF as a grantor type trust. Income Tax Return for Electing Alaska schedules electronically. If you wish to

Native Settlement Trusts, to make the To make the grantor trust election, do this, you must file Form 8633,

election. Additionally, Form 1041-N is the transferor must attach an election Application to Participate in the IRS

the trust’s income tax return and statement to a timely filed Form 1041, e-file Program. If you file Form 1041

satisfies the section 6039H information including extensions, that the electronically, you may now sign the

reporting requirement for the trust. administrator files for the QSF for the return electronically by using a personal

tax year in which the settlement fund is identification number (PIN). See Form

Bankruptcy Estate established. If Form 1041 is not filed 8879-F, IRS e-file Signature

because Optional Method 1 or 2 was Authorization for Form 1041, for details. The bankruptcy trustee or debtor-in- chosen, attach the election statement If you do not sign the electronically filed possession must file Form 1041 for the to a timely filed income tax return, return by using a PIN, you must file estate of an individual involved in including extensions, of the transferor Form 8453-F, U.S. Estate or Trust bankruptcy proceedings under chapter for the tax year in which the settlement Income Tax Declaration and Signature 7 or 11 of title 11 of the United States fund is established. for Electronic Filing. Code if the estate has gross income for Transition rule. A transferor can For more details, see Pub. 1437, the tax year of $9,350 or more. See

Bankruptcy Estates on page 13 for make a grantor trust election for a QSF Procedures for the Form 1041 e-file

details. that was established by February 3, Program, U.S. Income Tax Returns For

2006, if the applicable period for filing Estates and Trusts For Tax Year 2009

an amended return has not expired for and Pub. 1438, File Specifications, Charitable Remainder Trusts both the QSF’s first tax year and all Validation Criteria and Record Layouts A section 664 charitable remainder trust later tax years and the same tax years for the Electronic Filing Program for (CRT) does not file Form 1041. Instead, of the transferor. A grantor trust Form 1041, U.S. Income Tax Return for a CRT files Form 5227, Split-Interest election under this paragraph requires Estates and Trusts for Tax Year 2009.

Trust Information Return. If the CRT that the returns of the QSF and the If Form 1041 is e-filed and there is a

has any unrelated business taxable transferor for all affected tax years are balance due, the fiduciary may income, it also must file Form 4720, consistent with the grantor trust authorize an electronic funds

Return of Certain Excise Taxes Under election. This requirement may be withdrawal with the return.

Chapters 41 and 42 of the Internal satisfied by timely filed original returns Revenue Code. or amended returns filed before the When To File

applicable period of limitations expires. For calendar year estates and trusts, Common Trust Funds For information about QSFs established file Form 1041 and Schedule(s) K-1 on

Do not file Form 1041 for a common or before April 15, 2010. For fiscal year by the U.S. Government by February 3,

2006, see Regulations section trust fund maintained by a bank. estates and trusts, file Form 1041 by 1.468B-5(c)(3). Instead, the fund may use Form 1065, the 15th day of the 4th month following

U.S. Return of Partnership Income, for Election statement. The election the close of the tax year. For example,

its return. For more details, see section statement may be made separately or, an estate that has a tax year that ends

584 and Regulations section 1.6032-1. if filed with Form 1041, on the on June 30, 2010, must file Form 1041

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by October 15, 2010. If the due date

falls on a Saturday, Sunday, or legal

Extension of Time To File Who Must Sign If more time is needed to file the estate holiday, file on the next business day. or trust return, use Form 7004 to apply Fiduciary for an automatic 5-month extension of The fiduciary, or an authorized Private Delivery Services time to file. representative, must sign Form 1041. If

You can use certain private delivery there are joint fiduciaries, only one is

services designated by the IRS to meet required to sign the return. Period Covered the “timely mailing as timely filing/ File the 2009 return for calendar year A financial institution that submitted

paying” rule for tax returns and estimated tax payments for trusts for 2009 and fiscal years beginning in 2009 payments. These private delivery and ending in 2010. If the return is for a which it is the trustee must enter its EIN

services include only the following. in the space provided for the EIN of the fiscal year or a short tax year (less than • DHL Express (DHL): DHL Same Day fiduciary. Do not enter the EIN of the 12 months), fill in the tax year space at Service. trust. For this purpose, a financial the top of the form. institution is one that maintains a • Federal Express (FedEx): FedEx Treasury Tax and Loan (TT&L) Priority Overnight, FedEx Standard The 2009 Form 1041 may also be account. If you are an attorney or other Overnight, FedEx 2Day, FedEx used for a tax year beginning in 2010 if: individual functioning in a fiduciary International Priority, and FedEx 1. The estate or trust has a tax year capacity, leave this space blank. Do not International First. of less than 12 months that begins and enter your individual social security ends in 2010, and • United Parcel Service (UPS): UPS number (SSN).

Next Day Air, UPS Next Day Air Saver, 2. The 2010 Form 1041 is not If you, as fiduciary, fill in Form 1041, UPS 2nd Day Air, UPS 2nd Day Air available by the time the estate or trust leave the Paid Preparer’s space blank. A.M., UPS Worldwide Express Plus, is required to file its tax return. If someone prepares this return and and UPS Worldwide Express. However, the estate or trust must show does not charge you, that person its 2010 tax year on the 2009 Form should not sign the return. 1041 and incorporate any tax law The private delivery service can tell

you how to get written proof of the changes that are effective for tax years Paid Preparer beginning after December 31, 2009. mailing date. Generally, anyone who is paid to

prepare a tax return must sign the

return and fill in the other blanks in the

Where To File Paid Preparer’s Use Only area of the

return. For all estates and trusts, including charitable and split-interest trusts (other than Charitable

Remainder Trusts). The person required to sign the

return must:

THEN use this address if you: • Complete the required preparer

information, IF you are located in Are not enclosing a check or Are enclosing a check or money

... money order ... order ... • Sign it in the space provided for the

preparer’s signature (a facsimile Connecticut, Delaware, signature is acceptable), and District of Columbia, • Give you a copy of the return for your Georgia, Illinois, records. Indiana, Kentucky,

Maine, Maryland,

Massachusetts, Paid Preparer Authorization

Michigan, New Department of the Treasury Department of the Treasury If the fiduciary wants to allow the IRS to Hampshire, New Internal Revenue Service Center Internal Revenue Service Center discuss the estate’s or trust’s 2009 tax Jersey, New York, Cincinnati, Ohio 45999-0048 Cincinnati, Ohio 45999-0148 return with the paid preparer who North Carolina, Ohio, signed it, check the “Yes” box in the Pennsylvania, Rhode

Island, South Carolina, signature area of the return. This

Tennessee, Vermont, authorization applies only to the

Virginia, West Virginia, individual whose signature appears in

Wisconsin the Paid Preparer’s Use Only area of

the estate’s or trust’s return. It does not Alabama, Alaska, apply to the firm, if any, shown in that Arizona, Arkansas,

California, Colorado, section.

Florida, Hawaii, Idaho, If the “Yes” box is checked, the Iowa, Kansas, fiduciary is authorizing the IRS to call Louisiana, Minnesota, Department of the Treasury Department of the Treasury the paid preparer to answer any Mississippi, Missouri,

Montana, Nebraska, Internal Revenue Service Center Internal Revenue Service Center questions that may arise during the Ogden, Utah 84201-0048 Ogden, Utah 84201-0148 Nevada, New Mexico, processing of the estate’s or trust’s

North Dakota, return. The fiduciary is also authorizing

Oklahoma, Oregon, the paid preparer to:

South Dakota, Texas, • Give the IRS any information that is Utah, Washington, missing from the estate’s or trust’s Wyoming return,

A foreign country or Internal Revenue Service Center Internal Revenue Service Center • Call the IRS for information about the

United States P.O. Box 409101 P.O. Box 409101 processing of the estate’s or trust’s

possession Ogden, Utah 84409 Ogden, Utah 84409 return or the status of its refund or

payment(s), and

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• Respond to certain IRS notices that ending before the date that is 2 years

the fiduciary has shared with the after the decedent’s death. Rounding Off to Whole

preparer about math errors, offsets, and Dollars return preparation. The notices will not For more information, see Form You may round off cents to whole be sent to the preparer. 1041-ES, Estimated Income Tax for dollars on the estate’s or trust’s return Estates and Trusts. The fiduciary is not authorizing the and schedules. If you do round to

paid preparer to receive any refund whole dollars, you must round all

check, bind the estate or trust to amounts. To round, drop amounts Electronic Deposits

anything (including any additional tax under 50 cents and increase amounts A financial institution that maintains a

liability), or otherwise represent the from 50 to 99 cents to the next dollar. TT&L account, and acts as a fiduciary

estate or trust before the IRS. For example, $1.39 becomes $1 and for at least 200 taxable trusts that are

$2.50 becomes $3. required to pay estimated tax, may be The authorization will automatically required to deposit the estimated tax end no later than the due date (without If you have to add two or more payments electronically using the amounts to figure the amount to enter regard to extensions) for filing the Electronic Federal Tax Payment estate’s or trust’s 2010 tax return. If the on a line, include cents when adding System (EFTPS). The electronic fiduciary wants to expand the paid the amounts and round off only the deposit requirement applies in 2010 if: preparer’s authorization or revoke the total. • The total deposits of depository taxes authorization before it ends, see Pub. (such as estimated, employment, or 947, Practice Before the IRS and Estimated Tax excise tax) in 2008 were more than Power of Attorney. Generally, an estate or trust must pay $200,000, or

estimated income tax for 2010 if it • The fiduciary (on behalf of a trust)

Accounting Methods expects to owe, after subtracting any was required to use EFTPS in 2009.

withholding and credits, at least $1,000 Figure taxable income using the If the fiduciary is required to use in tax, and it expects the withholding method of accounting regularly used in EFTPS on behalf of a trust and fails to and credits to be less than the smaller keeping the estate’s or trust’s books of: do so, it may be subject to a 10% and records. Generally, permissible penalty. methods include the cash method, the 1. 90% of the tax shown on the

accrual method, or any other method 2010 tax return, or A fiduciary that is not required to

authorized by the Internal Revenue 2. 100% of the tax shown on the make electronic deposits of estimated

Code. In all cases, the method used 2009 tax return (110% of that amount if tax on behalf of a trust may either use

must clearly reflect income. the estate’s or trust’s adjusted gross the payment vouchers (see Form

income on that return is more than 1041-ES) or voluntarily participate in Generally, the estate or trust may $150,000, and less than 2

/3 of gross EFTPS. To enroll in or get more change its accounting method (for income for 2009 or 2010 is from information about EFTPS, call income as a whole or for any material farming or fishing). 1-800-555-4477. item) only by getting consent on Form

3115, Application for Change in However, if a return was not filed for Depositing on time. For deposits

Accounting Method. For more 2009 or that return did not cover a full made by EFTPS to be on time, the

information, see Pub. 538, Accounting 12 months, item 2 does not apply. fiduciary must initiate the transaction at

Periods and Methods. least one business day before the date For this purpose, include household the deposit is due. employment taxes in the tax shown on Accounting Periods the tax return, but only if either of the Section 643(g) Election For a decedent’s estate, the moment of following is true:

• The estate or trust will have federal Fiduciaries of trusts that pay estimated death determines the end of the

income tax withheld for 2010 (see the tax may elect under section 643(g) to decedent’s tax year and the beginning instructions on page 24 for line 24e), or have any portion of their estimated tax of the estate’s tax year. As executor or • The estate or trust would be required payments allocated to any of the administrator, you choose the estate’s beneficiaries. to make estimated tax payments for tax period when you file its first income

tax return. The estate’s first tax year 2010 even if it did not include The fiduciary of a decedent’s estate may be any period of 12 months or less household employment taxes when may make a section 643(g) election figuring estimated tax. that ends on the last day of a month. If only for the final year of the estate. you select the last day of any month

other than December, you are adopting Exceptions You make the election by filing

a fiscal tax year. Estimated tax payments are not Form 1041-T, Allocation of Estimated

required from: Tax Payments to Beneficiaries, by the To change the accounting period of 65th day after the close of the estate’s 1. An estate of a domestic decedent an estate, use Form 1128, Application or trust’s tax year. Then, you include or a domestic trust that had no tax To Adopt, Change, or Retain a Tax liability for the full 12-month 2009 tax that amount on the Schedule K-1 (Form Year.

year; 1041) for the beneficiary(ies) for whom

Generally, a trust must adopt a 2. A decedent’s estate for any tax you elected it.

calendar year. The following trusts are year ending before the date that is 2 Failure to make a timely election will exempt from this requirement: years after the decedent’s death; or result in the estimated tax payments • A trust that is exempt from tax under 3. A trust that was treated as owned not being transferred to the section 501(a); by the decedent if the trust will receive beneficiary(ies) even if you entered the • A charitable trust described in section the residue of the decedent’s estate amount you wanted transferred on 4947(a)(1); and under the will (or if no will is admitted to Schedule K-1. • A trust that is treated as wholly probate, the trust primarily responsible

owned by a grantor under the rules of for paying debts, taxes, and expenses See the instructions for line 24b on

sections 671 through 679. of administration) for any tax year page 24 for more details.

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the requirement to report information is Form 706-GS(D), Interest and Penalties intentionally disregarded, each $50 Generation-Skipping Transfer Tax

penalty is increased to $100 or, if Return for Distributions. Interest greater, 10% of the aggregate amount Form 706-GS(D-1), Notification of Interest is charged on taxes not paid by of items required to be reported, and Distribution From a

the due date, even if an extension of the $100,000 maximum does not apply. Generation-Skipping Trust. time to file is granted. The penalty will not be imposed if Form 706-GS(T), Interest is also charged on penalties the fiduciary can show that not Generation-Skipping Transfer Tax imposed for failure to file, negligence, providing information timely was due to Return for Terminations.

fraud, substantial valuation reasonable cause and not due to willful Form 709, United States Gift (and misstatements, substantial neglect. Generation-Skipping Transfer) Tax understatements of tax, and reportable Return. transaction understatements. Interest is

charged on the penalty from the due Underpaid Estimated Tax Form 720, Quarterly Federal Excise

date of the return (including If the fiduciary underpaid estimated tax, Tax Return. Use Form 720 to report

extensions). The interest charge is use Form 2210, Underpayment of environmental excise taxes,

figured at a rate determined under Estimated Tax by Individuals, Estates, communications and air transportation

section 6621. and Trusts, to figure any penalty. Enter taxes, fuel taxes, luxury tax on

the amount of any penalty on Form passenger vehicles, manufacturers’

Late Filing of Return 1041, line 26. taxes, ship passenger tax, and certain

The law provides a penalty of 5% of the other excise taxes.

tax due for each month, or part of a Trust Fund Recovery Penalty Caution. See Trust Fund Recovery

month, for which a return is not filed up This penalty may apply if certain excise, Penalty earlier.

to a maximum of 25% of the tax due income, social security, and Medicare Form 926, Return by a U.S. (15% for each month, or part of a taxes that must be collected or withheld Transferor of Property to a Foreign month, up to a maximum of 75% if the are not collected or withheld, or these Corporation. Use this form to report failure to file is fraudulent). If the return taxes are not paid. These taxes are certain information required under is more than 60 days late, the minimum generally reported on Forms 720, 941, section 6038B. penalty is the smaller of $135 or the tax 943, 944, or 945. The trust fund Form 940, Employer’s Annual due. The penalty will not be imposed if recovery penalty may be imposed on all Federal Unemployment (FUTA) Tax you can show that the failure to file on persons who are determined by the IRS Return. The estate or trust may be time was due to reasonable cause. If to have been responsible for collecting, liable for FUTA tax and may have to file the failure is due to reasonable cause, accounting for, or paying over these Form 940 if it paid wages of $1,500 or attach an explanation to the return. taxes, and who acted willfully in not more in any calendar quarter during the doing so. The penalty is equal to the Late Payment of Tax calendar year (or the preceding unpaid trust fund tax. See the calendar year) or one or more Generally, the penalty for not paying instructions for Form 720, Pub. 15 employees worked for the estate or tax when due is 1

/2 of 1% of the unpaid (Circular E), Employer’s Tax Guide, or trust for some part of a day in any 20 amount for each month or part of a Pub. 51 (Circular A), Agricultural

month it remains unpaid. The maximum different weeks during the calendar Employer’s Tax Guide, for more details, year (or the preceding calendar year). penalty is 25% of the unpaid amount. including the definition of responsible

The penalty applies to any unpaid tax persons. Form 941, Employer’s QUARTERLY

on the return. Any penalty is in addition Federal Tax Return. Employers must

to interest charges on late payments. Other Penalties file this form quarterly to report income

tax withheld on wages and employer If you include interest on either Other penalties can be imposed for and employee social security and of these penalties with your negligence, substantial understatement Medicare taxes. Certain small payment, identify and enter of tax, and fraud. See Pub. 17, Your

TIP

employers must file Form 944, these amounts in the bottom margin of Federal Income Tax, for details on Employer’s ANNUAL Federal Tax Form 1041, page 1. Do not include the these penalties. Return, instead of Form 941. For more interest or penalty amount in the information, see the instructions for balance of tax due on line 27. Other Forms That May Form 944. Agricultural employers must

file Form 943, Employer’s Annual Failure To Provide Be Required Federal Tax Return for Agricultural Information Timely Form W-2, Wage and Tax Statement, Employees, instead of Form 941, to

You must provide Schedule K-1 (Form and Form W-3, Transmittal of Wage report income tax withheld and

1041), on or before the day you are and Tax Statements. employer and employee social security

required to file Form 1041, to each and Medicare taxes on farmworkers. Form 56, Notice Concerning beneficiary who receives a distribution Caution. See Trust Fund Recovery Fiduciary Relationship. You must notify of property or an allocation of an item of Penalty earlier. the IRS of the creation or termination of the estate. a fiduciary relationship. You may use Form 945, Annual Return of For each failure to provide Schedule Form 56 to provide this notice to the Withheld Federal Income Tax. Use this K-1 to a beneficiary when due and each IRS. form to report income tax withheld from failure to include on Schedule K-1 all nonpayroll payments, including the information required to be shown Form 706, United States Estate (and pensions, annuities, IRAs, gambling (or the inclusion of incorrect Generation-Skipping Transfer) Tax winnings, and backup withholding. information), a $50 penalty may be Return, or Form 706-NA, United States Caution. See Trust Fund Recovery imposed with regard to each Schedule Estate (and Generation-Skipping Penalty earlier. K-1 for which a failure occurs. The Transfer) Tax Return, Estate of

maximum penalty is $100,000 for all nonresident not a citizen of the United Form 1040, U.S. Individual Income

such failures during a calendar year. If States. Tax Return.

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Form 1040NR, U.S. Nonresident Interests, and Form 8288-A, Statement foreign partnership if it was a partner at

Alien Income Tax Return. of Withholding on Dispositions by the time of the disposition.

Foreign Persons of U.S. Real Property Form 1041-A, U.S. Information For more details, including penalties Interests. Use these forms to report and Return Trust Accumulation of transmit withheld tax on the sale of U.S. for failing to file Form 8865, see Form Charitable Amounts. 8865 and its separate instructions. real property by a foreign person. Also, Form 1042, Annual Withholding Tax use these forms to report and transmit Form 8886, Reportable Transaction Return for U.S. Source Income of tax withheld from amounts distributed to Disclosure Statement. Use Form 8886 Foreign Persons, and Form 1042-S, a foreign beneficiary from a “U.S. real to disclose information for each Foreign Person’s U.S. Source Income property interest account” that a reportable transaction in which the trust Subject to Withholding. Use these domestic estate or trust is required to forms to report and transmit withheld participated, directly or indirectly. Form establish under Regulations section 8886 must be filed for each tax year tax on payments or distributions made 1.1445-5(c)(1)(iii). that the federal income tax liability of to nonresident alien individuals, foreign the estate or trust is affected by its partnerships, or foreign corporations to Form 8300, Report of Cash participation in the transaction. The the extent such payments or Payments Over $10,000 Received in a estate or trust may have to pay a distributions constitute gross income Trade or Business. Generally, this form penalty if it has a requirement to file from sources within the United States is used to report the receipt of more Form 8886 but you fail to file it. The that is not effectively connected with a than $10,000 in cash or foreign following are reportable transactions. U.S. trade or business. For more currency in one transaction (or a series

of related transactions). • Any transaction that is the same as information, see sections 1441 and or substantially similar to tax avoidance 1442, and Pub. 515, Withholding of Tax Form 8855, Election To Treat a transactions identified by the IRS as on Nonresident Aliens and Foreign

Entities. Qualified Revocable Trust as Part of an listed transactions.

Estate. This election allows a qualified • Any transaction offered under Forms 1099-A, B, INT, LTC, MISC, revocable trust to be treated and taxed conditions of confidentiality and for OID, Q, R, S, and SA. You may have to (for income tax purposes) as part of its which the estate or trust paid a file these information returns to report related estate during the election minimum fee (confidential transaction). acquisitions or abandonments of period. • Any transaction for which the estate secured property; proceeds from broker or trust or a related party has and barter exchange transactions; Form 8865, Return of U.S. Persons

With Respect to Certain Foreign contractual protection against interest payments; payments of

Partnerships. The estate or trust may disallowance of the tax benefits long-term care and accelerated death (transaction with contractual benefits; miscellaneous income have to file Form 8865 if it: protection). payments; original issue discount; 1. Controlled a foreign partnership • Any transaction resulting in a loss of distributions from Coverdell ESAs; (that is, owned more than a 50% direct at least $2 million in any single year or distributions from pensions, annuities, or indirect interest in a foreign $4 million in any combination of years retirement or profit-sharing plans, IRAs partnership); ($50,000 in any single year if the loss is (including SEPs, SIMPLEs, Roth IRAs, 2. Owned at least a 10% direct or

Roth Conversions, and IRA generated by a section 988 transaction) indirect interest in a foreign partnership (loss transactions). recharacterizations), insurance while U.S. persons controlled that contracts, etc.; proceeds from real • Any transaction substantially similar partnership; estate transactions; and distributions to one of the types of transactions 3. Had an acquisition, disposition, or identified by the IRS as a transaction of from an HSA, Archer MSA, or Medicare change in proportional interest in a Advantage MSA. interest. foreign partnership that:

Also, use certain of these returns to a. Increased its direct interest to at See the Instructions for Form 8886

report amounts received as a nominee least 10%; for more details and exceptions. on behalf of another person, except b. Reduced its direct interest of at amounts reported to beneficiaries on Form 8918, Material Advisor least 10% to less than 10%; or Schedule K-1 (Form 1041). Disclosure Statement. Material advisors c. Changed its direct interest by at who provide material aid, assistance, or Form 8275, Disclosure Statement. least a 10% interest. advice on organizing, managing, File Form 8275 to disclose items or 4. Contributed property to a foreign promoting, selling, implementing, positions, except those contrary to a partnership in exchange for a insuring, or carrying out any reportable regulation, that are not otherwise partnership interest if: transaction, and who directly or adequately disclosed on a tax return. a. Immediately after the indirectly receive or expect to receive a The disclosure is made to avoid parts contribution, the estate or trust owned, minimum fee, must use Form 8918 to of the accuracy-related penalty directly or indirectly, at least a 10% disclose any reportable transaction imposed for disregard of rules or interest in the foreign partnership or under Regulations section 301.6111-3. substantial understatement of tax. Form b. The fair market value (FMV) of For more information, see Form 8918 8275 is also used for disclosures the property the estate or trust and its instructions. relating to preparer penalties for contributed to the foreign partnership, understatements due to unrealistic for a partnership interest, when added positions or disregard of rules. Additional Information to other contributions of property made Form 8275-R, Regulation Disclosure The following publications may assist to the foreign partnership during the Statement, is used to disclose any item preceding 12-month period, exceeds you in preparing Form 1041:

on a tax return for which a position has $100,000. • Pub. 550, Investment Income and

been taken that is contrary to Treasury Expenses,

regulations. Also, the estate or trust may have to • Pub. 559, Survivors, Executors, and

Form 8288, U.S. Withholding Tax file Form 8865 to report certain Administrators, and

Return for Dispositions by Foreign dispositions by a foreign partnership of • Pub. 590, Individual Retirement

Persons of U.S. Real Property property it previously contributed to that Arrangements (IRAs).

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How to report. If the entire trust is a Optional Filing Methods for Assembly and grantor trust, fill in only the entity Certain Grantor Type Trusts Attachments portion of Form 1041. Do not show any Generally, if a trust is treated as owned dollar amounts on the form itself; show Assemble any schedules, forms, and by one grantor or other person, the dollar amounts only on an attachment attachments behind Form 1041 in the trustee may choose Optional Method 1 to the form. Do not use Schedule K-1 following order: or Optional Method 2 as the trust’s (Form 1041) as the attachment. method of reporting instead of filing 1. Schedule I (Form 1041); If only part of the trust is treated as a Form 1041. A husband and wife will be 2. Schedule D (Form 1041); grantor trust, report on Form 1041 only treated as one grantor for purposes of 3. Form 4952; the part of the income, deductions, etc., these two optional methods if: 4. Schedule H (Form 1040); that is taxable to the trust. The amounts • All of the trust is treated as owned by 5. Form 4136; that are taxable directly to the grantor the husband and wife, and 6. Form 8855; are shown only on an attachment to the • The husband and wife file their 7. All other schedules and form. Do not use Schedule K-1 (Form income tax return jointly for that tax forms; and 1041) as the attachment. year. 8. All attachments.

The fiduciary must give the grantor Generally, if a trust is treated as

(owner) of the trust a copy of the owned by two or more grantors or other Attachments attachment. persons, the trustee may choose If you need more space on the forms or Attachment. Optional Method 3 as the trust’s On the attachment, schedules, attach separate sheets. Use method of reporting instead of filing show: the same size and format as on the Form 1041. • The name, identifying number, and printed forms. But show the totals on address of the person(s) to whom the Once you choose the trust’s filing the printed forms. income is taxable; method, you must follow the rules Attach these separate sheets after • The income of the trust that is under Changing filing methods if you all the schedules and forms. Enter the taxable to the grantor or another person want to change to another method. estate’s or trust’s EIN on each sheet. under sections 671 through 678. Report Exceptions. The following trusts

Do not file a copy of the decedent’s the income in the same detail as it cannot report using the optional filing

will or the trust instrument unless the would be reported on the grantor’s methods.

IRS requests it. return had it been received directly by • A common trust fund (as defined in the grantor; and section 584(a)). • Any deductions or credits that apply • A foreign trust or a trust that has any

Special Reporting to this income. Report these deductions of its assets located outside the United

and credits in the same detail as they States.

Instructions would be reported on the grantor’s • A qualified subchapter S trust (as return had they been received directly defined in section 1361(d)(3)).

Grantor type trusts, the S portion of by the grantor. • A trust all of which is treated as

electing small business trusts (ESBTs), The income taxable to the grantor or owned by one grantor or one other

and bankruptcy estates all have another person under sections 671 person whose tax year is other than a

reporting requirements that are calendar year. through 678 and the deductions and significantly different than other credits that apply to that income must • A trust all of which is treated as

Subchapter J trusts and decedent’s be reported by that person on their own owned by one or more grantors or other

estates. Additionally, grantor type trusts persons, one of which is not a U.S. income tax return.

have optional filing methods available. person. Example. The John Doe Trust is a Pooled income funds have many similar • A trust all of which is treated as grantor type trust. During the year, the reporting requirements that other owned by one or more grantors or other trust sold 100 shares of ABC stock for Subchapter J trusts (other than grantor persons if at least one grantor or other $1,010 in which it had a basis of $10 type trusts and electing small business person is an exempt recipient for and 200 shares of XYZ stock for $10 in trusts) have but there are some very information reporting purposes, unless which it had a $1,020 basis. important differences. These reporting at least one grantor or other person is

differences and optional filing methods The trust does not report these not an exempt recipient and the trustee

are discussed below by entity. transactions on Form 1041. Instead, a reports without treating any of the schedule is attached to the Form 1041 grantors or other persons as exempt Grantor Type Trusts showing each stock transaction recipients.

A trust is a grantor trust if the grantor separately and in the same detail as Optional Method 1. For a trust

retains certain powers or ownership John Doe (grantor and owner) will need treated as owned by one grantor or by

benefits. This can also apply to only a to report these transactions on his one other person, the trustee must give

portion of a trust. See Grantor Type Schedule D (Form 1040). The trust may all payers of income during the tax year

Trust not net the capital gains and losses, nor on page 15 for details on what the name and TIN of the grantor or

makes a trust a grantor trust. may it issue John Doe a Schedule K-1 other person treated as the owner of (Form 1041) showing a $10 long-term the trust and the address of the trust. In general, a grantor trust is ignored capital loss. This method may be used only if the for income tax purposes and all of the QSSTs. A QSST follows the reporting owner of the trust provides the trustee income, deductions, etc., are treated as rules discussed above for grantor type with a signed Form W-9, Request for belonging directly to the grantor. This trusts. Income allocated to S Taxpayer Identification Number and also applies to any portion of a trust corporation stock held by the trust is Certification. In addition, unless the that is treated as a grantor trust. treated as owned by the income grantor or other person treated as

The following instructions apply beneficiary of the portion of the trust owner of the trust is the trustee or a

only to grantor type trusts that that owns the stock. A QSST cannot co-trustee of the trust, the trustee must CAUTION are not using an optional filing elect any of the optional filing methods give the grantor or other person treated

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method. discussed below. as owner of the trust a statement that:

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• Shows all items of income, part of the trust treated as owned by • The calculation of the yearly rate of

deduction, and credit of the trust; each grantor, or other person, showing return,

• Identifies the payer of each item of the trust as the payer and each grantor, • The computation of the deduction for

income; or other person treated as owner of the distributions to the beneficiaries, and

• Explains how the grantor or other trust, as the payee. The trustee must • The computation of any charitable

person treated as owner of the trust report each type of income in the deduction.

takes those items into account when aggregate and each item of gross See section 642 and the regulations

figuring the grantor’s or other person’s proceeds separately. The due date for thereunder for more information.

taxable income or tax; and any Forms 1099 required to be filed You do not have to complete • Informs the grantor or other person with the IRS by a trustee under this Schedules A or B of Form 1041. treated as the owner of the trust that method is March 1, 2010 (March 31,

those items must be included when 2010, if filed electronically). Also, you must file Form 5227,

figuring taxable income and credits on Split-Interest Trust Information Return, In addition, the trustee must give his or her income tax return. for the pooled income fund. However, if each grantor or other person treated as all amounts were transferred in trust Grantor trusts that have not owner of the trust a statement that: before May 27, 1969, or if an amount • Shows all items of income, applied for an EIN and are was transferred to the trust after May deduction, and credit of the trust going to file under Optional

TIP

26, 1969, for which no deduction was Method 1 do not need an EIN for the attributable to the part of the trust allowed under any of the sections listed treated as owned by the grantor or trust as long as they continue to report other person; under section 4947(a)(2), then Form under that method. 5227 does not have to be filed. • Explains how the grantor or other Optional Method 2. For a trust person treated as owner of the trust Note. Form 1041-A is no longer filed treated as owned by one grantor or by takes those items into account when by pooled income funds. one other person, the trustee must give figuring the grantor’s or other person’s all payers of income during the tax year taxable income or tax; and Electing Small Business the name, address, and TIN of the • Informs the grantor or other person trust. The trustee also must file with the Trusts (ESBTs) treated as the owner of the trust that IRS the appropriate Forms 1099 to Special rules apply when figuring the those items must be included when report the income or gross proceeds figuring taxable income and credits on tax on the S portion of an ESBT. The S paid to the trust during the tax year that portion of an ESBT is the portion of the his or her income tax return. This shows the trust as the payer and the trust that consists of stock in one or statement satisfies the requirement to grantor, or other person treated as more S corporations and is not treated give the recipient copies of the Forms owner, as the payee. The trustee must 1099 filed by the trustee. as a grantor type trust. The tax on the S report each type of income in the portion: Changing filing methods. A trustee aggregate and each item of gross • Must be figured separately from the who previously had filed Form 1041 can proceeds separately. The due date for tax on the remainder of the ESBT (if change to one of the optional methods any Forms 1099 required to be filed any) and attached to the return, with the IRS by a trustee under this by filing a final Form 1041 for the tax • Is entered to the left of the Schedule

method is March 1, 2010 (March 31, year that immediately precedes the first G, line 7, entry space preceded by tax year for which the trustee elects to 2010, if filed electronically). “Sec. 641(c),” and report under one of the optional In addition, unless the grantor, or • Is included in the total tax on methods. On the front of the final Form other person treated as owner of the Schedule G, line 7. 1041, the trustee must write “Pursuant trust, is the trustee or a co-trustee of to section 1.671-4(g), this is the final The tax on the remainder (non-S the trust, the trustee must give the Form 1041 for this grantor trust,” and portion) of the ESBT is figured in the grantor or other person treated as check the Final return box in item F. normal manner on Form 1041. owner of the trust a statement that:

• Shows all items of income, For more details on changing Tax computation attachment. Attach

deduction, and credit of the trust; reporting methods, including changes to the return the tax computation for the

• Explains how the grantor or other from one optional method to another, S portion of the ESBT. see Regulations section 1.671-4(g). person treated as owner of the trust To compute the tax on the S portion: takes those items into account when Backup withholding. The following • Treat that portion of the ESBT as if it figuring the grantor’s or other person’s grantor trusts are treated as payors for were a separate trust; taxable income or tax; and purposes of backup withholding. • Include only the income, losses, • Informs the grantor or other person 1. A trust established after 1995, all deductions, and credits allocated to the treated as the owner of the trust that of which is owned by two or more ESBT as an S corporation shareholder those items must be included when grantors (treating spouses filing a joint and gain or loss from the disposition of figuring taxable income and credits on return as one grantor). S corporation stock; his or her income tax return. This 2. A trust with 10 or more grantors • Aggregate items of income, losses, statement satisfies the requirement to established after 1983 but before 1996. deductions, and credits allocated to the give the recipient copies of the Forms ESBT as an S corporation shareholder 1099 filed by the trustee. The trustee must withhold 28% of if the S portion of the ESBT has stock

Optional Method 3. reportable payments made to any For a trust in more than one S corporation; grantor who is subject to backup treated as owned by two or more • Deduct state and local income taxes

withholding. grantors or other persons, the trustee and administrative expenses directly

must give all payers of income during related to the S portion or allocated to For more information, see section

the tax year the name, address, and the S portion if the allocation is 3406 and its regulations.

TIN of the trust. The trustee also must reasonable in light of all the

file with the IRS the appropriate Forms circumstances; Pooled Income Funds

1099 to report the income or gross If you are filing for a pooled income • Deduct interest expense paid or

proceeds paid to the trust by all payers fund, attach a statement to support the accrued on indebtedness incurred to

during the tax year attributable to the following: acquire stock in an S corporation;

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• Do not claim a deduction for capital The filing of a tax return for the Income, Deductions, and

losses in excess of capital gains; bankruptcy estate does not Credits • Do not claim an income distribution CAUTION relieve the individual debtor of

!

Under section 1398(c), the taxable deduction or an exemption amount; his, her, or their individual tax income of the bankruptcy estate • Do not claim an exemption amount in obligations. generally is figured in the same manner figuring the AMT; and as that of an individual. The gross • Do not use the tax rate schedule to EIN income of the bankruptcy estate figure the tax. The tax is 35% of the S Every bankruptcy estate of an individual includes any income included in portion’s taxable income except in required to file a return must have its property of the estate as defined in title figuring the maximum tax on qualified own EIN. The SSN of the individual 11, sections 541 and 1115. Section dividends and capital gains. debtor cannot be used as the EIN for 1115 was added to title 11 of the U.S.

the bankruptcy estate. Code by the Bankruptcy Abuse For additional information, see Prevention and Consumer Protection Regulations section 1.641(c)-1. Act of 2005. Section 1115 of title 11 of Accounting Period Other information. When figuring the the U.S. Code expands the definition of

tax and DNI on the remaining (non-S) A bankruptcy estate is allowed to have property of the estate in chapter 11

portion of the trust, disregard the S a fiscal year. The period can be no cases filed by individuals after October longer than 12 months. 16, 2005, and in chapter 11 cases corporation items. begun by creditors against an individual

Do not apportion to the beneficiaries When To File debtor (involuntary cases) after that

any of the S corporation items. File Form 1041 on or before the 15th date. Under section 1115 of title 11 of

day of the 4th month following the close the U.S. Code, property of the

If the ESBT consists entirely of stock of the tax year. Use Form 7004 to apply bankruptcy estate includes (a) earnings

in one or more S corporations, do not for an extension of time to file. from services performed by the debtor

make any entries on lines 1–22 after the beginning of the case (both

of page 1. Instead: Disclosure of Return wages and self-employment income)

• Complete the entity portion; and before the case is closed, Information • Follow the instructions above for dismissed, or converted to a case Under section 6103(e)(5), tax returns of figuring the tax on the S corporation under a different chapter and (b) individual debtors who have filed for items; property described in section 541 of bankruptcy under chapters 7 or 11 of • Carry the tax from line 7 of Schedule title 11 of the U.S. Code and income title 11 are, upon written request, open G to line 23 on page 1; and earned therefrom that the debtor to inspection by or disclosure to the • Complete the rest of the return. acquires after the beginning of the case trustee. and before the case is closed,

The grantor portion (if any) of an The returns subject to disclosure to dismissed, or converted. If section 1115

ESBT will follow the rules discussed the trustee are those for the year the of title 11 of the U.S. Code applies, the

under Grantor Type Trusts on page 11. bankruptcy begins and prior years. Use bankruptcy estate’s gross income

Form 4506, Request for Copy of Tax includes, as described above, (a) the

Bankruptcy Estates Return, to request copies of the debtor’s earnings from services

individual debtor’s tax returns. performed after the beginning of the The bankruptcy estate that is created case and (b) the income from property when an individual debtor files a If the bankruptcy case was not acquired after the beginning of the petition under either chapter 7 or 11 of voluntary, disclosure cannot be made case. title 11 of the U.S. Code is treated as a before the bankruptcy court has separate taxable entity. The bankruptcy The income from property owned by entered an order for relief, unless the estate is administered by a trustee or a the debtor when the case began is also court rules that the disclosure is

debtor-in-possession. If the case is later included in the bankruptcy estate’s needed for determining whether relief dismissed by the bankruptcy court, the gross income. However, if this property should be ordered.

individual debtor is treated as if the is exempted from the bankruptcy estate

bankruptcy petition had never been or is abandoned by the trustee or Transfer of Tax Attributes From

filed. debtor-in-possession, the income from the Individual Debtor to the the property is not included in the Bankruptcy Estate A separate taxable entity is not bankruptcy estate’s gross income. Also

created if a partnership or corporation The bankruptcy estate succeeds to the included in income is gain from the sale

files a petition under any chapter of title following tax attributes of the individual of the bankruptcy estate’s property. To

11 of the U.S. Code. debtor: figure gain, the trustee or

1. Net operating loss (NOL) debtor-in-possession must determine

Who Must File carryovers; the correct basis of the property.

2. Charitable contributions To determine whether any amount Every trustee (or debtor-in-possession) carryovers; paid or incurred by the bankruptcy for an individual’s bankruptcy estate 3. Recovery of tax benefit items; estate is allowable as a deduction or under chapter 7 or 11 of title 11 of the credit, or is treated as wages for U.S. Code must file a return if the 4. Credit carryovers; employment tax purposes, treat the bankruptcy estate has gross income of 5. Capital loss carryovers; amount as if it were paid or incurred by $9,350 or more for tax years beginning 6. Basis, holding period, and the individual debtor in the same trade in 2009. character of assets; or business or other activity the debtor

Failure to do so may result in an 7. Method of accounting; engaged in before the bankruptcy

estimated Request for Administrative 8. Unused passive activity losses; proceedings began.

Expenses being filed by the IRS in the 9. Unused passive activity credits; Administrative expenses. The

bankruptcy proceeding or a motion to bankruptcy estate is allowed a and

compel filing of the return. 10. Unused section 465 losses. deduction for any administrative

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expense allowed under section 503 of If taxable income is: Complete lines 24 through 29 of Form Of the title 11 of the U.S. Code, and any fee or But not 1041, and sign and date it. Over — The tax is: amount charge assessed under chapter 123 of over — over — In a chapter 11 case filed after title 28 of the U.S. Code, to the extent $0 $8,350 10% $0 October 16, 2005, the bankruptcy

not disallowed under an Internal 8,350 33,950 $835.00 + 15% 8,350 estate’s gross income may be affected 33,950 68,525 4,675.00 + 25% 33,950 Revenue Code provision (for example, by section 1115 of title 11 of the U.S. 68,525 104,425 13,318.75 + 28% 68,525 section 263, 265, or 275). Code. See 104,425 186,475 23,370.75 + 33% 104,425 Income, Deductions, and

186,475 ------ 50,447.25 + 35% 186,475 Credits earlier. The debtor may receive Administrative expense loss. When a Form W-2, 1099-INT, 1099-DIV, or

figuring an NOL, nonbusiness Prompt Determination of Tax 1099-MISC or other information return

deductions (including administrative reporting wages or other income to the Liability expenses) are limited under section debtor for the entire year, even though To request a prompt determination of 172(d)(4) to the bankruptcy estate’s some or all of this income is includible the tax liability of the bankruptcy estate, nonbusiness income. The excess in the bankruptcy estate’s gross income the trustee or debtor-in-possession nonbusiness deductions are an under section 1115 of title 11 of the must file a written request for the administrative expense loss that may U.S. Code. If this happens, the income determination with the IRS. The request be carried back to each of the 3 reported to the debtor on the Form W-2 must be submitted in duplicate and preceding tax years and forward to or 1099, or other information return executed under penalties of perjury. each of the 7 succeeding tax years of (and the withheld income tax shown on The request must include a statement these forms) must be reasonably the bankruptcy estate. The amount of indicating that it is a request for prompt allocated between the debtor and the an administrative expense loss that determination of tax liability and: (a) the may be carried to any tax year is bankruptcy estate. The return type, and all the tax periods for debtor-in-possession (or the chapter 11 determined after the NOL deductions which prompt determination is sought; trustee, if one was appointed) must allowed for that year. An administrative (b) the name and location of the office attach a schedule that shows (a) all the expense loss is allowed only to the where the return was filed; (c) the income reported on the Form W-2, bankruptcy estate and cannot be debtor’s name; (d) the debtor’s SSN, Form 1099, or other information return, carried to any tax year of the individual TIN, or EIN; (e) the type of bankruptcy (b) the portion of this income includible debtor. estate; (f) the bankruptcy case number; in the bankruptcy estate’s gross and (g) the court where the bankruptcy income, and (c) all the withheld income Carryback of NOLs and credits. If is pending. Send the request to the tax, if any, and the portion of withheld the bankruptcy estate itself incurs an Centralized Insolvency Operation, P.O. tax reasonably allocated to the NOL (apart from losses carried forward Box 21126, Philadelphia, PA 19114 bankruptcy estate. Also, the to the estate from the individual debtor), (marked “Request for Prompt debtor-in-possesion (or the chapter 11 it can carry back its NOLs not only to Determination”). trustee, if one was appointed) must previous tax years of the bankruptcy The IRS will notify the trustee or attach a copy of the Form W-2, if any, estate, but also to tax years of the debtor-in-possession within 60 days issued to the debtor for the tax year if individual debtor prior to the year in from receipt of the request if the return the Form W-2 reports wages to the which the bankruptcy proceedings filed by the trustee or debtor and some or all of the wages are began. Excess credits, such as the debtor-in-possession has been selected includible in the bankruptcy estate’s foreign tax credit, also may be carried for examination or has been accepted gross income because of section 1115 back to pre-bankruptcy years of the as filed. If the return is selected for of title 11 of the U.S. Code. For more

individual debtor. examination, it will be examined as details, including acceptable allocation

soon as possible. The IRS will notify methods, see Notice 2006-83, 2006-40 Exemption. For tax years beginning in I.R.B. 596, available at www.irs.gov/irb/ the trustee or debtor-in-possession of 2009, a bankruptcy estate is allowed a any tax due within 180 days from 2006-40_IRB/ar12.html. personal exemption of $3,650. receipt of the request or within any

additional time permitted by the Standard deduction. For tax years

beginning in 2009, a bankruptcy estate bankruptcy court. Specific Instructions

that does not itemize deductions is See Rev. Proc. 2006-24, 2006-22

allowed a standard deduction of I.R.B. 943, available at www.irs.gov/irb/ Name of Estate or Trust $5,700. 2006-22_IRB/ar12.html. Copy the exact name of the estate or

Discharge of indebtedness. Special Filing Instructions for trust from the Form SS-4, Application In a title for Employer Identification Number, that 11 case, gross income does not include Bankruptcy Estates you used to apply for the EIN. If the amounts that normally would be Use Form 1041 only as a transmittal for name of the trust was changed during included in gross income resulting from Form 1040. In the top margin of Form the tax year for which you are filing, the discharge of indebtedness. 1040 write “Attachment to Form 1041. enter the trust’s new name and check However, any amounts excluded from DO NOT DETACH.” Attach Form 1040 the Change in trust’s name box in item gross income must be applied to to Form 1041. Complete only the F. reduce certain tax attributes in a certain identification area at the top of Form If a grantor type trust (discussed order. Attach Form 982, Reduction of 1041. Enter the name of the individual later), write the name, identification Tax Attributes Due to Discharge of debtor in the following format: “John Q. number, and address of the grantor(s) Indebtedness (and Section 1082 Basis Public Bankruptcy Estate.” Beneath, or other owner(s) in parentheses after Adjustment), to show the reduction of enter the name of the trustee in the the name of the trust. tax attributes. following format: “Avery Snow,

Trustee.” In item D, enter the date the Name and Title of Tax Rate Schedule petition was filed or the date of

Figure the tax for the bankruptcy estate conversion to a chapter 7 or 11 case. Fiduciary

using the tax rate schedule below. Enter on Form 1041, line 23, the Enter the name and title of the

Enter the tax on Form 1040, line 44. total tax from line 60 of Form 1040. fiduciary. If the name entered is

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different than the name on the prior Complex Trust Nonqualified deferred compensation

year’s return, see Change in Fiduciary’s plans. Taxpayers may adopt and A complex trust is any trust that does Name and Change in Fiduciary on maintain grantor trusts in connection not qualify as a simple trust as page 17. with nonqualified deferred explained above. compensation plans (sometimes

Address Qualified Disability Trust referred to as “rabbi trusts”). Rev. Proc.

92-64, 1992-2 C.B. 422, provides a Include the suite, room, or other unit A qualified disability trust is any “model grantor trust” for use in rabbi number after the street address. If the nongrantor trust: trust arrangements. The procedure also post office does not deliver mail to the 1. Described in 42 U.S.C. provides guidance for requesting street address and the fiduciary has a

P.O. box, show the box number 1396p(c)(2)(B)(iv) and established rulings on the plans that use these solely for the benefit of an individual trusts. instead. under 65 years of age who is disabled, If you want a third party (such as an QSSTs. For purposes of section and accountant or an attorney) to receive 678(a), the beneficiary of a qualified 2. All the beneficiaries of which are mail for the estate or trust, enter on the subchapter S trust is treated as the determined by the Commissioner of street address line “C/O” followed by owner of that portion of the trust which Social Security to have been disabled the third party’s name and street consists of stock in an S corporation for for some part of the tax year within the address or P.O. box. meaning of 42 U.S.C. 1382c(a)(3). which an election under section

1361(d)(2) has been made. See QSSTs If the estate or trust has had a

A trust will not fail to meet item 2 on page 11. change of address (including a change

to an “in care of” name and address) above just because the trust’s corpus

and did not file Form 8822, Change of may revert to a person who is not Bankruptcy Estate

Address, check the Change in disabled after the trust ceases to have A chapter 7 or 11 bankruptcy estate is

fiduciary’s address box in item F. any disabled beneficiaries. a separate and distinct taxable entity

from the individual debtor for federal If the estate or trust has a change of ESBT (S Portion Only) mailing address (including a new ‘‘in income tax purposes. See Bankruptcy

care of’’ name and address) after filing The S portion of an ESBT is the portion Estates on page 13.

of the trust that consists of S its return, file Form 8822 to notify the For more information, see section corporation stock and that is not treated IRS of the change. 1398 and Pub. 908, Bankruptcy Tax as owned by the grantor or another Guide. A. Type of Entity person. See page 12 of the instructions

for more information about an ESBT. Check the appropriate box that Pooled Income Fund

describes the entity for which you are Grantor Type Trust A pooled income fund is a split-interest filing the return. A grantor type trust is a legal trust trust with a remainder interest for a

If only a portion of a trust is a grantor under applicable state law that is not public charity and a life income interest

type trust or if only a portion of an recognized as a separate taxable entity retained by the donor or for another

electing small business trust is the S for income tax purposes because the person. The property is held in a pool

portion, then more than one box can be grantor or other substantial owners with other pooled income fund property

checked. have not relinquished complete and does not include any tax-exempt

dominion and control over the trust. securities. The income for a retained There are special reporting life interest is figured using the yearly requirements for grantor type Generally, for transfers made in trust rate of return earned by the trust. See CAUTION trusts, pooled income funds, after March 1, 1986, the grantor is !

section 642(c) and the related electing small business trusts, and treated as the owner of any portion of a regulations for more information. bankruptcy estates. See Special trust in which he or she has a

Reporting Instructions on page 11. reversionary interest in either the

income or corpus therefrom, if, as of B. Number of Schedules Decedent’s Estate the inception of that portion of the trust,

An estate of a deceased person is a the value of the reversionary interest is K-1 Attached

taxable entity separate from the more than 5% of the value of that Every trust or decedent’s estate

decedent. It generally continues to exist portion. Also, the grantor is treated as claiming an income distribution

until the final distribution of the assets holding any power or interest that was deduction on page 1, line 18, must

of the estate is made to the heirs and held by either the grantor’s spouse at enter the number of Schedules K-1

other beneficiaries. The income earned the time that the power or interest was (Form 1041) that are attached to Form

from the property of the estate during created or who became the grantor’s 1041.

the period of administration or spouse after the creation of that power

settlement must be accounted for and or interest. See Grantor Type Trusts on C. Employer reported by the estate. page 11 for more information.

Pre-need funeral trusts. The Identification Number Simple Trust purchasers of pre-need funeral services Every estate or trust that is required to A trust may qualify as a simple trust if: are the grantors and the owners of file Form 1041 must have an EIN. An

1. The trust instrument requires that pre-need funeral trusts established EIN may be applied for:

all income must be distributed currently; under state laws. See Rev. Rul. • Online by clicking on the EIN link at

2. The trust instrument does not 87-127, 1987-2 C.B. 156. However, the www.irs.gov/businesses/small. The EIN

provide that any amounts are to be trustees of pre-need funeral trusts can is issued immediately once the

paid, permanently set aside, or used for elect to file the return and pay the tax application information is validated.

charitable purposes; and for qualified funeral trusts. For more • By telephone at 1-800-829-4933 from

3. The trust does not distribute information, see Form 1041-QFT, U.S. 7:00 a.m. to 10:00 p.m. in the

amounts allocated to the corpus of the Income Tax Return for Qualified fiduciary’s local time zone. Assistance

trust. Funeral Trusts. provided to callers from Alaska and

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Hawaii will be based on the hours of Revenue Code. Taxes paid by the trust F. Initial Return, operation in the Pacific time zone. on Form 4720 or on Form 990-PF (the

• By mailing or faxing Form SS-4, section 4940 tax) cannot be taken as a Amended Return, etc. Application for Employer Identification deduction on Form 1041.

Number. Amended Return If the estate or trust has not received its

EIN by the time the return is due, write Not a Private Foundation If you are filing an amended Form

Check this box if the nonexempt 1041: “Applied for” in the space for the EIN.

For more details, see Pub. 583, charitable trust (section 4947(a)(1)) is • Check the “Amended return” box,

Starting a Business and Keeping not treated as a private foundation • Complete the entire return,

Records. under section 509. For more • Correct the appropriate lines with the

information, see Regulations section new information, and

53.4947-1. • Refigure the estate’s or trust’s tax D. Date Entity Created liability. Enter the date the trust was created, or, Other returns that must be filed. If a If the total tax on line 23 is larger on if a decedent’s estate, the date of the nonexempt charitable trust is not the amended return than on the original decedent’s death. treated as though it were a private return, you generally should pay the foundation, the fiduciary must file Form difference with the amended return. E. Nonexempt Charitable 990, Return of Organization Exempt However, you should adjust this From Income Tax, or Form 990-EZ, and Split-Interest Trusts amount if there is any increase or Short Form Return of Organization decrease in the total payments shown Exempt from Income Tax, in addition to on line 25. Section 4947(a)(1) Trust Form 1041, if the trust meets the filing

Check this box if the trust is a Attach a sheet that explains the requirements for either of those forms. reason for the amendments and nonexempt charitable trust within the

meaning of section 4947(a)(1). If a nonexempt charitable trust is not identifies the lines and amounts being

changed on the amended return. treated as though it were a private A nonexempt charitable trust is a foundation, and it has no taxable Amended Schedule H (Form 1040). trust: income under Subtitle A, it may answer If you discover an error on a Schedule • That is not exempt from tax under

section 501(a); “Yes” on Form 990, Part V, line 12a H that you previously filed with Form

and enter the tax-exempt interest 1041, file an “Amended” Form 1041 • In which all of the unexpired interests received or accrued during the year on and attach a corrected Schedule H. are devoted to one or more charitable Form 990, Part V, line 12b instead of purposes described in section In the top margin of your corrected filing Form 1041 to meet its section 170(c)(2)(B); and Schedule H, write “Amended,” (using • For which a deduction was allowed 6012 filing requirement for that tax year red ink, if possible) and the date you under section 170 (for individual (or if Form 990-EZ is filed instead of discovered the error. Also, on an

taxpayers) or similar Code section for Form 990, you may check the box on attachment explain the reason for your personal holding companies, foreign Form 990-EZ, line 43 and enter the correction. If you owe tax, pay the tax in personal holding companies, or estates tax-exempt interest received or accrued full with your amended Form 1041. If or trusts (including a deduction for during the year on that line). you overpaid tax on a previously filed estate or gift tax purposes). Schedule H, depending on whether you

Nonexempt charitable trust treated Section 4947(a)(2) Trust choose the adjustment or claim for

as a private foundation. If a Check this box if the trust is a refund process to correct the error, you

nonexempt charitable trust is treated as must either repay or reimburse the split-interest trust described in section though it were a private foundation employee’s share of social security and 4947(a)(2). under section 509, then the fiduciary Medicare tax or get the employee’s

must file Form 990-PF, Return of A split-interest trust is a trust that: consent to the filing of a refund claim

Private Foundation, in addition to Form for their share. See Pub. 926, • Is not exempt from tax under section 1041. Household Employer’s Tax Guide, for 501(a); more information. If a nonexempt charitable trust is • Has some unexpired interests that

are devoted to purposes other than Amended Schedule K-1 (Form 1041). treated as though it were a private

foundation, and it has no taxable religious, charitable, or similar purposes If the amended return results in a

income under Subtitle A, it may check described in section 170(c)(2)(B); and change to income, or a change in

distribution of any income or other the box on Form 990-PF, Part VII-A, • Has amounts transferred in trust after information provided to a beneficiary, line 15 and enter the tax-exempt May 26, 1969, for which a deduction an amended Schedule K-1 (Form 1041) interest received or accrued during the was allowed under section 170 (for year on that line, instead of filing Form must also be filed with the amended individual taxpayers) or similar Code 1041 to meet its section 6012 filing Form 1041 and given to each sections for personal holding beneficiary. Check the “Amended K-1” requirement for that tax year. companies, foreign personal holding box at the top of the amended Excise taxes. If a nonexempt companies, or estates or trusts Schedule K-1. charitable trust is treated as a private (including a deduction for estate or gift

foundation, then it is subject to the tax purposes). Final Return same excise taxes under chapters 41 Other returns that must be filed. Check this box if this is a final return and 42 that a private foundation is The fiduciary of a split-interest trust because the estate or trust has subject to. If the nonexempt charitable must file Form 5227. However, see the terminated. Also, check the “Final K-1” trust is liable for any of these taxes box at the top of Schedule K-1. (except the section 4940 tax), then it Instructions for Form 5227 for the

reports these taxes on Form 4720, If, on the final return, there are exception that applies to split-interest

Return of Certain Excise Taxes Under excess deductions, an unused capital trusts other than section 664 charitable

Chapters 41 and 42 of the Internal loss carryover, or an NOL carryover, remainder trusts.

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see the instructions for Schedule K-1, However, income from certain 5 the ordinary dividends shown on

box 11, on page 34. long-term sales and leases may still Form 1099-DIV. Under the last entry on

qualify for the exclusion. For details and line 5, subtotal all the dividends Change in Trust’s Name to figure the amount of the exclusion, reported on line 5. Below the subtotal,

If the name of the trust has changed see Form 8873, Extraterritorial Income write “Form 1041” and the name and

from the name shown on the prior Exclusion, and its separate instructions. address shown on Form 1041 for the

year’s return (or Form SS-4 if this is the The estate or trust must report the decedent’s estate. Also, show the part

first return being filed), be sure to check extraterritorial income exclusion on line of the ordinary dividends reported on

this box. 15a of Form 1041, page 1. Form 1041 and subtract it from the

Although the extraterritorial income subtotal.

Change in Fiduciary exclusion is entered on line 15a, it is an Report capital gain distributions If a different fiduciary enters his or her exclusion from income and should be on Schedule D (Form 1041), name on the line for Name and title of treated as tax-exempt income when line 9.

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fiduciary than was shown on the prior completing other parts of the return. year’s return (or Form SS-4 if this is the Line 2b—Qualified first return being filed) and you did not Line 1—Interest Income

file a Form 8822, be sure to check this Dividends Report the estate’s or trust’s share of box. If there is a change in the fiduciary all taxable interest income that was Enter the beneficiary’s allocable share

whose address is used as the mailing received during the tax year. Examples of qualified dividends on line 2b(1) and

address for the estate or trust after the of taxable interest include interest from: enter the estate’s or trust’s allocable

return is filed, use Form 8822 to notify • Accounts (including certificates of share on line 2b(2).

the IRS. deposit and money market accounts) If the estate or trust received

with banks, credit unions, and thrift qualified dividends that were derived Change in Fiduciary’s Name institutions; from IRD, you must reduce the amount If the fiduciary changed his or her name • Notes, loans, and mortgages; on line 2b(2) by the portion of the from the name that he or she entered • U.S. Treasury bills, notes, and estate tax deduction claimed on Form

on the prior year’s return (or Form SS-4 bonds; 1041, page 1, line 19, that is if this is the first return being filed), be • U.S. savings bonds; attributable to those qualified dividends. sure to check this box. • Original issue discount; and Do not reduce the amounts on line 2b • Income received as a regular interest by any other allocable expenses. Change in Fiduciary’s holder of a real estate mortgage Note. The beneficiary’s share (as Address investment conduit (REMIC). figured above) may differ from the If the same fiduciary who filed the prior For taxable bonds acquired after amount entered on line 2b of Schedule

year’s return (or Form SS-4 if this is the 1987, amortizable bond premium is K-1 (Form 1041). first return being filed) files the current treated as an offset to the interest Qualified dividends. Qualified year’s return and changed the address income instead of as a separate dividends are eligible for a lower tax on the return (including a change to an interest deduction. See Pub. 550. rate than other ordinary income. ‘‘in care of’’ name and address), and For the year of the decedent’s death, Generally, these dividends are reported did not report the change on Form Forms 1099-INT issued in the to the estate or trust in box 1b of 8822, check this box. decedent’s name may include interest Form(s) 1099-DIV. See Pub. 550 for If the address shown on Form 1041 income earned after the date of death the definition of qualified dividends if changes after you file the form that should be reported on the income the estate or trust received dividends

(including a change to an ‘‘in care of’’ tax return of the decedent’s estate. not reported on Form 1099-DIV. name and address), file Form 8822 to When preparing the decedent’s final Exception. Some dividends may notify the IRS of the change. income tax return, report on Schedule be reported to the estate or trust as in B (Form 1040A or 1040), line 1 the total box 1b of Form 1099-DIV but are not G. Section 645 Election interest shown on Form 1099-INT. qualified dividends. These include: Under the last entry on line 1, subtotal If a section 645 election was made by • Dividends received on any share of all the interest reported on line 1. Below filing Form 8855, check the box in item stock that the estate or trust held for the subtotal, write “Form 1041” and the G. See Special Rule for Certain less than 61 days during the 121-day name and address shown on Form Revocable Trusts under Who Must File period that began 60 days before the 1041 for the decedent’s estate. Also, and Form 8855 for more information ex-dividend date. The ex-dividend date show the part of the interest reported about this election. is the first date following the declaration on Form 1041 and subtract it from the of a dividend on which the purchaser of subtotal. Income a stock is not entitled to receive the

Line 2a—Total Ordinary next dividend payment. When counting

Special Rule for Blind Trust the number of days the stock was held, Dividends include the day the estate or trust If you are reporting income from a Report the estate’s or trust’s share of disposed of the stock but not the day it qualified blind trust (under the Ethics in all ordinary dividends received during acquired the stock. However, you Government Act of 1978), do not the tax year. cannot count certain days during which identify the payer of any income to the For the year of the decedent’s death, the estate’s or trust’s risk of loss was trust but complete the rest of the return Forms 1099-DIV issued in the diminished. See Pub. 550 for more as provided in the instructions. Also decedent’s name may include details. write “Blind Trust” at the top of page 1. dividends earned after the date of • Dividends attributable to periods

death that should be reported on the totaling more than 366 days that the Extraterritorial Income income tax return of the decedent’s estate or trust received on any share of Exclusion estate. When preparing the decedent’s preferred stock held for less than 91

The extraterritorial income exclusion is final income tax return, report on days during the 181-day period that

not allowed for transactions after 2006. Schedule B (Form 1040A or 1040), line began 90 days before the ex-dividend

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date. When counting the number of If the estate or trust received a amortization should be reported on the

days the stock was held, include the Schedule K-1 from a partnership, S appropriate lines of Schedule C (or

day the estate or trust disposed of the corporation, or other flow-through C-EZ), E, or F (Form 1040), the net

stock but not the day it acquired the entity, use the corresponding lines on income or loss from which is shown on

stock. However, you cannot count Form 1041 to report the interest, line 3, 5, or 6 of Form 1041. If the

certain days during which the estate’s dividends, capital gains, etc., from the deduction is not related to a specific

or trust’s risk of loss was diminished. flow-through entity. business or activity, then report it on

See Pub. 550 for more details. line 15a.

Preferred dividends attributable to Line 6—Farm Income or Depreciation. For a decedent’s periods totaling less than 367 days are (Loss) estate, the depreciation deduction is subject to the 61-day holding period If the estate or trust operated a farm, apportioned between the estate and the rule above. use Schedule F (Form 1040), Profit or heirs, legatees, and devisees on the • Dividends on any share of stock to Loss From Farming, to report farm basis of the estate’s income allocable the extent that the estate or trust is income and expenses. Enter the net to each. under an obligation (including a short profit or (loss) from Schedule F on line For a trust, the depreciation sale) to make related payments with 6. deduction is apportioned between the respect to positions in substantially If an estate or trust has farm income beneficiaries and the trust on similar or related property. rental income and expenses the basis of the trust income allocable • Payments in lieu of dividends, but based on crops or livestock to each, unless the governing only if you know or have reason to CAUTION

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produced by a tenant, report the instrument (or local law) requires or know that the payments are not income and expenses on Schedule E permits the trustee to maintain a qualified dividends. (Form 1040). Do not use Form 4835 or depreciation reserve. If the trustee is

If you have an entry on line Schedule F (Form 1040) to report such required to maintain a reserve, the

2b(2), be sure you use income and expenses and do not deduction is first allocated to the trust,

Schedule D (Form 1041), the include the net profit or (loss) from such up to the amount of the reserve. Any

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Schedule D Tax Worksheet, or the income and expenses on line 6. excess is allocated among the

Qualified Dividends Tax Worksheet, beneficiaries and the trust in the same

whichever applies, to figure the estate’s Line 7—Ordinary Gain or manner as the trust’s accounting

or trust’s tax. Figuring the estate’s or (Loss) income. See Regulations section

trust’s tax liability in this manner will 1.167(h)-1(b). Enter from line 17, Form 4797, Sales of usually result in a lower tax. Business Property, the ordinary gain or Depletion. For mineral or timber

loss from the sale or exchange of property held by a decedent’s estate, Line 3—Business Income or property other than capital assets and the depletion deduction is apportioned

(Loss) also from involuntary conversions between the estate and the heirs,

(other than casualty or theft). legatees, and devisees on the basis of If the estate operated a business,

report the income and expenses on the estate’s income from such property

Schedule C (Form 1040), Profit or Loss Line 8—Other Income allocable to each.

From Business (or Schedule C-EZ Enter other items of income not For mineral or timber property held (Form 1040), Net Profit From included on lines 1, 2a, and 3 through in trust, the depletion deduction is Business). Enter the net profit or (loss) 7. List the type and amount on an apportioned between the income from Schedule C (or Schedule C-EZ) attached schedule if the estate or trust beneficiaries and the trust based on the

on line 3. has more than one item. trust income from such property

Items to be reported on line 8 allocable to each, unless the governing Line 4—Capital Gain or include: instrument (or local law) requires or

(Loss) • Unpaid compensation received by permits the trustee to maintain a

the decedent’s estate that is IRD, and reserve for depletion. If the trustee is Enter the gain from Schedule D (Form • Any part of a total distribution shown required to maintain a reserve, the 1041), Part III, line 15, column (3) or on Form 1099-R, Distributions From deduction is first allocated to the trust, the loss from Part IV, line 16. Pensions, Annuities, Retirement or up to the amount of the reserve. Any

Do not substitute Schedule D Profit-Sharing Plans, IRAs, Insurance excess is allocated among the

(Form 1040) for Schedule D Contracts, etc., that is treated as beneficiaries and the trust in the same CAUTION (Form 1041). ordinary income. For more information, manner as the trust’s accounting

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see the separate instructions for Form income. See Regulations section

Line 5—Rents, Royalties, 4972, Tax on Lump-Sum Distributions. 1.611-1(c)(4).

Partnerships, Other Estates Amortization. The deduction for Deductions amortization is apportioned between an and Trusts, etc. estate or trust and its beneficiaries

Use Schedule E (Form 1040), Depreciation, Depletion, and under the same principles for Supplemental Income and Loss, to Amortization apportioning the deductions for report the estate’s or trust’s share of depreciation and depletion. income or (losses) from rents, royalties, A trust or decedent’s estate is allowed

a deduction for depreciation, depletion, The deduction for the amortization of partnerships, S corporations, other and amortization only to the extent the reforestation expenditures under estates and trusts, and REMICs. Also deductions are not apportioned to the section 194 is allowed only to an use Schedule E (Form 1040) to report beneficiaries. An estate or trust is not estate. farm rental income and expenses

based on crops or livestock produced allowed to make an election under Allocation of Deductions for by a tenant. Enter the net profit or (loss) section 179 to expense certain tangible

from Schedule E on line 5. See the property. Tax-Exempt Income

instructions for Schedule E (Form 1040) The estate’s or trust’s share of Generally, no deduction that would

for reporting requirements. depreciation, depletion, and otherwise be allowable is allowed for

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any expense (whether for business or figure the amount of losses allowed Passive Activity Loss and for the production of income) that is from passive activities. See Form Credit Limitations allocable to tax-exempt income. 8582-CR, Passive Activity Credit

Examples of tax-exempt income In general. Section 469 and the Limitations, to figure the amount of

include: regulations thereunder generally limit credit allowed for the current year.

• Certain death benefits (section 101), losses from passive activities to the

amount of income derived from all Transactions Between • Interest on state or local bonds

(section 103), passive activities. Similarly, credits from Related Taxpayers

• Compensation for injuries or sickness passive activities are generally limited Under section 267, a trust that uses the to the tax attributable to such activities. (section 104), and accrual method of accounting may only These limitations are first applied at the • deduct business expenses and interest Income from discharge of estate or trust level. indebtedness in a title 11 case (section owed to a related party in the year the

Generally, an activity is a passive payment is included in the income of 108). activity if it involves the conduct of any the related party. For this purpose, a

Exception. State income taxes and trade or business, and the taxpayer related party includes:

business expenses that are allocable to does not materially participate in the 1. A grantor and a fiduciary of any tax-exempt interest are deductible. activity. Passive activities do not trust; include working interests in oil and gas 2. A fiduciary of a trust and a Expenses that are directly allocable properties. See section 469(c)(3). fiduciary of another trust, if the same to tax-exempt income are allocated only Note. Material participation standards person is a grantor of both trusts; to tax-exempt income. A reasonable for estates and trusts have not been 3. A fiduciary of a trust and a proportion of expenses indirectly established by regulations. beneficiary of such trust; allocable to both tax-exempt income 4. A fiduciary of a trust and a and other income must be allocated to For a grantor trust, material beneficiary of another trust, if the same each class of income. participation is determined at the person is a grantor of both trusts; grantor level. 5. A fiduciary of a trust and a

Deductions That May Be If the estate or trust distributes an corporation more than 50% in value of

Allowable for Estate Tax interest in a passive activity, the basis the outstanding stock of which is

of the property immediately before the owned, directly or indirectly, by or for Purposes distribution is increased by the passive the trust or by or for a person who is a

Administration expenses and casualty activity losses allocable to the interest, grantor of the trust; and

and theft losses deductible on Form and such losses cannot be deducted. 6. An executor of an estate and a

706 may be deducted, to the extent See section 469(j)(12). beneficiary of that estate, except for a

otherwise deductible for income tax sale or exchange to satisfy a pecuniary Losses from passive activities purposes, on Form 1041 if the fiduciary bequest (that is, a bequest of a sum of are first subject to the at-risk files a statement waiving the right to money). rules. When the losses are

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deduct the expenses and losses on deductible under the at-risk rules, the Form 706. The statement must be filed passive activity rules then apply. Line 10—Interest before the expiration of the statutory Rental activities. Generally, rental Enter the amount of interest (subject to period of limitations for the tax year the activities are passive activities, whether limitations) paid or incurred by the deduction is claimed. See Pub. 559 for

or not the taxpayer materially estate or trust on amounts borrowed by more information.

participates. However, certain the estate or trust, or on debt acquired

by the estate or trust (for example, taxpayers who materially participate in Accrued Expenses real property trades or businesses are outstanding obligations from the

Generally, an accrual basis taxpayer not subject to the passive activity decedent) that is not claimed elsewhere

can deduct accrued expenses in the tax on the return. limitations on losses from rental real

year that: (a) all events have occurred estate activities in which they materially If the proceeds of a loan were used that determine the liability; and (b) the participate. For more details, see for more than one purpose (for amount of the liability can be figured section 469(c)(7). example, to purchase a portfolio with reasonable accuracy. However, all For tax years of an estate ending investment and to acquire an interest in the events that establish liability are a passive activity), the fiduciary must less than 2 years after the decedent’s treated as occurring only when date of death, up to $25,000 of make an interest allocation according to economic performance takes place. deductions and deduction equivalents the rules in Temporary Regulations There are exceptions for recurring of credits from rental real estate section 1.163-8T.

items. See section 461(h). activities in which the decedent actively Do not include interest paid on participated are allowed. Any excess indebtedness incurred or continued to

Limitations on losses or credits are suspended for the purchase or carry obligations on which year and carried forward. the interest is wholly exempt from Deductions Portfolio income. Portfolio income is income tax.

not treated as income from a passive Personal interest is not deductible. At-Risk Loss Limitations activity, and passive losses and credits Examples of personal interest include

Generally, the amount the estate or generally may not be applied to offset interest paid on:

trust has “at-risk” limits the loss it can it. Portfolio income generally includes • Revolving charge accounts used to

deduct for any tax year. Use Form interest, dividends, royalties, and purchase personal use property;

6198, At-Risk Limitations, to figure the income from annuities. Portfolio income • Personal notes for money borrowed

deductible loss for the year and file it of an estate or trust must be accounted from a bank, credit union, or other

with Form 1041. For more information, for separately. person;

see Pub. 925, Passive Activity and Forms to file. See Form 8582, • Installment loans on personal use

At-Risk Rules. Passive Activity Loss Limitations, to property; and

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• Underpayments of federal, state, or allowable investment interest Federal Housing Administration, or the

local income taxes. deduction. Rural Housing Service, and private

mortgage insurance (as defined in If you must complete Form 4952, Interest that is paid or incurred on section 2 of the Homeowners indebtedness allocable to a trade or check the box on line 10 of Form 1041

and attach Form 4952. Then, add the Protection Act of 1998 as in effect on business (including a rental activity) deductible investment interest to the December 20, 2006). should be deducted on the appropriate

line of Schedule C (or C-EZ), E, or F other types of deductible interest and Mortgage insurance provided by the enter the total on line 10. (Form 1040), the net income or loss Department of Veterans Affairs and the from which is shown on line 3, 5, or 6 of Qualified residence interest. Interest Rural Housing Service is commonly Form 1041. paid or incurred by an estate or trust on known as a funding fee and guarantee indebtedness secured by a qualified Types of interest to include on line fee, respectively. These fees can be residence of a beneficiary of an estate 10 are: deducted fully in 2009 if the mortgage or trust is treated as qualified residence insurance contract was issued in 2009. 1. Any investment interest (subject interest if the residence would be a Contact the mortgage insurance issuer to limitations—see below); qualified residence (that is, the principal 2. Any qualified residence interest to determine the deductible amount if it residence or the secondary residence is not included in box 4 of Form 1098. (see later); and selected by the beneficiary) if owned by 3. Any interest payable under the beneficiary. The beneficiary must Prepaid mortgage insurance. If section 6601 on any unpaid portion of have a present interest in the estate or the estate or trust paid mortgage the estate tax attributable to the value trust or an interest in the residuary of insurance premiums allocable to of a reversionary or remainder interest the estate or trust. See Pub. 936, Home periods after the end of its tax year, in property for the period during which Mortgage Interest Deduction, for an such premiums must be allocated over an extension of time for payment of explanation of the general rules for the shorter of: such tax is in effect. deducting home mortgage interest. • The stated term of the mortgage, or See section 163(h)(3) for a definition Investment interest. Generally, • 84 months, beginning with the month of qualified residence interest and for investment interest is interest (including the insurance was obtained. limitations on indebtedness. amortizable bond premium on taxable

bonds acquired after October 22, 1986, Qualified mortgage insurance The premiums are treated as paid in

but before January 1, 1988) that is paid premiums. Enter (on the worksheet the year to which they are allocated. If

or incurred on indebtedness that is below) the qualified mortgage the mortgage is satisfied before its

properly allocable to property held for insurance premiums paid under a term, no deduction is allowed for the

investment. Investment interest does mortgage insurance contract issued unamortized balance. See Pub. 936 for

not include any qualified residence after December 31, 2006, in connection details. These allocation rules do not

interest, or interest that is taken into with qualified residence acquisition debt apply to qualified mortgage insurance

account under section 469 in figuring that was secured by a principal or provided by the Department of

income or loss from a passive activity. Veterans Affairs or the Rural Housing secondary residence. See Prepaid

mortgage insurance below if the estate Service. Generally, net investment income is or trust paid any premiums allocable the excess of investment income over after 2009. If at least one other person Limit on the amount that is

investment expenses. Investment was liable for and paid the premiums in deductible. The estate or trust cannot

expenses are those expenses (other connection with the loan, and the deduct mortgage insurance premiums if than interest) allowable after application premiums were reported on Form 1098, the estate’s or trust’s AGI is more than

of the 2% floor on miscellaneous include the estate’s or trust’s share of $109,000. If the estate’s or trust’s AGI itemized deductions. the 2009 premiums on the worksheet is more than $100,000, its deduction is

The amount of the investment below. limited and you must use the worksheet

interest deduction may be limited. Use Qualified mortgage insurance is below to figure the deduction. See How

Form 4952, Investment Interest mortgage insurance provided by the to figure AGI for estates and trusts on

Expense Deduction, to figure the Department of Veterans Affairs, the page 22 for information on figuring AGI.

Qualified Mortgage Insurance Premiums Deduction Worksheet Keep for Your Records

1. Enter the total premiums the estate or trust paid in 2009 for qualified mortgage insurance for a contract issued

after December 31, 2006 . . . ......................................................... 1.

2. Enter the estate’s or trust’s AGI ......................................... 2.

3. Enter $100,000 ..................................................... 3.

4. Is the amount on line 2 more than the amount on line 3?

No. The deduction is not limited. Include the amount from line 1 above on Form

1041, line 10. Do not complete the rest of this worksheet.

Yes. Subtract line 3 from line 2. If the result is not a multiple of $1,000, increase it to

the next multiple of $1,000. For example, increase $425 to $1,000, increase

$2,025 to $3,000, etc. ........................................ 4.

5. Divide line 4 by $10,000. Enter the result as a decimal. If the result is 1.0 or more, enter 1.0 ............. 5. .

6. Multiply line 1 by line 5 ............................................................. 6.

7. Qualified mortgage insurance premiums deduction. Subtract line 6 from line 1. Enter the result here and

include the amount on Form 1041, line 10 ................................................ 7.

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Line 11—Taxes Line 15a—Other Deductions a. Tangible personal property,

computer software, and sound Enter any deductible taxes paid or Not Subject to the 2% Floor recordings that the estate or trust incurred during the tax year that are not Attach your own schedule, listing by manufactured, produced, grew, or deductible elsewhere on Form 1041. type and amount all allowable extracted in whole or in significant part Deductible taxes include the following. deductions that are not deductible within the United States; • State and local income taxes. You elsewhere on Form 1041. b. Any qualified film the estate or can deduct state and local income Do not include any losses on trust produced; or taxes unless you elect to deduct state worthless bonds and similar obligations c. Electricity, natural gas, or potable and local general sales taxes. You and nonbusiness bad debts. Report water the estate or trust produced in cannot deduct both. these losses on Schedule D (Form the United States. • State and local general sales taxes. 1041). You can elect to deduct state and local In certain cases, the United States general sales taxes instead of state and Do not deduct medical or funeral includes the Commonwealth of Puerto expenses on Form 1041. Medical local income taxes. Generally, you can Rico.

elect to deduct the actual state and expenses of the decedent paid by the The deduction does not apply to local general sales taxes (including estate may be deductible on the income derived from: compensating use taxes) you paid in decedent’s income tax return for the • The sale of food and beverages the 2009 if the tax rate was the same as year incurred. See section 213(c). estate or trust prepared at a retail the general sales tax rate. However, Funeral expenses are deductible only establishment; sales taxes on food, clothing, medical on Form 706. • Property the estate or trust leased, supplies, and motor vehicles are The following are examples of licensed, or rented for use by any deductible as a general sales tax even deductions that are reported on line related person; or if the tax rate was less than the general 15a. • The transmission or distribution of sales tax rate. Sales taxes on motor Bond premium(s). For taxable bonds electricity, natural gas, or potable water. vehicles are also deductible as a acquired before October 23, 1986, if general sales tax if the tax rate was The deduction cannot exceed 6% of the fiduciary elected to amortize the more than the general sales tax rate, modified AGI or 50% of certain Form premium, report the amortization on this but the tax is deductible only up to the W-2 wages. QPAI, as well as Form W-2 line. You cannot deduct the amount of tax that would have been wages, must be apportioned between amortization for tax-exempt bonds. If the trust or estate and its beneficiaries. imposed at the general sales tax rate. you made the election to amortize the Motor vehicles include cars, For more details, see Form 8903, premium, the basis in the taxable bond motorcycles, motor homes, recreational Domestic Production Activities must be reduced by the amount of vehicles, sport utility vehicles, trucks, Deduction, and its separate amortization. vans, and off-road vehicles. Also instructions.

For tax-exempt bonds, you cannot include any state and local general Net operating loss deduction deduct the premium that is amortized. sales taxes paid for a leased motor (NOLD). An estate or trust is allowed Although the premium cannot be vehicle. Do not include sales taxes paid the NOLD under section 172. deducted, you must amortize the on items used in a trade or business. premium and reduce the estate’s or If you claim an NOLD for the estate An estate or trust cannot use the trust’s basis in the tax-exempt bond by or trust, figure the deduction on a Optional Sales Tax Tables for the amount of premium amortized. In separate sheet and attach it to this individuals in Pub. 600, State and Local return. the case of a premium on a tax-exempt General Sales Taxes, to figure its bond, or if the fiduciary has made an Estate’s or trust’s share of deduction. election to amortize the premium on a amortization, depreciation, and • State, local, and foreign real property taxable bond, the basis in the bond depletion not claimed elsewhere. If taxes. must be reduced by the amount of you cannot deduct the amortization, • State and local personal property amortization. depreciation, and depletion as rent or taxes.

• Foreign or U.S. possession income For more information, see section royalty expenses on Schedule E (Form

171 and Pub. 550. 1040), or as business or farm expenses taxes. You may want to take a credit for

the tax instead of a deduction. See the on Schedule C, C-EZ, or F (Form If you claim a bond premium 1040), itemize the fiduciary’s share of instructions for Schedule G, line 2a, on deduction for the estate or trust, figure the deductions on an attached sheet page 28 for more details. the deduction on a separate sheet and and include them on line 15a. Itemize • The generation-skipping transfer attach it to Form 1041. each beneficiary’s share of the (GST) tax imposed on income Casualty and theft losses. Use Form deductions and report them in the distributions. 4684, Casualties and Thefts, to figure appropriate box of Schedule K-1 (Form

Do not deduct: any deductible casualty and theft 1041). • Federal income taxes; losses.

• Estate, inheritance, legacy, Domestic production activities Line 15b—Allowable

succession, and gift taxes; or deduction. The estate or trust may be Miscellaneous Itemized • Federal duties and excise taxes. able to deduct up to 6% of its share of Deductions Subject to the qualified production activities income

Line 12—Fiduciary Fees 2% Floor (QPAI) from the following activities.

Enter the deductible fees paid or Miscellaneous itemized deductions are 1. Construction performed in the

incurred to the fiduciary for United States. deductible only to the extent that the

administering the estate or trust during aggregate amount of such deductions 2. Engineering or architectural exceeds 2% of AGI. the tax year. services performed in the United States

for construction projects in the United Among the miscellaneous itemized Fiduciary fees deducted on States. deductions that must be included on

Form 706 cannot be deducted 3. Any lease, rental, license, sale, line 15b are expenses for the on Form 1041.

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exchange, or other disposition of: production or collection of income

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under section 212, such as investment provides that capital gains are added to AMID = 1,500 – (.02(32,900 –

advisory fees, subscriptions to corpus. Fifty percent of the fiduciary 13,000 + AMID))

investment advisory publications, and fees are allocated to income and 50% AMID = 1,500 – (658 – 260 + the cost of safe deposit boxes. to corpus. The trust claimed a $2,000 .02AMID)

Miscellaneous itemized deductions deduction on line 12 of Form 1041. The AMID = 1,102 – .02AMID trust incurred $1,500 of miscellaneous do not include deductions for: itemized deductions (chargeable to 1.02AMID = 1,102 • Interest under section 163,

• Taxes under section 164, income), which are subject to the 2% AMID = 1,080

floor. There are no other deductions. • The amortization of bond premium DNI = 11,920 (i.e., 13,000 – 1,080) The trustee made a discretionary under section 171, AGI = 20,980 (i.e., 32,900 – 11,920) distribution of the accounting income of • Estate taxes attributable to IRD $17,500 to the trust’s sole beneficiary. Note. The income distribution under section 691(c), or deduction is equal to the smaller of the • Expenses paid or incurred in Because the actual distribution can distribution ($17,500) or the DNI connection with the administration of reasonably be expected to exceed the ($11,920). the estate or trust that would not have DNI, the trust must figure the DNI,

been incurred if the property were not taking into account the allowable Enter the value of AMID on line 15b

held in the estate or trust. miscellaneous itemized deductions, to (the DNI should equal line 7 of

determine the amount to enter on line Schedule B) and complete the rest of For other exceptions, see section 15b. Form 1041 according to the 67(b). instructions. The trust also claims an exemption How to figure AGI for estates and of $100 on line 20. If the 2% floor is more than the trusts. You figure AGI by subtracting

Using the facts in this example: deductions subject to the 2% floor, no the following from total income on line 9 deductions are allowed. of page 1: AMID = 1,500 – (.02(AGI))

1. The administration costs of the In all situations, use the following Line 18—Income

estate or trust (the total of lines 12, 14, equation to compute the AGI: Distribution Deduction and 15a to the extent they are costs AGI = (line 9) – (the total of lines 12, If the estate or trust was required to incurred in the administration of the 14, and 15a to the extent they are costs distribute income currently or if it paid, estate or trust) that would not have incurred in the administration of the credited, or was required to distribute been incurred if the property were not estate or trust that would not have been any other amounts to beneficiaries held by the estate or trust; incurred if the property were not held by during the tax year, complete Schedule 2. The income distribution deduction the estate or trust) – (line 18) – (line B to determine the estate’s or trust’s (line 18); 20). income distribution deduction. 3. The amount of the exemption Note. There are no other deductions However, if you are filing for a pooled (line 20); claimed by the trust on line 15a that are income fund, do not complete Schedule 4. The domestic production deductible in arriving at AGI. B. Instead, attach a statement to activities deduction claimed on line 15a; support the computation of the income and Figuring AGI in this example, we get: distribution deduction. See Pooled 5. The NOLD claimed on line 15a. AGI = 35,000 – 2,000 – DNI – 100 Income Funds on page 12 for more

For those estates and trusts whose Since the value of line 18 is not information.

known because it is limited to the DNI, income distribution deduction is limited If the estate or trust claims an

you are left with the following: to the actual distribution, and not the income distribution deduction, complete

DNI (that is, the income distribution is AGI = 32,900 – DNI and attach:

less than the DNI), when computing the Substitute the value of AGI in the • Part I (through line 26) and Part II of

AGI, use the amount of the actual Schedule I (Form 1041) to refigure the equation: distribution. deduction on a minimum tax basis, and AMID = 1,500 – (.02(32,900 – DNI)) For those estates and trusts whose • Schedule K-1 (Form 1041) for each

income distribution deduction is limited The equation cannot be solved until beneficiary to which a distribution was the value of DNI is known. The DNI can made or required to be made. to the DNI (that is, the actual be expressed in terms of the AMID. To distribution exceeds the DNI), the DNI Cemetery perpetual care fund. On do this, compute the DNI using the must be figured taking into account the line 18, deduct the amount, not more known values. In this example, the DNI allowable miscellaneous itemized than $5 per gravesite, paid for is equal to the total income of the trust deductions (AMID) after application of maintenance of cemetery property. To (less any capital gains allocated to the 2% floor. In this situation there are the right of the entry space for line 18, corpus or plus any capital loss from line two unknown amounts: (a) the AMID enter the number of gravesites. Also 4); less total deductions from line 16 and (b) the DNI. write “Section 642(i) trust” in (excluding any miscellaneous itemized Computing line 15b. To compute line parentheses after the trust’s name at deductions); less the AMID. the top of Form 1041. You do not have 15b, use the equation below: Thus, DNI = (line 9) – (line 15, to complete Schedules B of Form 1041 AMID = Total miscellaneous column (2) of Schedule D (Form 1041)) and K-1 (Form 1041). itemized deductions – (.02(AGI)) – (line 16) – (AMID) Do not enter less than zero on line The following example illustrates Substitute the known values: 18. how algebraic equations can be used to DNI = 35,000 – 20,000 – 2,000 – solve for these unknown amounts. Line 19—Estate Tax AMID

Example. The Malcolm Smith DNI = 13,000 – AMID Deduction (Including Certain Trust, a complex trust, earned $20,000 Substitute the value of DNI in the Generation-Skipping of dividend income, $20,000 of capital

gains, and a fully deductible $5,000 equation to solve for AMID: Transfer Taxes)

loss from XYZ partnership (chargeable AMID = 1,500 – (.02(32,900 – If the estate or trust includes IRD in its

to corpus) in 2009. The trust instrument (13,000 – AMID))) gross income, and such amount was

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included in the decedent’s gross estate Trusts required to distribute all

for estate tax purposes, the estate or income currently. A trust whose Tax and Payments

trust is allowed to deduct in the same governing instrument requires that all

tax year that the income is included that income be distributed currently is Line 22—Taxable Income

portion of the estate tax imposed on the allowed a $300 exemption, even if it Minimum taxable income. Line 22

decedent’s estate that is attributable to distributed amounts other than income cannot be less than the larger of: the inclusion of the IRD in the during the tax year. • The inversion gain of the estate or decedent’s estate. For an example of trust, as figured under section 7874, if Qualified disability trusts. A qualified the computation, see Regulations the estate or trust is an expatriated disability trust is allowed a $3,650 section 1.691(c)-1 and Pub. 559. entity or a partner in an expatriated exemption if the trust’s modified AGI is entity, or less than or equal to $166,800. If its If any amount properly paid, • The sum of the excess inclusions of modified AGI exceeds $166,800, credited, or required to be distributed the estate or trust from Schedule Q complete the worksheet below to figure by an estate or trust to a beneficiary (Form 1066), line 2c. the amount of the trust’s exemption. To consists of IRD received by the estate figure modified AGI, follow the NOL. If line 22 (figured without regard or trust, do not include such amounts in instructions for figuring AGI for line 15b to the minimum taxable income rule determining the estate tax deduction for on page 22, except use zero as the stated above) is a loss, the estate or the estate or trust. Figure the deduction amount of the trust’s exemption when trust may have an NOL. Do not include on a separate sheet. Attach the sheet the deductions claimed on lines 13, 18, figuring AGI. to your return. and 20 when figuring the amount of the

A qualified disability trust is any trust: NOL.

If you claim a deduction for 1. Described in 42 U.S.C. Generally, an NOL may be carried estate tax attributable to 1396p(c)(2)(B)(iv) and established back to the prior 2 tax years. The CAUTION qualified dividends or capital

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solely for the benefit of an individual 2-year carryback period does not apply gains, you may have to adjust the under 65 years of age who is disabled, to the portion of an NOL attributable to amount on Form 1041, page 1, line and an eligible loss; a farming loss; a 2b(2), or Schedule D (Form 1041), line 2. All of the beneficiaries of which qualified disaster, GO Zone, recovery 18. are determined by the Commissioner of assistance, or disaster recovery

Social Security to have been disabled assistance loss; or a specified liability Also, a deduction is allowed for the

GST tax imposed as a result of a for some part of the tax year within the loss. An estate or trust may also elect

meaning of 42 U.S.C. 1382c(a)(3). to carry an NOL forward only, instead taxable termination or a direct skip of first carrying it back. For more occurring as a result of the death of the information, see the Instructions for transferor. See section 691(c)(3). Enter A trust will not fail to meet item 2 Form 1045, Application for Tentative the estate’s or trust’s share of these above just because the trust’s corpus Refund. deductions on line 19. may revert to a person who is not

disabled after the trust ceases to have Complete Schedule A of Form 1045

any disabled beneficiaries. to figure the amount of the NOL that is Line 20—Exemption available for carryback or carryover.

Decedents’ estates. A decedent’s All other trusts. A trust not described Use Form 1045 or file an amended

estate is allowed a $600 exemption. return to apply for a refund based on an above is allowed a $100 exemption.

Exemption Worksheet for Qualified Disability Trusts

Only—Line 20 Keep for Your Records

Note: If the trust’s modified AGI* is less than or equal to $166,800, enter $3,650 on Form 1041, line 20.

Otherwise, complete the worksheet below to figure the trust’s exemption.

1. Maximum exemption ............................................................... 1. $3,650

2. Enter the trust’s modified AGI* .......................................... 2.

3. Threshold amount ................................................... 3. $166,800

4. Subtract line 3 from line 2 .............................................. 4.

Note: If line 4 is more than $122,500, enter $2,433 on line 9 below. Do not complete lines 5

through 8.

5. Divide line 4 by $2,500. If the result is not a whole number, increase it to the next higher

whole number (for example, increase 0.0004 to 1) ............................ 5.

6. Multiply line 5 by 2% (.02) and enter the result as a decimal ..................... 6.

7. Multiply line 1 by line 6 .............................................................. 7.

8. Divide line 7 by 3 .................................................................. 8.

9. Exemption. Subtract line 8 from line 1. Enter the result here and on Form 1041, line 20 ............... 9.

*Figure the trust’s modified AGI in the same manner as AGI is figured in the line 15b instructions on page 22,

except use zero when figuring the amount of the trust’s exemption.

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NOL carryback. For more details, see Tax Payments to Beneficiaries, which Line 24f—Credit for Tax Paid Pub. 536, Net Operating Losses must be filed by the 65th day after the on Undistributed Capital (NOLs) for Individuals, Estates, and close of the trust’s tax year. Form

Trusts. 1041-T shows the amounts to be Gains

On the termination of the estate or allocated to each beneficiary. This Attach Copy B of Form 2439, Notice to

trust, any unused NOL carryover that amount is reported on the beneficiary’s Shareholder of Undistributed

would be allowable to the estate or trust Schedule K-1 (Form 1041), box 13, Long-Term Capital Gains.

in a later tax year, but for the using code A. Line 24g—Credit for Federal termination, is allowed to the

beneficiaries succeeding to the property Attach Form 1041-T to your return Tax on Fuels

of the estate or trust. See the only if you have not yet filed it; Enter any credit for federal excise taxes instructions for Schedule K-1 (Form however, attaching Form 1041-T to paid on fuels that are ultimately used 1041), box 11, codes D and E on page Form 1041 does not extend the due for nontaxable purposes (for example, 35. date for filing Form 1041-T. If you have an off-highway business use). Attach

Excess deductions on termination. already filed Form 1041-T, do not Form 4136, Credit for Federal Tax Paid

attach a copy to your return. on Fuels. See Pub. 510, Excise Taxes, If the estate or trust has for its final year

deductions (excluding the charitable for more information.

deduction and exemption) in excess of Failure to file Form 1041-T by

its gross income, the excess is allowed the due date (March 8, 2010, for Line 26—Estimated Tax

as an itemized deduction to the CAUTION calendar year estates and Penalty

!

beneficiaries succeeding to the property trusts) will result in an invalid election. If line 27 is at least $1,000 and more of the estate or trust. An invalid election will require the filing than 10% of the tax shown on Form of amended Schedules K-1 for each In general, an unused NOL 1041, or the estate or trust underpaid beneficiary who was allocated a carryover that is allowed to its 2009 estimated tax liability for any

beneficiaries (as explained above) payment of estimated tax. payment period, it may owe a penalty.

cannot also be treated as an excess See Form 2210 to determine whether

deduction. However, if the final year of Line 24d—Tax Paid With the estate or trust owes a penalty and

the estate or trust is also the last year to figure the amount of the penalty. Form 7004 of the NOL carryover period, the NOL Note. The penalty may be waived If you filed Form 7004 to request an carryover not absorbed in that tax year under certain conditions. See Pub. 505, extension of time to file Form 1041, by the estate or trust is included as an Tax Withholding and Estimated Tax, for enter the amount that you paid with the excess deduction. See the instructions details. extension request. for Schedule K-1 (Form 1041), box 11,

code A on page 34. Line 27—Tax Due Line 24e—Federal Income You must pay the tax in full when the Line 24a—2009 Estimated Tax Withheld return is filed. You may pay by check or Tax Payments and Amount Use line 24e to claim a credit for any money order or by credit or debit card.

Applied From 2008 Return federal income tax withheld (and not To pay by check or money order.

Enter the amount of any estimated tax repaid) by: (a) an employer on wages Make the check or money order

payment you made with Form 1041-ES and salaries of a decedent received by payable to the “United States

for 2009 plus the amount of any the decedent’s estate; (b) a payer of Treasury.” Write the EIN and “2009

overpayment from the 2008 return that certain gambling winnings (for example, Form 1041” on the payment. Enclose,

was applied to the 2009 estimated tax. state lottery winnings); or (c) a payer of but do not attach, the payment with

distributions from pensions, annuities, Form 1041. If the estate or trust is the beneficiary

of another trust and received a retirement or profit-sharing plans, IRAs, To pay by credit or debit card. To

payment of estimated tax that was insurance contracts, etc., received by a pay by credit or debit card, call toll-free

credited to the trust (as reflected on the decedent’s estate or trust. Attach a or visit the website of any of the service

Schedule K-1 issued to the trust), then copy of Form W-2, Form W-2G, or providers listed below and follow the

report this amount separately with the Form 1099-R to the front of the return. instructions. A convenience fee will be

notation “section 643(g)” in the space charged for this service.

next to line 24a and include this amount Except for backup withholding Link2Gov Corporation in the amount entered on line 24a. (as explained below), withheld 1-888-729-1040 CAUTION income tax may not be passed

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Do not include on Form 1041 www.pay1040.com through to beneficiaries on either estimated tax paid by an Schedule K-1 or Form 1041-T. RBS WorldPAY, Inc. CAUTION individual before death. Instead,

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1-888-972-9829 include those payments on the Backup withholding. If the estate or www.payUSAtax.com decedent’s final income tax return. trust received a 2009 Form 1099 Official Payments Corporation showing federal income tax withheld Line 24b—Estimated Tax 1-888-872-9829 (that is, backup withholding) on interest Payments Allocated to www.officialpayments.com/fed income, dividends, or other income, Beneficiaries check the box and include the amount For more information on paying your The trustee (or executor, for the final withheld on income retained by the taxes by credit or debit card, visit the year of the estate) may elect under estate or trust in the total for line 24e. IRS website at www.irs.gov and type section 643(g) to have any portion of its “e-pay” in the search box. estimated tax treated as a payment of Report on Schedule K-1 (Form

estimated tax made by a beneficiary or 1041), box 13, using code B, any credit You may use EFTPS to pay the

beneficiaries. The election is made on for backup withholding on income tax due for a trust. See

Form 1041-T, Allocation of Estimated distributed to the beneficiary. Electronic Deposits on page 8.

TIP

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Line 29a—Credited to 2010 4. The name and address of each Also, certain testamentary trusts that

organization to which any such were established by a will that was Estimated Tax contribution is paid; and executed on or before October 9, 1969, Enter the amount from line 28 that you 5. The amount of each contribution may qualify. See Regulations section want applied to the estate’s or trust’s and date of actual payment or, if 1.642(c)-2(b). 2010 estimated tax. applicable, the total amount of Do not include any capital gains for contributions paid to each organization the tax year allocated to corpus and during the next tax year, to be treated paid or permanently set aside for Schedule A—Charitable as paid in the prior tax year. charitable purposes. Instead, enter

Deduction these amounts on line 4. The election must be filed by the due

date (including extensions) for Form Line 2—Tax-Exempt Income General Instructions 1041 for the next tax year. If the original Allocable to Charitable Generally, any part of the gross income return was filed on time, you may make Contributions of an estate or trust (other than a the election on an amended return filed

no later than 6 months after the due Any estate or trust that pays or sets simple trust) that, under the terms of date of the return (excluding aside any part of its income for a the will or governing instrument, is paid extensions). Write “Filed pursuant to charitable purpose must reduce the (or treated as paid) during the tax year section 301.9100-2” at the top of the deduction by the portion allocable to for a charitable purpose specified in amended return and file it at the same any tax-exempt income. If the section 170(c) is allowed as a address you used for your original governing instrument specifically deduction to the estate or trust. It is not

return. provides as to the source from which necessary that the charitable amounts are paid, permanently set organization be created or organized in For more information about the aside, or to be used for charitable the United States. charitable deduction, see section 642(c) purposes, the specific provisions A pooled income fund or a section and related regulations. control. In all other cases, determine 4947(a)(1) nonexempt charitable trust the amount of tax-exempt income treated as a private foundation must Specific Instructions allocable to charitable contributions by attach a separate sheet to Form 1041 multiplying line 1 by a fraction, the instead of using Schedule A of Form Line 1—Amounts Paid or numerator of which is the total 1041 to figure the charitable deduction. Permanently Set Aside for tax-exempt income of the estate or

Additional return to be filed by Charitable Purposes From trust, and the denominator of which is

trusts. Trusts, other than split-interest Gross Income the gross income of the estate or trust.

trusts or nonexempt charitable trusts, Enter amounts that were paid for a Do not include in the denominator any

that claim a charitable deduction also charitable purpose out of the estate’s or losses allocated to corpus.

file Form 1041-A unless the trust is trust’s gross income, including any required to distribute currently to the Line 4—Capital Gains for the capital gains that are attributable to beneficiaries all the income for the year income under the governing instrument Tax Year Allocated to Corpus

determined under section 643(b) and or local law. Include amounts paid and Paid or Permanently Set related regulations. during the tax year from gross income Aside for Charitable Purposes

Pooled income funds and charitable received in a prior tax year, but only if Enter the total of all capital gains for the lead trusts also file Form 5227. See no deduction was allowed for any prior tax year that are: Form 5227 for information about any tax year for these amounts. • Allocated to corpus, and exceptions. Estates, and certain trusts, may • Paid or permanently set aside for

Election to treat contributions as claim a deduction for amounts charitable purposes.

paid in the prior tax year. The permanently set aside for a charitable

fiduciary of an estate or trust may elect purpose from gross income. Such Line 6—Section 1202 Exclusion

to treat as paid during the tax year any amounts must be permanently set Allocable to Capital Gains Paid

amount of gross income received aside during the tax year to be used or Permanently Set Aside for

during that tax year or any prior tax exclusively for religious, charitable, Charitable Purposes year that was paid in the next tax year scientific, literary, or educational If the exclusion of gain from the sale or for a charitable purpose. purposes, or for the prevention of exchange of qualified small business cruelty to children or animals, or for the For example, if a calendar year (QSB) stock was claimed, enter the part establishment, acquisition, estate or trust makes a qualified of the gain included on Schedule A, maintenance, or operation of a public charitable contribution on February 8, lines 1 and 4, that was excluded under cemetery not operated for profit. 2010, from income earned in 2009 or section 1202.

prior, then the fiduciary can elect to For a trust to qualify, the trust may treat the contribution as paid in 2009. not be a simple trust, and the set aside

To make the election, the fiduciary amounts must be required by the terms Schedule B—Income

must file a statement with Form 1041 of a trust instrument that was created

for the tax year in which the on or before October 9, 1969. Distribution Deduction

contribution is treated as paid. This Further, the trust instrument must statement must include: provide for an irrevocable remainder General Instructions

1. The name and address of the interest to be transferred to or for the If the estate or trust was required to

fiduciary; use of an organization described in distribute income currently or if it paid,

2. The name of the estate or trust; section 170(c); or the trust must have credited, or was required to distribute

3. An indication that the fiduciary is been created by a grantor who was at any other amounts to beneficiaries

making an election under section all times after October 9, 1969, under a during the tax year, complete Schedule

642(c)(1) for contributions treated as mental disability to change the terms of B to determine the estate’s or trust’s

paid during such tax year; the trust. income distribution deduction.

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Note. Use Schedule I (Form 1041) to Step 2. Subtract the Step 1 total under the terms of the governing

compute the DNI and income from the amount of tax-exempt interest instrument and applicable local law. Do

distribution deduction on a minimum tax (including exempt-interest dividends) not include extraordinary dividends or

basis. received. taxable stock dividends determined

under the governing instrument and Pooled income funds. Do not Section 212 expenses that are applicable local law to be allocable to complete Schedule B for these funds. directly allocable to tax-exempt interest corpus. are allocated only to tax-exempt Instead, attach a separate statement to

support the computation of the income interest. A reasonable proportion of Lines 9 and 10 distribution deduction. See Pooled section 212 expenses that are indirectly

allocable to both tax-exempt interest Do not include any: Income Funds on page 12 for more and other income must be allocated to • Amounts deducted on prior year’s information.

each class of income. return that were required to be Separate share rule. If a single trust distributed in the prior year; Figure the interest expense allocable or an estate has more than one • Amount that is properly paid or to tax-exempt interest according to the beneficiary, and if different beneficiaries credited as a gift or bequest of a guidelines in Rev. Proc. 72-18, 1972-1 have substantially separate and specific amount of money or specific C.B. 740. independent shares, their shares are property. (To qualify as a gift or treated as separate trusts or estates for See Regulations sections 1.643(a)-5 bequest, the amount must be paid in the sole purpose of determining the and 1.265-1 for more information. three or fewer installments.) An amount DNI allocable to the respective that can be paid or credited only from Line 3 beneficiaries. income is not considered a gift or Include all capital gains, whether or not bequest; or If the separate share rule applies, distributed, that are attributable to • Amount paid or permanently set figure the DNI allocable to each income under the governing instrument aside for charitable purposes or beneficiary on a separate sheet and or local law. For example, if the trustee otherwise qualifying for the charitable attach the sheet to this return. Any distributed 50% of the current year’s deduction. deduction or loss that is applicable capital gains to the income solely to one separate share of the trust beneficiaries (and reflects this amount Line 9—Income Required To Be or estate is not available to any other

share of the same trust or estate. in column (1), line 15 of Schedule D Distributed Currently (Form 1041)), but under the governing Line 9 is to be completed by all simple For more information, see section instrument all capital gains are trusts as well as complex trusts and 663(c) and related regulations. attributable to income, then include decedent’s estates that are required to

Withholding of tax on foreign 100% of the capital gains on line 3. If distribute income currently, whether it is the amount on Schedule D (Form persons. The fiduciary may be liable distributed or not. The determination of 1041), line 15, column (1) is a net loss, for withholding tax on distributions to whether trust income is required to be enter zero. beneficiaries who are foreign persons. distributed currently depends on the For more information, see Pub. 515, If the exclusion of gain from the sale terms of the governing instrument and Withholding of Tax on Nonresident or exchange of QSB stock was the applicable local law.

Aliens and Foreign Entities, and Forms claimed, do not reduce the gain on line

3 by any amount excluded under The line 9 distributions are referred 1042 and 1042-S.

section 1202. to as first tier distributions and are

Specific Instructions deductible by the estate or trust to the Line 5 extent of the DNI. The beneficiary

Line 1—Adjusted Total Income In figuring the amount of long-term and includes such amounts in his or her

short-term capital gain for the tax year income to the extent of his or her Generally, enter on line 1, Schedule B, included on Schedule A, line 1, the proportionate share of the DNI. the amount from line 17 on page 1 of specific provisions of the governing Form 1041. However, if both line 4 and Line 10—Other Amounts Paid, instrument control if the instrument line 17 on page 1 of Form 1041 are specifically provides as to the source Credited, or Otherwise losses, enter on line 1, Schedule B, the from which amounts are paid, Required To Be Distributed smaller of those losses. If line 4 is zero permanently set aside, or to be used for or a gain and line 17 is a loss, enter Line 10 is to be completed only by a charitable purposes. zero on line 1, Schedule B. decedent’s estate or complex trust.

In all other cases, determine the These distributions consist of any other If you are filing for a simple trust, amount to enter by multiplying line 1 of amounts paid, credited, or required to subtract from adjusted total income any Schedule A by a fraction, the numerator be distributed and are referred to as extraordinary dividends or taxable stock of which is the amount of net capital second tier distributions. Such amounts dividends included on page 1, line 2, gains that are included in the include annuities to the extent not paid and determined under the governing accounting income of the estate or trust out of income, mandatory and instrument and applicable local law to (that is, not allocated to corpus) and are discretionary distributions of corpus, be allocable to corpus. distributed to charities, and the and distributions of property in kind.

Line 2—Adjusted Tax-Exempt denominator of which is all items of If Form 1041-T was timely filed to income (including the amount of such Interest elect to treat estimated tax payments net capital gains) included in the DNI. To figure the adjusted tax-exempt as made by a beneficiary, the Reduce the amount on line 5 by any interest: payments are treated as paid or allocable section 1202 exclusion. credited to the beneficiary on the last Step 1. Add tax-exempt interest Line 8—Accounting Income day of the tax year and must be income on line 2 of Schedule A, any included on line 10. expenses allowable under section 212 If you are filing for a decedent’s estate

allocable to tax-exempt interest, and or a simple trust, skip this line. If you Unless a section 643(e)(3) election

any interest expense allocable to are filing for a complex trust, enter the is made, the value of all noncash

tax-exempt interest. income for the tax year determined property actually paid, credited, or

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required to be distributed to any Expenses that are directly allocable Line 12—Adjustment for beneficiaries is the smaller of: Tax-Exempt Income to tax-exempt income are allocated only

1. The estate’s or trust’s adjusted to tax-exempt income. A reasonable In figuring the income distribution proportion of expenses indirectly basis in the property immediately deduction, the estate or trust is not allocable to both tax-exempt income before distribution, plus any gain or allowed a deduction for any item of the minus any loss recognized by the and other income must be allocated to DNI that is not included in the gross each class of income. estate or trust on the distribution (basis income of the estate or trust. Thus, for of beneficiary), or purposes of figuring the allowable 2. The FMV of such property. income distribution deduction, the DNI

(line 7) is figured without regard to any Schedule G—Tax If a section 643(e)(3) election is made

by the fiduciary, then the amount tax-exempt interest. Computation entered on line 10 will be the FMV of If tax-exempt interest is the only the property. tax-exempt income included in the total Line 1a

A fiduciary of a complex trust or a distributions (line 11), and the DNI (line 2009 tax rate schedule. For tax years decedent’s estate may elect to treat 7) is less than or equal to line 11, then beginning in 2009, figure the tax using any amount paid or credited to a enter on line 12 the amount from line 2. the Tax Rate Schedule below and enter

beneficiary within 65 days following the the tax on line 1a. However, see the close of the tax year as being paid or If tax-exempt interest is the only Instructions for Schedule D (Form credited on the last day of that tax year. tax-exempt income included in the total 1041) and the Qualified Dividends Tax

To make this election, see the distributions (line 11), and the DNI is Worksheet below.

instructions for Question 6 on page 30. more than line 11 (that is, the estate or

trust made a distribution that is less 2009 Tax Rate Schedule The beneficiary includes the than the DNI), then figure the amounts on line 10 in his or her income If taxable adjustment by multiplying line 2 by a only to the extent of his or her income fraction, the numerator of which is the is: proportionate share of the DNI. total distributions (line 11), and the Of the But not denominator of which is the DNI (line Over — Its tax is: amount Complex trusts. If the second tier over — over — distributions exceed the DNI allocable 7). Enter the result on line 12. $0 $2,300 15% $0 to the second tier, the trust may have 2,300 5,350 $345.00 + 25% 2,300 If line 11 includes tax-exempt an accumulation distribution. See the 5,350 8,200 1,107.50 + 28% 5,350 income other than tax-exempt interest, line 11 instructions below. 8,200 11,150 1,905.50 + 33% 8,200

figure line 12 by subtracting the total of 11,150 ----- 2,879.00 + 35% 11,150

Line 11—Total Distributions the following from tax-exempt income

included on line 11: If line 11 is more than line 8, and you

are filing for a complex trust that has 1. The charitable contribution Schedule D (Form 1041) and

previously accumulated income, see deduction allocable to such tax-exempt Schedule D Tax Worksheet. Use

the instructions on page 30 to see if income, and Part V of Schedule D (Form 1041) or

you must complete Schedule J (Form 2. Expenses allocable to tax-exempt the Schedule D Tax Worksheet,

1041). income. whichever is applicable, to figure the

Qualified Dividends Tax Worksheet—Schedule G, line 1a Keep for Your Records

Caution: Do not use this worksheet if the estate or trust must complete Schedule D (Form 1041).

1. Enter the amount from Form 1041, line 22 .......................... 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 $2,300 ................... 6.

7. Is the amount on line 5 equal to or more than the amount on line 6?

 Yes. Skip lines 7 and 8; go to line 9 and check the ‘‘No’’ box.

No. Enter the amount from line 5 ............................ 7.

8. Subtract line 7 from line 6 ..................................... 8.

9. Are the amounts on lines 4 and 8 the same?

 Yes. Skip lines 9 through 12; go to line 13.

No. Enter the smaller of line 1 or line 4 ........................ 9.

10. Enter the amount from line 8 (if line 8 is blank, enter -0-) ................ 10.

11. Subtract line 10 from line 9 ..................................... 11.

12. Multiply line 11 by 15% (.15) ................................................... 12.

13. Figure the tax on the amount on line 5. Use the 2009 Tax Rate Schedule ................... 13.

14. Add lines 12 and 13 .......................................................... 14.

15. Figure the tax on the amount on line 1. Use the 2009 Tax Rate Schedule ................... 15.

16. Tax on all taxable income. Enter the smaller of line 14 or line 15 here and on Sch. G, line 1a .... 16.

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estate’s or trust’s tax if the estate or Line 2c—General Business • Credit for employer differential wage

trust files Schedule D (Form 1041) and payments (Form 8932). Credit has: • Carbon dioxide sequestration credit

• A net capital gain and any taxable (Form 8933). Do not include any amounts that • Qualified plug-in electric drive motor income, or are allocated to a beneficiary. vehicle credit (Form 8936). • Qualified dividends on line 2b(2) of CAUTION Credits that are allocated

! • Qualified plug-in electric vehicle Form 1041 and any taxable income. between the estate or trust and the credit (Form 8834). beneficiaries are listed in the Qualified Dividends Tax Worksheet. • Credit for contributions to selected instructions for Schedule K-1, box 13, If you do not have to complete Part I or community development corporations on page 35. Generally, these credits Part II of Schedule D and the estate or (only from partnerships and S are apportioned on the basis of the corporations). trust has an amount entered on line income allocable to the estate or trust 2b(2) of Form 1041 and any taxable • General credits from an electing and the beneficiaries. income (line 22), then figure the large partnership. Report these credits

estate’s or trust’s tax using the Enter on line 2c the estate’s or on Form 3800, line 1bb.

worksheet below and enter the tax on trust’s total general business credit The following general business line 1a. allowed for the current year from line 32 credits have special tax liability limits. of Form 3800. The estate or trust must These limits are now figured in Part II of Note. You must reduce the amount file Form 3800 to claim any of the Form 3800. See the Instructions for you enter on line 2b(2) of Form 1041 by general business credits. If the estate’s Form 3800 for more information. the portion of the section 691(c) or trust’s only source of credits listed in • Empowerment zone and renewal deduction claimed on line 19 of Form Part I for Form 3800 is from community employment credit (Form 1041 if the estate or trust received pass-through entities, you may not be 8844). qualified dividends that were IRD. required to complete the source credit • Investment credit (Form 3468, Part III form. See the Instructions for Form only). Line 1c—AMT. Attach Schedule I 3800 for more information. • Work opportunity credit (Form 5884). (Form 1041) if: The following general business • Alcohol and cellulosic biofuel fuels • The estate or trust must complete credits appear in Part I of Form 3800. credit (Form 6478). Schedule B. • Investment credit (Form 3468, Part II • Renewable electricity, refined coal,

• The estate or trust claims a credit on only). and Indian coal production credit (Form

line 2b, 2c, or 2d of Schedule G. • Welfare-to-work credit (only from 8835, Part II).

• The estate’s or trust’s share of partnerships, S corporations, and • Credit for employer social security

alternative minimum taxable income estates and trusts). and Medicare taxes (Form 8846).

(line 29 of Schedule I (Form 1041)) • Credit for increasing research • Qualified railroad track maintenance

exceeds $22,500. activities (Form 6765). credit (Form 8900).

Enter the amount from line 56 of • Low-income housing credit (Form • Low-income housing credit (Form

Schedule I (Form 1041) on line 1c. 8586, Part I). 8586, Part II).

• Disabled access credit (Form 8826).

• Renewable electricity production Line 2d—Credit for Prior

Line 2a—Foreign Tax Credit credit (Form 8835, Part I only). Year Minimum Tax

Attach Form 1116, Foreign Tax Credit • Indian employment credit (Form An estate or trust that paid AMT in a (Individual, Estate, or Trust), if you elect 8845). previous year may be eligible for a to claim credit for income or profits • Orphan drug credit (Form 8820). minimum tax credit in 2009. See Form taxes paid or accrued to a foreign • New markets credit (Form 8874). 8801, Credit for Prior Year Minimum country or a U.S. possession. The • Credit for small employer pension Tax—Individuals, Estates, and Trusts. estate or trust may claim credit for that plan startup costs (Form 8881).

part of the foreign taxes not allocable to • Credit for employer-provided child Line 3—Total Credits

the beneficiaries (including charitable care facilities and services (Form Credit to holders of tax credit bonds. beneficiaries). Enter the estate’s or 8882). Complete and attach Form 8912, Credit trust’s share of the credit on line 2a. • Biodiesel and renewable diesel fuels

See Pub. 514, Foreign Tax Credit for to Holders of Tax Credit Bonds, if the credit (Form 8864). estate or trust claims a credit for Individuals, for details. • Low sulfur diesel fuel production holding a qualified energy conservation credit (Form 8896). bond, clean renewable energy bond, Line 2b—Other Nonbusiness • Distilled spirits credit (Form 8906). new clean renewable energy bond, Gulf • Nonconventional source fuel credit Credits tax credit bond, Midwestern tax credit (Form 8907). bond, qualified forestry conservation Alternative motor vehicle credit. • Energy efficient home credit (Form bond, qualified zone academy bond, Complete and attach Form 8910, 8908). qualified school construction bond, or Alternative Motor Vehicle Credit, if the • Energy efficient appliance credit Build America bond. Include the credit estate claims a credit for alternative (Form 8909). on line 3. On the dotted line to the left motor vehicles. Include the credit for • Alternative motor vehicle credit (Form of the entry, write “Form 8912” and the nondepreciable property on line 2b. 8910). amount of the credit. Also, be sure to • Alternative fuel vehicle refueling

Alternative fuel vehicle refueling include the credit in interest income. property credit (Form 8911).

property credit. Complete and attach • Credits for affected Midwestern Line 5—Recapture Taxes Form 8911, Alternative Fuel Vehicle disaster area employers (Form

Refueling Property Credit, if the estate 5884-A). Recapture of investment credit. If

claims a credit for alternative fuel • Mine rescue team training credit the estate or trust disposed of

vehicle refueling property. Include the (Form 8923). investment credit property or changed

credit for nondepreciable property on • Agricultural chemicals security credit its use before the end of the recapture

line 2b. (Form 8931). period, see Form 4255, Recapture of

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Investment Credit, to figure the the entry space, write “From Form Line 6—Household recapture tax allocable to the estate or 4970” and the amount of the tax. Employment Taxes trust. Include the tax on line 5 and write Form 8697, Interest Computation “ICR” on the dotted line to the left of the If any of the following apply, get Under the Look-Back Method for

entry space. Schedule H (Form 1040), Household Completed Long-Term Contracts. Employment Taxes, and its instructions, Recapture of low-income housing Include the interest due under the to see if the estate or trust owes these credit. If the estate or trust disposed look-back method of section 460(b)(2). taxes. of property (or there was a reduction in To the left of the entry space, write

the qualified basis of the property) on 1. The estate or trust paid any one “From Form 8697” and the amount of

household employee cash wages of which the low-income housing credit interest due.

was claimed, see Form 8611, $1,700 or more in 2009. Cash wages Form 8866, Interest Computation Recapture of Low-Income Housing include wages paid by checks, money Under the Look-Back Method for

Credit, to figure any recapture tax orders, etc. When figuring the amount Property Depreciated Under the allocable to the estate or trust. Include of cash wages paid, combine cash Income Forecast Method. Include

the tax on line 5 and write “LIHCR” on wages paid by the estate or trust with the interest due under the look-back

the dotted line to the left of the entry cash wages paid to the household method of section 167(g)(2). To the left employee in the same calendar year by space. of the entry space, write “From Form the household of the decedent or Recapture of qualified electric 8866” and the amount of interest due. beneficiary for whom the administrator, vehicle credit. If the estate or trust executor, or trustee of the estate or Interest on deferral of gain from

claimed the qualified electric vehicle certain constructive ownership trust is acting. credit in a prior tax year for a vehicle transactions. Include the interest due 2. The estate or trust withheld that ceased to qualify for the credit, part under section 1260(b) on any deferral federal income tax during 2009 at the or all of the credit may have to be of gain from certain constructive request of any household employee. recaptured. See Regulations 1.30-1(b) ownership transactions. To the left of 3. The estate or trust paid total cash for details. If the estate or trust owes the entry space, write “1260(b)” and the wages of $1,000 or more in any any recapture tax, include it on line 5 amount of interest due. calendar quarter of 2008 or 2009 to and write “QEVCR” on the dotted line to household employees. Form 5329, Additional Taxes on the left of the entry space. Qualified Plans (Including IRAs) and

Recapture of the Indian employment Note. See Amended Schedule H Other Tax-Favored Accounts. If the

credit. Generally, if the estate or trust (Form 1040) under F. Initial Return, estate or trust fails to receive the

terminates a qualified employee less Amended Return, etc., earlier for minimum distribution under section

than 1 year after the date of initial information on filing an amended 4974, use Form 5329 to pay the excise

employment, any Indian employment Schedule H (Form 1040) for a Form tax. To the left of the entry space, write

credit allowed for a prior tax year by 1041. “From Form 5329” and the amount of

reason of wages paid or incurred to that the tax.

employee must be recaptured. See Line 7—Total Tax

Form 8845 for details. If the estate or

Tax on ESBTs. Attach the tax trust owes any recapture tax, include it Other Information

on line 5 and write “IECR” on the dotted computation to the return. To the left of

the line 7 entry space, write “Sec. line to the left of the entry space. Question 1 641(c)” and the amount of tax on the S Recapture of the new markets credit. corporation items. Include this amount If the estate or trust received

If the estate or trust owes any new in the total tax on line 7. tax-exempt income, figure the allocation markets recapture tax, include it on line of expenses between tax-exempt and 5 and write “NMCR” on the dotted line See Electing Small Business Trusts taxable income on a separate sheet to the left of the entry space. For more (ESBTs) on page 12 for the special tax and attach it to the return. Enter only information, including how to figure the computation rules that apply to the the deductible amounts on the return.

recapture amount, see section 45D(g). portion of an ESBT consisting of stock Do not figure the allocation on the in one or more S corporations. Recapture of the credit for return itself. For more information, see

employer-provided child care the instructions for Allocation of Interest on deferred tax attributable

facilities. If the facility ceased to Deductions for Tax-Exempt Income on to installment sales of certain

operate as a qualified child care facility page 18. timeshares and residential lots and

or there was a change in ownership, certain nondealer real property Report the amount of tax-exempt

part or all of the credit may have to be installment obligations. If an interest income received or accrued in

recaptured. See Form 8882 for details. obligation arising from the disposition of the space provided below Question 1.

If the estate or trust owes any recapture real property to which section 453(l) or Also, include any exempt-interest tax, include it on line 5 and write 453A applies is outstanding at the close dividends the estate or trust received “ECCFR” on the dotted line to the left of of the year, the estate or trust must as a shareholder in a mutual fund or the entry space. include the interest due under section other regulated investment company.

Recapture of the alternative motor 453(l)(3)(B) or 453A(c), whichever is

vehicle credit. See section 30B(h)(8) applicable, in the amount to be entered Question 2

on line 7 of Schedule G, Form 1041, for details. Include the tax on line 5 and All salaries, wages, and other

write “AMVCR” on the dotted line to the with the notation “Section 453(l) compensation for personal services interest” or “Section 453A(c) interest,” left of the entry space. must be included on the return of the

Recapture of the alternative fuel whichever is applicable. Attach a person who earned the income, even if schedule showing the computation. the income was irrevocably assigned to vehicle refueling property credit.

See section 30C(e)(5) for details. Form 4970, Tax on Accumulation a trust by a contract assignment or

similar arrangement. Include the tax on line 5 and write Distribution of Trusts. Include on this

“ARPCR” on the dotted line to the left of line any tax due on an accumulation The grantor or person creating the

the entry space. distribution from a trust. To the left of trust is considered the owner if he or

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she keeps “beneficial enjoyment” of or An owner of a foreign trust must

substantial control over the trust ensure that the trust files an Schedule J (Form 1041) property. The trust’s income, annual information return on

TIP

deductions, and credits are allocable to Form 3520-A, Annual Information — Accumulation

the owner. Return of Foreign Trust With a U.S.

Owner. Distribution for Certain

If you checked “Yes” for Question 2,

see Special Reporting Instructions on Complex Trusts Question 5

page 11. An estate or trust claiming an interest General Instructions deduction for qualified residence Question 3 Use Schedule J (Form 1041) to report interest (as defined in section Check the “Yes” box and enter the an accumulation distribution for a 163(h)(3)) on seller-provided financing name of the foreign country if either 1 must include on an attachment to the domestic complex trust that was:

or 2 below applies. • Previously treated at any time as a 2009 Form 1041 the name, address, foreign trust (unless an exception is 1. The estate or trust owns more and TIN of the person to whom the provided in future regulations), or interest was paid or accrued (that is, than 50% of the stock in any • Created before March 1, 1984, corporation that owns one or more the seller). unless that trust would not be foreign bank accounts. If the estate or trust received or aggregated with other trusts under the 2. At any time during the year the accrued such interest, it must provide rules of section 643(f) if that section estate or trust had an interest in or identical information on the person applied to the trust. signature or other authority over a liable for such interest (that is, the

bank, securities, or other financial An accumulation distribution is the buyer). This information does not need account in a foreign country. excess of amounts properly paid, to be reported if it duplicates credited, or required to be distributed information already reported on Form

Exception. Check “No” if either of the (other than income required to be 1098.

distributed currently) over the DNI of following applies to the estate or trust:

• The combined value of the accounts Question 6 the trust reduced by income required to

was $10,000 or less during the whole To make the section 663(b) election to be distributed currently. To have an

year, or treat any amount paid or credited to a accumulation distribution, the

• The accounts were with a U.S. beneficiary within 65 days following the distribution must exceed the accounting

military banking facility operated by a income of the trust. close of the tax year as being paid or

U.S. financial institution. credited on the last day of that tax year, Specific Instructions check the box. This election can be Get Form TD F 90-22.1, Report of made by the fiduciary of a complex Foreign Bank and Financial Accounts, Part I—Accumulation trust or the executor of a decedent’s to see if the estate or trust is Distribution in 2009 estate. For the election to be valid, you considered to have an interest in or must file Form 1041 by the due date signature or other authority over a Line 1—Distribution Under (including extensions). Once made, the bank, securities, or other financial election is irrevocable. Section 661(a)(2) account in a foreign country. You can Enter the amount from Form 1041, get Form TD F 90-22.1 from the IRS Question 7 Schedule B, line 10, for 2009. This is website at www.irs.gov/pub/irs-pdf/ To make the section 643(e)(3) election the amount properly paid, credited, or f90221.pdf. to recognize gain on property required to be distributed other than the

If you checked “Yes” for Question 3, distributed in kind, check the box and amount of income for the current tax

file Form TD F 90-22.1 by June 30, see the Instructions for Schedule D year required to be distributed currently.

2010, with the Department of the (Form 1041). Line 2—DNI Treasury at the address shown on the Question 9 Enter the amount from Form 1041, form. Form TD F 90-22.1 is not a tax

return, so do not file it with Form 1041. Generally, a beneficiary is a skip Schedule B, line 7, for 2009. This is the

person if the beneficiary is in a amount of DNI for the current tax year

If you are required to file Form generation that is two or more determined under section 643(a).

TD F 90-22.1 but do not, you generations below the generation of the

may have to pay a penalty of up Line 3—Distribution Under transferor to the trust. CAUTION

!

Section 661(a)(1) to $10,000 (more in some cases). To determine if a beneficiary that is a Enter the amount from Form 1041, trust is a skip person, and for Question 4 Schedule B, line 9, for 2009. This is the exceptions to the general rules, see the

The estate or trust may be required to amount of income for the current tax definition of a skip person in the year required to be distributed currently. file Form 3520, Annual Return To instructions for Schedule R of Form

Report Transactions With Foreign 706. Line 5—Accumulation Trusts and Receipt of Certain Foreign Distribution Gifts, if: If line 11 of Form 1041, Schedule B, is • It directly or indirectly transferred more than line 8 of Form 1041, property or money to a foreign trust. Schedule B, complete the rest of For this purpose, any U.S. person who Schedule J and file it with Form 1041, created a foreign trust is considered a unless the trust has no previously transferor; accumulated income. • It is treated as the owner of any part

of the assets of a foreign trust under Generally, amounts accumulated

the grantor trust rules; or before a beneficiary reaches age 21

• It received a distribution from a may be excluded by the beneficiary.

foreign trust. See sections 665 and 667(c) for

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exceptions relating to multiple trusts. distribution is thrown back first to the Note. The alternative tax on capital

The trustee reports to the IRS the total earliest preceding tax year in which gains was repealed for tax years

amount of the accumulation distribution there is undistributed net income (UNI). beginning after December 31, 1978.

before any reduction for income Then, it is thrown back beginning with The maximum rate on net capital gain

accumulated before the beneficiary the next earliest year to any remaining for 1981, 1987, and 1991 through 2008

reaches age 21. If the multiple trust preceding tax years of the trust. The is not an alternative tax for this

rules do not apply, the beneficiary portion of the accumulation distribution purpose.

claims the exclusion when filing Form allocated to the earliest preceding tax

4970, as you may not be aware that the year is the amount of the UNI for that Line 18—Regular Tax

beneficiary may be a beneficiary of year. The portion of the accumulation Enter the applicable amounts as

other trusts with other trustees. distribution allocated to any remaining follows:

For examples of accumulation preceding tax year is the amount by Throwback Amount from line which the accumulation distribution is distributions that include payments from year(s) larger than the total of the UNI for all one trust to another trust, and amounts 1969 – 1976 .... Form 1041, page 1, line 24 earlier preceding tax years. distributed for a dependent’s support, 1977 ........ Form 1041, page 1, line 26

see Regulations section 1.665(b)-1A(b). 1978 – 1979 .... Form 1041, line 27 A tax year of a trust during which the 1980 – 1984 .... Form 1041, line 26c trust was a simple trust for the entire Part II—Ordinary Income 1985 – 1986 .... Form 1041, line 25c

year is not a preceding tax year unless 1987 ........ Form 1041, line 22c Accumulation Distribution (a) during that year the trust received 1988 – 2008 .... Form 1041, Schedule G, line 1a

Enter the applicable year at the top of outside income, or (b) the trustee did

each column for each throwback year. not distribute all of the trust’s income Line 19—Trust’s Share of Net

that was required to be distributed Short-Term Gain Line 6—DNI for Earlier Years currently for that year. In this case, UNI For each throwback year, enter the Enter the applicable amounts as for that year must not be more than the smaller of the capital gain from the two follows: greater of the outside income or income lines indicated. If there is a capital loss not distributed during that year. Throwback or a zero on either or both of the two

year(s) Amount from line The term “outside income” means lines indicated, enter zero on line 19.

1969 – 1977 ...... Form 1041, Schedule C, line 5 amounts that are included in the DNI of Throwback Amount from line 1978 – 1979 ...... Form 1041, line 61 the trust for that year but that are not year(s) 1980 .......... Form 1041, line 60

1981 – 1982 ...... Form 1041, line 58 “income” of the trust as defined in 1969 – 1970 . . Schedule D, line 10, column 2, or

1983 – 1996 ...... Form 1041, Schedule B, line 9 Regulations section 1.643(b)-1. Some Schedule D, line 12, column 2

1997 – 2008 ...... Form 1041, Schedule B, line 7 examples of outside income are: (a) 1971 – 1978 . . Schedule D, line 14, column 2, or

Schedule D, line 16, column 2 income taxable to the trust under For information about throwback 1979 ...... Schedule D, line 18, column (b), or section 691; (b) unrealized accounts years, see the instructions for line 13. Schedule D, line 20, column (b)

For purposes of line 6, in figuring the receivable that were assigned to the 1980 – 1981 . . Schedule D, line 14, column (b), or

trust; and (c) distributions from another Schedule D, line 16, column (b) DNI of the trust for a throwback year, 1982 ...... Schedule D, line 16, column (b), or trust that include the DNI or UNI of the subtract any estate tax deduction for Schedule D, line 18, column (b) other trust. IRD if the income is includible in 1983 – 1996 . . Schedule D, line 15, column (b), or

Schedule D, line 17, column (b) figuring the DNI of the trust for that Line 16—Tax-Exempt Interest year. 1997 – 2002 . . Schedule D, line 14, column (2), or Included on Line 13 Schedule D, line 16, column (2) Line 7—Distributions Made For each throwback year, divide line 15 2003 ...... Schedule D, line 14a, column (2), or

During Earlier Years Schedule D, line 16a, column (2) by line 6 and multiply the result by the 2004 – 2008 . . Schedule D, line 13, column (2), or Enter the applicable amounts as following: Schedule D, line 15, column (2)

follows: Throwback Amount from line

year(s) Line 20—Trust’s Share of Net Throwback Amount from line

year(s) 1969 – 1977 .... Form 1041, Schedule C, line 2(a) Long-Term Gain

1969 – 1977 ...... Form 1041, Schedule C, line 8 1978 – 1979 .... Form 1041, line 58(a) Enter the applicable amounts as 1980 ........ Form 1041, line 57(a) 1978 .......... Form 1041, line 64 follows: 1981 – 1982 .... Form 1041, line 55(a) 1979 .......... Form 1041, line 65 1983 – 2008 .... Form 1041, Schedule B, line 2 1980 .......... Form 1041, line 64 Throwback Amount from line

1981 – 1982 ...... Form 1041, line 62 year(s)

1983 – 1996 ...... Form 1041, Schedule B, line 13 Part III—Taxes Imposed on 1969 – 1970 ...... 50% of Schedule D, line 13(e) 1997 – 2008 ...... Form 1041, Schedule B, line 11

Undistributed Net Income 1971 – 1977 ...... 50% of Schedule D, line 17(e)

Line 11—Prior Accumulation For the regular tax computation, if there 1978 .......... Schedule D, line 17(e), or line

Distribution Thrown Back to 31, whichever is applicable, is a capital gain, complete lines 18 less Form 1041, line 23 Any Throwback Year through 25 for each throwback year. If 1979 .......... Schedule D, line 25 or line 27,

Enter the amount of prior accumulation the trustee elected the alternative tax whichever is applicable, less

on capital gains, complete lines 26 Form 1041, line 23 distributions thrown back to the 1980 – 1981 ...... Schedule D, line 21, less throwback years. Do not enter through 31 instead of lines 18 through Schedule D, line 22

distributions excluded under section 25 for each applicable year. If there is 1982 .......... Schedule D, line 23, less

663(a)(1) for gifts, bequests, etc. no capital gain for any year, or there is Schedule D, line 24

a capital loss for every year, enter on 1983 – 1986 ...... Schedule D, line 22, less

Line 13—Throwback Years Schedule D, line 23 line 9 the amount of the tax for each

1987 – 1996 ...... Schedule D, the smaller Allocate the amount on line 5 that is an year identified in the instruction for line of any gain on line 16 accumulation distribution to the earliest 18 and do not complete Part III. If the or line 17, column (b)

applicable year first, but do not allocate trust received an accumulation 1997 – 2001 ...... Schedule D, the smaller more than the amount on line 12 for distribution from another trust, see of any gain on line 15c or

any throwback year. An accumulation Regulations section 1.665(b)-1A. line 16, column (2)

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additional beneficiary. Give each is established for not providing it. Throwback Amount from line beneficiary a copy of his or her Explain any reasonable cause in a year(s) respective Part IV information. If more signed affidavit and attach it to this 2002 .......... Schedule D, the smaller than 5 throwback years are involved, return. of any gain on line 15a or

line 16, column (2) use another Schedule J, completing Substitute Forms Parts II and III for each additional 2003 .......... Schedule D, the smaller throwback year. You do not need IRS approval to use a of any gain on line 15a or substitute Schedule K-1 if it is an exact line 16a, column (2) If the beneficiary is a nonresident 2004 – 2008 ...... Schedule D, the smaller copy of the IRS schedule. The boxes alien individual or a foreign corporation, of any gain on line 14a must use the same numbers and titles

or line 15, column (2) see section 667(e) about retaining the and must be in the same order and character of the amounts distributed to format as on the comparable IRS Line 22—Taxable Income determine the amount of the U.S. Schedule K-1. The substitute schedule withholding tax. Enter the applicable amounts as must include the OMB number and the

follows: The beneficiary uses Form 4970 to 6-digit form ID code in the upper

Throwback Amount from line figure the tax on the distribution. The right-hand corner of the schedule.

year(s) beneficiary also uses Form 4970 for the You must provide each beneficiary section 667(b)(6) tax adjustment if an 1969 – 1976 ........ Form 1041, page 1, line 23 with the Instructions for Beneficiary 1977 ............ Form 1041, page 1, line 25 accumulation distribution is subject to Filing Form 1040 or other prepared 1978 – 1979 ........ Form 1041, line 26 estate or generation-skipping transfer

1980 – 1984 ........ Form 1041, line 25 specific instructions for each item tax. This is because the trustee may 1985 – 1986 ........ Form 1041, line 24 reported on the beneficiary’s Schedule not be the estate or generation-skipping 1987 ............ Form 1041, line 21 K-1.

1988 – 1996 transfer tax return filer. ........ Form 1041, line 22

1997 ............ Form 1041, line 23 Inclusion of Amounts in

1998 – 2008 ........ Form 1041, line 22 Beneficiaries’ Income

Line 26—Tax on Income Other Schedule K-1 (Form Simple trust. The beneficiary of a

Than Long-Term Capital Gain 1041)— Beneficiary’s simple trust must include in his or her

gross income the amount of the income Enter the applicable amounts as Share of Income, required to be distributed currently, follows: Deductions, Credits, etc. whether or not distributed, or if the

Throwback Amount from line income required to be distributed

year(s) currently to all beneficiaries exceeds General Instructions 1969 ........... Schedule D, line 20 the DNI, his or her proportionate share

1970 ........... Schedule D, line 19 Use Schedule K-1 (Form 1041) to of the DNI. The determination of

1971 ........... Schedule D, line 50 report the beneficiary’s share of whether trust income is required to be 1972 – 1975 ....... Schedule D, line 48 income, deductions, and credits from a distributed currently depends on the 1976 – 1978 ....... Schedule D, line 27 trust or a decedent’s estate. terms of the trust instrument and

applicable local law. See Regulations Line 27—Trust’s Share of Net Grantor type trusts do not use section 1.652(c)-4 for a comprehensive Short-Term Gain Schedule K-1 (Form 1041) to example. CAUTION report the income, deductions,

!

If there is a loss on any of the following or credits of the grantor (or other Estates and complex trusts. The lines, enter zero on line 27 for the person treated as owner). See Grantor beneficiary of a decedent’s estate or applicable throwback year. Otherwise, Type Trusts complex trust must include in his or her on page 11. enter the applicable amounts as gross income the sum of: follows: Who Must File 1. The amount of the income

Throwback Amount from line The fiduciary (or one of the joint required to be distributed currently, or if year(s) fiduciaries) must file Schedule K-1. A the income required to be distributed

1969 – 1970 .... Schedule D, line 10, column 2 copy of each beneficiary’s Schedule currently to all beneficiaries exceeds 1971 – 1978 .... Schedule D, line 14, column 2 K-1 is attached to the Form 1041 filed the DNI (figured without taking into with the IRS, and each beneficiary is account the charitable deduction), his Line 28—Trust’s Share of given a copy of his or her respective or her proportionate share of the DNI Taxable Income Less Section Schedule K-1. One copy of each (as so figured), and

1202 Deduction Schedule K-1 must be retained for the 2. All other amounts properly paid, fiduciary’s records. credited, or required to be distributed, Enter the applicable amounts as or if the sum of the income required to follows: Beneficiary’s Identifying be distributed currently and other Number Throwback year(s) Amount from line amounts properly paid, credited, or

1969 As a payer of income, you are required required to be distributed to all ............ Schedule D, line 19

1970 ............ Schedule D, line 18 to request and provide a proper beneficiaries exceeds the DNI, his or

1971 ............ Schedule D, line 38 identifying number for each recipient of her proportionate share of the excess 1972 – 1975 ........ Schedule D, line 39 income. Enter the beneficiary’s number of DNI over the income required to be 1976 – 1978 ........ Schedule D, line 21 on the respective Schedule K-1 when distributed currently.

you file Form 1041. Individuals and Part IV—Allocation to business recipients are responsible for See Regulations section 1.662(c)-4

Beneficiary giving you their TINs upon request. You for a comprehensive example.

Complete Part IV for each beneficiary. For complex trusts that have more may use Form W-9 to request the

beneficiary’s identifying number. If the accumulation distribution is than one beneficiary, and if different

allocated to more than one beneficiary, Penalty. You may be charged a $50 beneficiaries have substantially

attach an additional copy of Schedule J penalty for each failure to provide a separate and independent shares, their

with Part IV completed for each required TIN, unless reasonable cause shares are treated as separate trusts

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for the sole purpose of determining the income earned by the estate or trust. the same sheet of paper and should be

amount of DNI allocable to the Excess deductions attributable to identified in alphanumeric order by box

respective beneficiaries. A similar rule tax-exempt income cannot offset any number followed by the letter code (if

applies to treat substantially separate other class of income. any). For example: “Box 9, Code

and independent shares of different A—Depreciation” (followed by the In no case can deductions be beneficiaries of an estate as separate information the beneficiary needs). allocated to an item of income that is estates. For examples of the application not included in the computation of DNI, Too few entry spaces on Schedule of the separate share rule, see the or attributable to corpus. K-1? If the estate or trust has more regulations under section 663(c). You cannot show any negative coded items than the number of spaces Gifts and bequests. Do not include in amounts for any class of income shown in box 9 or boxes 11 through 14, do not the beneficiary’s income any gifts or enter a code or dollar amount in the last in boxes 1 through 8 of Schedule K-1. bequests of a specific sum of money or However, for the final year of the estate entry space of the box. In the last entry of specific property under the terms of or trust, certain deductions or losses space, enter an asterisk in the left the governing instrument that are paid can be passed through to the column and enter “STMT” in the entry or credited in three installments or less. beneficiary(ies). See the instructions for space to the right. Report the additional

Amounts that can be paid or credited box 11 for more information on these items on an attached statement and

only from income of the estate or trust deductions and losses. Also, the provide the box number, code,

do not qualify as a gift or bequest of a beneficiary’s share of depreciation and description, and dollar amount or

specific sum of money. depletion is apportioned separately. information for each additional item. For

These deductions may be allocated to example: “Box 13, Code H—Alcohol Past years. Do not include in the and Cellulosic Biofuels Fuel beneficiary’s income any amounts the beneficiary(ies) in amounts greater Credit—$500.00.” deducted on Form 1041 for an earlier than his or her income. See

year that were credited or required to Depreciation, Depletion, and

Amortization on page 18 and Rev. Rul. Specific Instructions be distributed in that earlier year. 74-530, 1974-2 C.B. 188. Character of income. The Part I. Information About the beneficiary’s income is considered to Beneficiary’s Tax Year have the same proportion of each class Estate or Trust The beneficiary’s income from the of items entering into the computation On each Schedule K-1, enter the name, estate or trust must be included in the of DNI that the total of each class has address, and identifying number of the beneficiary’s tax year during which the to the DNI (for example, half dividends estate or trust. Also, enter the name tax year of the estate or trust ends. See and half interest if the income of the and address of the fiduciary. Pub. 559 for more information, estate or trust is half dividends and half including the effect of the death of a interest). Item D beneficiary during the tax year of the

Allocation of deductions. If the fiduciary of a trust or decedent’s estate or trust.

Generally, items of deduction that enter estate filed Form 1041-T, you must

General Reporting check this box and enter the date it was into the computation of DNI are

allocated among the items of income to filed. Information

the extent such allocation is not If the return is for a fiscal year or a Item E inconsistent with the rules set out in short tax year, fill in the tax year space section 469 and its regulations, relating If this is the final year of the estate or at the top of each Schedule K-1. On trust, you must check this box. to passive activity loss limitations, in the each Schedule K-1, enter the following order. information about the estate or trust Note. If this is the final K-1 for the

First, all deductions directly and the beneficiary in Parts I and II beneficiary, check the “Final K-1” box at

attributable to a specific class of income the top of Schedule K-1. (items A through H). In Part III, enter

are deducted from that income. For the beneficiary’s share of each item of

example, rental expenses, to the extent income, deduction, credit, and any Part II. Information About the

allowable, are deducted from rental other information the beneficiary needs Beneficiary income. to file his or her income tax return. Complete a Schedule K-1 for each Second, deductions that are not Codes. In box 9 and boxes 11 through beneficiary. On each Schedule K-1, directly attributable to a specific class of 14, identify each item by entering a enter the beneficiary’s name, address, income generally may be allocated to code in the column to the left of the and identifying number. any class of income, as long as a entry space for the dollar amount.

reasonable portion is allocated to any These codes are identified in these Item H

tax-exempt income. Deductions instructions and on the back of the Check the foreign beneficiary box if the considered not directly attributable to a Schedule K-1. beneficiary is a nonresident alien specific class of income under this rule Attached statements. Enter an individual, a foreign corporation, or a include fiduciary fees, safe deposit box asterisk (*) after the code, if any, in the foreign estate or trust. Otherwise, check rental charges, and state income and column to the left of the dollar amount the domestic beneficiary box. personal property taxes. The charitable entry space for each item for which you deduction, however, must be ratably have attached a statement providing Part III. Beneficiary’s Share apportioned among each class of additional information. For those of Current Year Income, income included in DNI. informational items that cannot be Deductions, Credits, and Finally, any excess deductions that reported as a single dollar amount,

are directly attributable to a class of enter the code and asterisk in the Other Items

income may be allocated to another left-hand column and enter “STMT” in Box 1—Interest class of income. However, in no case the entry space to the right to indicate

can excess deductions from a passive that the information is provided on an Enter the beneficiary’s share of the

activity be allocated to income from a attached statement. More than one taxable interest income minus allocable

nonpassive activity, or to portfolio attached statement can be placed on deductions.

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Box 2a—Total Ordinary schedule showing the beneficiary’s Amortization (code C). Itemize the

Dividends share of income derived from each beneficiary’s share of the amortization

trade or business, rental real estate, deductions directly apportioned to each Enter the beneficiary’s share of ordinary and other rental activity. activity reported in boxes 5 through 8. dividends minus allocable deductions. Apportion the amortization deductions Box 9—Directly Apportioned Box 3—Net Short-Term Capital between the estate or trust and the Deductions Gain beneficiaries in the same way that the

depreciation and depletion deductions Enter the beneficiary’s share of the net The limitations on passive are divided. Report any AMT short-term capital gain from Schedule D activity losses and credits under adjustment attributable to amortization (Form 1041), line 13, column (1), minus CAUTION section 469 apply to estates and

!

separately in box 12, using code I. allocable deductions. Do not enter a trusts. Estates and trusts that distribute

loss on line 3. If, for the final year of the income to beneficiaries are allowed to Box 10—Estate Tax Deduction

estate or trust, there is a capital loss apportion depreciation, depletion, and (Including Certain carryover, enter in box 11, using code amortization deductions to the Generation-Skipping Transfer B, the beneficiary’s share of short-term beneficiaries. These deductions are Taxes) capital loss carryover. However, if the referred to as “directly apportionable beneficiary is a corporation, enter in If the distribution deduction consists of deductions.”

box 11, using code B, the beneficiary’s any IRD, and the estate or trust was Rules for treating a beneficiary’s share of all short- and long-term capital allowed a deduction under section income and directly apportionable loss carryovers as a single item. See 691(c) for the estate tax paid deductions from an estate or trust and section 642(h) and related regulations attributable to such income (see the other rules for applying the passive loss for more information. line 19 instructions on page 22), then and credit limitations to beneficiaries of the beneficiary is allowed an estate tax Boxes 4a through 4c—Net estates and trusts have not yet been deduction in proportion to his or her Long-Term Capital Gain issued. share of the distribution that consists of

Enter the beneficiary’s share of the net Any directly apportionable deduction, such income. For an example of the

long-term capital gain from Schedule D such as depreciation, is treated by the computation, see Regulations section

(Form 1041), lines 14a through 14c, beneficiary as having been incurred in 1.691(c)-2. Figure the computation on a

column (1), minus allocable deductions. the same activity as incurred by the separate sheet and attach it to the estate or trust. However, the character return. Do not enter a loss in boxes 4a of such deduction may be determined through 4c. If, for the final year of the as if the beneficiary incurred the Box 11, Code A—Excess estate or trust, there is a capital loss deduction directly. Deductions on Termination

carryover, enter in box 11, using code To assist the beneficiary in figuring If this is the final return of the estate or C, the beneficiary’s share of the any applicable passive activity loss trust, and there are excess deductions long-term capital loss carryover. (If the limitations, also attach a separate on termination (see the instructions for beneficiary is a corporation, see the schedule showing the beneficiary’s line 22 on page 23), enter the instructions for box 3.) See section share of directly apportionable beneficiary’s share of the excess 642(h) and related regulations for more deductions derived from each trade or deductions in box 11, using code A. information. business, rental real estate, and other Figure the deductions on a separate Gains or losses from the complete or rental activity. sheet and attach it to the return.

partial disposition of a rental, rental real Enter the beneficiary’s share of Excess deductions on termination estate, or trade or business activity that directly apportioned deductions using occur only during the last tax year of is a passive activity must be shown on codes A through C. the trust or decedent’s estate when the an attachment to Schedule K-1.

Depreciation (code A). Enter the total deductions (excluding the

Box 5—Other Portfolio and beneficiary’s share of the depreciation charitable deduction and exemption)

Nonbusiness Income deductions directly apportioned to each are greater than the gross income

activity reported in boxes 5 through 8. during that tax year. Enter the beneficiary’s share of

annuities, royalties, or any other See the instructions on page 18 for a Generally, a deduction based on an

income, minus allocable deductions discussion of how the depreciation NOL carryover is not available to a

(other than directly apportionable deduction is apportioned between the beneficiary as an excess deduction.

deductions), that is not subject to any beneficiaries and the estate or trust. However, if the last tax year of the

passive activity loss limitation rules at Report any AMT adjustment or tax estate or trust is also the last year in

the beneficiary level. Use boxes 6 preference item attributable to which an NOL carryover may be taken

through 8 to report income items depreciation separately in box 12, using (see section 172(b)), the NOL carryover code G. subject to the passive activity rules at is considered an excess deduction on

the beneficiary’s level. Note. An estate or trust cannot make the termination of the estate or trust to

an election under section 179 to the extent it is not absorbed by the Boxes 6 through 8—Ordinary expense certain tangible property. estate or trust during its final tax year. Business Income, Rental Real Depletion (code B). For more information, see Regulations Enter the Estate, and Other Rental section 1.642(h)-4 for a discussion of beneficiary’s share of the depletion Income the allocation of the carryover among deduction under section 611 directly the beneficiaries. Enter the beneficiary’s share of trade or apportioned to each activity reported in

business, rental real estate, and other boxes 5 through 8. See the instructions Only the beneficiary of an estate or

rental income, minus allocable on page 18 for a discussion of how the trust that succeeds to its property is

deductions (other than directly depletion deduction is apportioned allowed to deduct that entity’s excess

apportionable deductions). To assist between the beneficiaries and the deductions on termination. A

the beneficiary in figuring any estate or trust. Report any tax beneficiary who does not have enough

applicable passive activity loss preference item attributable to depletion income in that year to absorb the entire

limitations, also attach a separate separately in box 12, using code H. deduction may not carry the balance

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over to any succeeding year. An Accelerated depreciation, depletion, beneficiary to complete Form 3468 for

individual beneficiary must be able to and amortization (codes G through the qualifying advanced coal project

itemize deductions in order to claim the I). Enter any adjustments or tax credit, qualifying gasification project

excess deductions in determining preference items attributable to credit, and qualifying advanced energy

taxable income. depreciation, depletion, or amortization project credit. See the Instructions for

that were directly apportioned to the Form 3468 for more information. Box 11, Codes B and beneficiary. For property placed in • Work opportunity credit (code F). C—Unused Capital Loss service before 1987, report separately • Welfare-to-work credit (code G). Carryover the accelerated depreciation of real and • Alcohol and cellulosic biofuel fuels

Upon termination of the trust or leased personal property. credit (code H). If the credit includes

decedent’s estate, the beneficiary Exclusion items (code J). Enter the the small ethanol producer credit,

succeeding to the property is allowed beneficiary’s share of the adjustment attach a statement that shows the

as a deduction any unused capital loss beneficiary’s share of the small ethanol for minimum tax purposes from carryover under section 1212. If the Schedule K-1, box 12, code A, that is producer credit, the number of gallons

estate or trust incurs capital losses in attributable to exclusion items claimed for the small ethanol producer

the final year, use the Capital Loss (Schedule I (Form 1041), lines 2 credit, and the estate’s or trust’s

Carryover Worksheet in the Instructions productive capacity for alcohol. through 6 and 8). for Schedule D (Form 1041) to figure • Credit for increasing research

the amount of capital loss carryover to Box 13—Credits and Credit activities (code I).

be allocated to the beneficiary. Recapture • Renewable electricity, refined coal,

Enter each beneficiary’s share of the and Indian coal production credit (code Box 11, Codes D and E—NOL credits and credit recapture using the J). Attach a statement that shows the Carryover applicable codes. Listed below are the amount of the credit the beneficiary

Upon termination of a trust or credits that can be allocated to the must report on line 9 and line 29 of

decedent’s estate, a beneficiary beneficiary(ies). Attach a statement if Form 8835, in case the beneficiary is

succeeding to its property is allowed to additional information must be provided required to file that form in addition to

deduct any unused NOL (and any Form 3800. to the beneficiary as explained below. ATNOL) carryover for regular and AMT • Empowerment zone and renewal • Credit for estimated taxes (code purposes if the carryover would be community employment credit (code K). A)—Payment of estimated tax to be allowable to the estate or trust in a later • Indian employment credit (code L). credited to the beneficiary (section tax year but for the termination. Enter in • Orphan drug credit (code M). 643(g)). box 11, using codes D and E, the • Credit for employer provided child unused carryover amounts. See the instructions for line 24b care and facilities (code N).

Box 12—AMT Items on page 24 before you make an • Biodiesel and renewable diesel fuels CAUTION entry to allocate any estimated credit (code O). If the credit includes

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Adjustment for minimum tax tax payments to a beneficiary. If the the small agri-biodiesel credit, attach a purposes (code A). Enter the fiduciary does not make a valid statement that shows the beneficiary’s beneficiary’s share of the adjustment election, then the IRS will disallow the share of the small agri-biodiesel credit, for minimum tax purposes. estimated tax payment that is reported the number of gallons claimed for the

To figure the adjustment, subtract on Schedule K-1 and claimed on the small agri-biodiesel credit, and the

the beneficiary’s share of the income beneficiary’s return. estate’s or trust’s productive capacity

distribution deduction figured on • Credit for backup withholding (code for agri-biodiesel.

Schedule B, line 15, from the B). • Nonconventional source fuel credit

beneficiary’s share of the income • The low-income housing credit (code (code P).

distribution deduction on a minimum tax C). Attach a statement that shows the • Credit to holders of tax credit bonds

basis figured on Schedule I (Form beneficiary’s share of the amount, if (code Q).

1041), line 44. The difference is the any, entered on line 6 of Form 8586 • Agricultural chemicals security credit

beneficiary’s share of the adjustment with instructions to report that amount (code R).

for minimum tax purposes. on line 4 of Form 8586 or line 1d of • Energy efficient appliance credit

Note. Schedule B, line 15 equals the Form 3800 if the beneficiary’s only (code S).

sum of all Schedule K-1s, box 1, 2a, 3, source for the credit is a pass-through • Credit for employer differential wage

4a, 5, 6, 7, and 8. entity. Also, show the beneficiary’s payments (code T). share of the amount, if any, entered on • Recapture of credits (code U). On an AMT adjustment attributable to line 19 of Form 8586 with instructions attached statement to Schedule K-1, qualified dividends, net short-term to report that amount on line 11 of Form provide any information the beneficiary capital gains, or net long-term 8586. will need to report recapture of credits. capital gains (codes B through D). If • Rehabilitation credit and energy any part of the amount reported in box credit (code D). Attach a statement that Box 14—Other Information 12, code A, is attributable to qualified shows the beneficiary’s apportioned Enter the dollar amounts and applicable dividends (code B), net short-term share of basis, expenditures, and other codes for the items listed under Other capital gain (code C), or net long-term information that is necessary for the Information. capital gain (code D), enter that part beneficiary to complete Form 3468, using the applicable code. Investment Credit, for the rehabilitation Domestic production activities

AMT adjustment attributable to credit and the energy credit. See the information. The estate or trust

unrecaptured section 1250 gain or Instructions for Form 3468 for more allocates QPAI (whether positive or

28% rate gain (codes E and F). Enter information. negative) and Form W-2 wages based

the beneficiary’s distributive share of • Other qualifying investment credit on the relative proportion of the trust’s

any AMT adjustments to the (code E). Attach a statement that or estate’s DNI that is distributed or

unrecaptured section 1250 gain (code shows the beneficiary’s apportioned required to be distributed to the

E) or 28% rate gain (code F), share of qualified investment and other beneficiary. If the estate or trust has no

whichever is applicable, in box 12. information that is necessary for the DNI for the tax year, QPAI and Form

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W-2 wages are allocated entirely to the beneficiary’s share, if any, of the 10), both the estate or trust and its

estate or trust. estate’s or trust’s QPAI. See Form 8903 beneficiaries may be required to file

Qualified production activities and its instructions for more details. Form 8886. The estate or trust must

income (code C). Enter the determine if any of its beneficiaries are Foreign trading gross receipts beneficiary’s share, if any, of the required to disclose the transaction and (code G). Enter the beneficiary’s estate’s or trust’s QPAI. The QPAI will provide those beneficiaries with share, if any, of foreign trading gross be less than zero if the cost of goods information they will need to file Form receipts. See Form 8873, sold and deductions allocated and 8886. This determination is based on Extraterritorial Income Exclusion, for apportioned to domestic production the category(ies) under which a more information.

gross receipts (DPGR) is more than the transaction qualified for disclosure. See

estate’s or trust’s DPGR. See Form Other information (code H). List on a the instructions for Form 8886 for

8903, Domestic Production Activities separate sheet the tax information the details.

Deduction, and its instructions for more beneficiary will need to complete his or Income tax withheld on wages her return that is not entered elsewhere details. cannot be distributed to the on Schedule K-1. Form W-2 wages (code D). Use CAUTION beneficiary.

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code D to report the beneficiary’s For example, if the estate or trust

share, if any, of Form W-2 wages. Do participates in a transaction that must

not enter more than 6% of the be disclosed on Form 8886 (see page

Privacy Act and 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. Section 6109 requires return preparers to provide

their identifying numbers on the return.

You are not 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

Recordkeeping 32 hr., 58 min. 32 hr., 30 min. 17 hr., 42 min. 11 hr., 00 min. 6 hr., 27 min.

Learning about the law

or the form 15 hr., 52 min. 4 hr., 22 min. 4 hr., 22 min. 1 hr., 27 min. 35 min.

Preparing the form 30 hr., 7 min. 5 hr., 59 min. 4 hr., 51 min. 2 hr., 37 min. 43 min.

Copying, assembling, and sending the

form to the IRS 3 hr., 45 min. 50 min. - - - - 16 min. - - - -

If you have comments concerning the accuracy of these time estimates or suggestions for making this form and related

schedules simpler, we would be happy to hear from you. You can write to the Internal Revenue Service, Tax Products

Coordinating Committee, SE:W:CAR:MP:T:T:SP, 1111 Constitution Ave. NW, IR-6526, Washington, DC 20224. Do not send

the tax form to this address. Instead, see Where To File on page 7.

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Index

A E Income in respect of a decedent Qualified settlement

Accounting income ............ 2 Electing small business (See IRD) funds ..................... 6

AGI . . . . . . . . . . . . . . . . . . . . . . . . . . 22 trusts .................. 12, 29 Inter vivos . . . . . . . . . . . . . . . . . . . 2, 3 Split-interest trust . . . . . . . . . . . 16

ESBT (S portion only) . . . . . . 15 Interest income . . . . . . . . . . . . . . . 17 When to file ................. 6 Alaska Native Settlement

S portion . . . . . . . . . . . . . . . . . . . 12 Who must file ............... 3 Trusts . . . . . . . . . . . . . . . . . . . . . . 6 IRD . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Elections: Deduction Revocable Living Trusts: Allowable miscellaneous itemized . . . . . . . . . . . . . . . . . . 22

Section 643(e)(3) . . . . . . . . . . . 26 Section 645 Election . . . . . . . . 17 deductions (AMID) ..... 21, 22 Section 643(g) . . . . . . . . . . . 8, 24 Amended return . . . . . . . . . . . . . . 16 Section 645 ................. 4 M

Amounts paid or permanently set Minimum taxable income S Special rule for qualified . . . . . . 23

aside . . . . . . . . . . . . . . . . . . . . . . 25 Second tier distributions . . . . . . 27 revocable trusts ........... 4 Assembly . . . . . . . . . . . . . . . . . . . . 11 Separate share rule . . . . . . . . . . 26 Treating contributions as paid in N Attachments . . . . . . . . . . . . . . . . . 11 prior tax year Special filing instructions: . . . . . . . . . . . . . 25 net operating loss . . . . . . . . . . . . 23 Bankruptcy estates . . . . . . . . . 14 Electronic deposits ............ 8 Nonexempt charitable Electing small business B ESBTs (See Electing small deduction . . . . . . . . . . . . . . . . . . 16 trusts . . . . . . . . . . . . . . . . . . . . 12 Bankruptcy estate . . . . . . 6, 13, 15 business trusts) Nonexempt charitable Grantor trusts . . . . . . . . . . . . . . 11

Bankruptcy information . . . . . . . 13 Estate . . . . . . . . . . . . . . . . . . . . . 3, 32 trust ................... 16, 25 Pooled income funds . . . . . . . 12

Beneficiary .................... 3 Bankruptcy . . . . . . . . . . . . . . 6, 15 Nonqualified deferred Split-interest trust . . . . . . . . . . . . . 16

Allocation of estimated tax Exemption for . . . . . . . . . . . . . . 23 compensation plans . . . . . . . . 15 Substitute forms . . . . . . . . . . . . . . 32 payment . . . . . . . . . . . . . . . 8, 24 Foreign ..................... 3

Complex trust . . . . . . . . . . . . . . 32 Who must file ............... 3

Estate . . . . . . . . . . . . . . . . . . . . . 32 Estate tax deduction . . . . . . . . . . 22 P T

Simple trust . . . . . . . . . . . . . . . . 32 Estimated tax . . . . . . . . . . 8, 24, 25 Paid preparer ................. 7 Tax rate schedule . . . . . . . . . . . . 27

Tax year for inclusion . . . . . . . 33 Allocation of payments to Paid preparer authorization .... 7 Taxable income . . . . . . . . . . . . . . 23

Withholding on foreign beneficiaries . . . . . . . . . . . 8, 24 Penalties: Throwback years . . . . . . . . . . . . . 31

person . . . . . . . . . . . . . . . . . . . 26 Penalty . . . . . . . . . . . . . . . . . . . . 24 Estimated tax . . . . . . . . . . . . . . 24 Trusts ........................ 3

Blind trust . . . . . . . . . . . . . . . . . . . . 17 Excess deductions . . . . . . . . . . . 24 Failure to provide a required Alaska Native Settlement .... 6

Exemption . . . . . . . . . . . . . . . . . . . 23 TIN . . . . . . . . . . . . . . . . . . . . . . 32 Blind . . . . . . . . . . . . . . . . . . . . . . 17

Extraterritorial income Failure to provide information C Common trust fund .......... 6 timely .................... 9 exclusion . . . . . . . . . . . . . . . . . . 17 Complex . . . . . . . . . . . . . . . . . . . 32 Cemetery perpetual care Late filing of return .......... 9 Domestic ................... 4 fund . . . . . . . . . . . . . . . . . . . . . . . 22 Late payment of tax ......... 9 Exemption for . . . . . . . . . . . . . . 23 Charitable deduction . . . . . . . . . . 25 F Other ....................... 9 Foreign . . . . . . . . . . . . . . . . . . . . 30 Charitable remainder Fiduciary . . . . . . . . . . . . . . . . . . . . 3, 7 Trust fund recovery .......... 9 Grantor ..................... 2 trusts . . . . . . . . . . . . . . . . . . . . . . 16 Fiduciary accounting income (FAI) Underpaid estimated tax ..... 9 Inter vivos . . . . . . . . . . . . . . . . 2, 3 Common trust fund ............ 6 (See Accounting income) Pooled income funds ..... 12, 15, Nonexempt charitable . . . . . 16,

Final return . . . . . . . . . . . . . . . . . . . 16 25, 26 25

D First tier distributions . . . . . . . . . . 26 Pre-need funeral trusts . . . . . . . . 15 Pre-need funeral . . . . . . . . . . . 15

Foreign tax credit . . . . . . . . . . . . . 28 Qualified disability . . . . . . . . . . 23 Decedent’s Estate ............. 3

Form 1041-T . . . . . . . . . . . . . . . 8, 24 Qualified revocable .......... 4 Definitions: Q Simple . . . . . . . . . . . . . . . . . . . . . 32 Accumulation Form 8855 .................... 4 Qualified disability trust . . . . . . . 23 Split-interest . . . . . . . . . . . . . . . 16 distribution . . . . . . . . . . . . . . . 30 Qualified revocable trust ....... 4 Testamentary . . . . . . . . . . . . . 2, 3 Beneficiary .................. 3 G Qualified settlement funds ...... 6 Who must file . . . . . . . . . . . . 3, 32 Complex trust . . . . . . . . . . . . . . 15 General business credit . . . . . . . 28 Qualified small business Decedent’s Estate . . . . . . . . 3, 15 Grantor trusts . . . . . . . . 2, 4, 11, 15 stock . . . . . . . . . . . . . . . . . . . . . . 26 DNI . . . . . . . . . . . . . . . . . . . . . . . . . 3 W Backup withholding . . . . . . . . . 12 Qualified subchapter S trust Fiduciary .................... 3 Where to file .................. 7 Nonqualified deferred (QSST) . . . . . . . . . . . . . . 4, 11, 15 Grantor trusts . . . . . . . . . . . . . . 15 Who must file: compensation plans . . . . . . 15 IRD . . . . . . . . . . . . . . . . . . . . . . . . . 3 Optional filing methods Bankruptcy estate . . . . . . . . . . 13 . . . . . 11 Outside income . . . . . . . . . . . . 31 Pre-need funeral trusts R Decedent’s estate ........... 3 . . . . . 15 Pooled income fund . . . . . . . . 15 Special filing instructions Returns: Trust ....................... 3 . . . . 11 Revocable Living Trust ...... 3 GST tax deduction Amended . . . . . . . . . . . . . . . . . . 16 Withholding on foreign Simple trust . . . . . . . . . . . . 23 . . . . . . . . . . . . . . . . 15 Common trust fund .......... 6 person . . . . . . . . . . . . . . . . . . . . . 26 Trust ....................... 3 Electronic and magnetic Trusts ...................... 3 I media .................... 6 ■ Distributable net income (See Income distribution Final . . . . . . . . . . . . . . . . . . . . . . . 16

DNI) deduction . . . . . . . . . . . . 2, 22, 25 Nonexempt charitable

DNI . . . . . . . . . . . . . . . . . . . . . . . . 3, 26 trust . . . . . . . . . . . . . . . . . . . . . 16

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