2014

Instructions for Form 1041 

and Schedules A, B, G, J, 

and K-1

U.S. Income Tax Return for Estates and Trusts

Department of the Treasury

Internal Revenue Service

Section references are to the Internal Revenue 

Code unless otherwise noted.

Contents Page

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

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

Photographs of Missing Children .... 2

Unresolved Tax Issues ........... 2

How To Get Forms and 

Publications ............... 2

General Instructions ............. 2

Purpose of Form ............... 2

Income Taxation of Trusts and 

Decedents' Estates .......... 3

Abusive Trust Arrangements ....... 3

Definitions ................... 3

Who Must File ................ 4

Electronic Filing ............... 7

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

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

Who Must Sign ................ 8

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

Accounting Periods ............. 9

Rounding Off to Whole Dollars ...... 9

Estimated Tax ................ 9

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

Other Forms That May Be 

Required ................ 10

Additional Information .......... 12

Assembly and Attachments ....... 12

Special Reporting Instructions ..... 12

Specific Instructions ............ 16

Name of Estate or Trust ......... 16

Name and Title of Fiduciary ....... 16

Address ................... 16

A. Type of Entity .............. 17

B. Number of Schedules K-1 

Attached ................ 17

C. Employer Identification 

Number ................. 17

D. Date Entity Created .......... 17

E. Nonexempt Charitable and 

Split-Interest Trusts ......... 18

F. Initial Return, Amended Return, 

etc. ................... 18

G. Section 645 Election ......... 19

Income .................... 19

Deductions ................. 20

Limitations on Deductions ........ 21

Tax and Payments ............. 25

Schedule A—Charitable 

Deduction ............... 27

Schedule B—Income Distribution 

Deduction ............... 28

Schedule G—Tax Computation .... 30

Contents Page

Net Investment Income Tax ....... 32

Other Information ............. 33

Schedule J (Form 1041) — 

Accumulation Distribution for 

Certain Complex Trusts ...... 33

Schedule K-1 (Form 1041)— 

Beneficiary's Share of 

Income, Deductions, Credits, 

etc. ................... 36

Index ..................... 42

Future Developments

For the latest information about 

developments related to Form 1041 and 

Schedules A, B, G, J, K-1 and its 

instructions, such as legislation enacted 

after they were published, go to 

www.irs.gov/form1041.

What's New

Form 1041 E-filing. For tax year 2014, 

Form 1041 must be e-Filed using Form 

8453-FE, U.S. Estate or Trust 

Declaration for an IRS e-File Return.

Note: Form 8453-F, U.S. Estate or 

Trust Income Tax Declaration and 

Signature for Electronic Filing, is 

obsolete.

For Form 1041 e-File signature 

authorizations, see Form 8879-F, IRS 

e-file Signature Authorization for Form 

1041, and its instructions.

Beginning January 1, 2015, 

Form 8879-F can only be 

associated with a single Form 

1041. Form 8879-F can no longer be 

used with multiple Forms 1041.

For more information about e-filing 

returns through MeF, see Publication 

4164, Modernization e-File (MeF) Guide 

for Software Developers and 

Transmitters.

Capital gains and qualified dividends. For tax year 2014, the 20% 

maximum capital gains rate applies to 

estates and trusts with income above 

$12,150. The 0% and 15% rates 

continue to apply to certain threshold 

amounts. The 0% rate applies to 

amounts up to $2,500. The 15% rate 

CAUTION

!

applies to amounts over $2,500 and up 

to $12,150.

Bankruptcy estate filing threshold. 

For tax year 2014, the requirement to 

file a return for a bankruptcy estate 

applies only if gross income is at least 

$10,150.

Qualified disability trust. For tax year 

2014, a qualified disability trust can 

claim an exemption of up to $3,950. A 

trust with modified adjusted gross 

income above $254,200 loses part of 

the exemption deduction. See the 

instructions for Line 20—Exemption, 

later, for more details.

Section 67(e) regulations. For 2014, 

the proposed regulations for section 

67(e) clarify which costs, such as 

investment advisory and bundled 

fiduciary fees, incurred by estates and 

nongrantor trusts are and are not 

exempt from the 2% floor for 

miscellaneous itemized deductions. 

Notice 2011-37 (available at 

www.irs.gov/irb/2011-20_IRB/ar08.html) 

extends the existing interim guidance 

under the proposed regulations for 

section 67(e) providing that taxpayers 

will not determine the portion of a 

bundled fiduciary fee that is subject to 

the 2% floor.

Note. The final regulations under 

section 67(e) have been issued 

(available at www.irs.gov/irb/

2014-22_IRB/ar05.html, amended at 

www.irs.gov/irb/2014–32_IRB/

ar06.html). The effective date of the 

regulations has been amended to apply 

to tax years beginning on or after 

January 1, 2015.

Reminders

Review a copy of the will or trust 

instrument, including any amendments 

or codicils, before preparing an estate's 

or trust's return.

We encourage you to use Form 

1041-V, Payment Voucher, to 

accompany your payment of a balance 

of tax due on Form 1041, particularly if 

your payment is made by check or 

money order.

Jan 07, 2015 Cat. No. 11372D
Net investment income tax. This tax 

applies to certain investment income of 

estates and trusts. Use Form 8960 and 

its instructions to figure your net 

investment income tax. See Net 

Investment Income Tax, later, for more 

information.

Item A. Type of Entity. On page 1 of 

Form 1041, Item A, taxpayers should 

select more than one box, when 

appropriate, to reflect the type of entity.

Item F. Net operating loss (NOL) carryback. A Net operating loss carryback 

check box was added in Item F of the 

heading. If an amended return is filed for 

an NOL carryback, check the box. See 

Amended Return, later, for complete 

information.

Item G. Section 645 election. If the 

estate has made a section 645 election 

the executor must check Item G and 

provide the taxpayer identification 

number (TIN) of the electing trust with 

the highest total asset value in the box 

provided.

The executor must also attach a 

statement to Form 1041 providing the 

following information for each electing 

trust (including the electing trust 

provided in Item G): (a) the name of the 

electing trust, (b) the TIN of the electing 

trust, and (c) the name and address of 

the trustee of the electing trust.

Net operating loss deduction 

(NOLD). Line 15b was revised to report 

net operating loss deductions. Prior to 

tax year 2013, NOLDs were reported on 

line 15a.

Note. Miscellaneous itemized 

deductions subject to the 2% floor are 

reported on line 15c.

Specified domestic entity. The IRS 

anticipates issuing regulations that will 

require a domestic entity to file Form 

8938 if the entity is formed or availed of 

to hold specified foreign financial assets 

and the value of those assets exceeds 

the appropriate reporting threshold. 

Until the IRS issues such regulations, 

only individuals must file Form 8938.

Photographs of Missing 

Children

The Internal Revenue Service is a proud 

partner with the National Center for 

Missing and Exploited Children. 

Photographs of missing children 

selected by the Center may appear in 

instructions on pages that would 

otherwise be blank. You can help bring 

these children home by looking at the 

photographs and calling 

1-800-THE-LOST (1-800-843-5678) if 

you recognize a child.

Unresolved Tax Issues

If you have attempted to deal with an 

IRS problem unsuccessfully, you should 

contact the Taxpayer Advocate Service 

(TAS). The Taxpayer Advocate 

independently represents the estate's or 

trust's interests and concerns within the 

IRS by protecting its rights and resolving 

problems that have not been fixed 

through normal channels.

While Taxpayer Advocates cannot 

change the tax law or make a technical 

tax decision, they can clear up problems 

that resulted from previous contacts and 

ensure that the estate's or trust's case is 

given a complete and impartial review.

The estate's or trust's assigned 

personal advocate will listen to its point 

of view and will work with the estate or 

trust to address its concerns. The estate 

or trust can expect the advocate to 

provide:

An impartial and independent look at 

your problem,

Timely acknowledgment,

The name and phone number of the 

individual assigned to its case,

Updates on progress,

Timeframes for action,

Speedy resolution, and

Courteous service.

When contacting the Taxpayer 

Advocate, you should provide the 

following information:

The estate's or trust's name, address, 

and employer identification number 

(EIN).

The name and telephone number of 

an authorized contact person and the 

hours he or she can be reached.

The type of tax return and year(s) 

involved.

A detailed description of the problem.

Previous attempts to solve the 

problem and the office that had been 

contacted.

A description of the hardship the 

estate or trust is facing and supporting 

documentation (if applicable).

You can contact a Taxpayer 

Advocate as follows:

Call the Taxpayer Advocate's toll-free 

number: 1-877-777-4778.

Call, write, or fax the Taxpayer 

Advocate office in its area (see Pub. 

1546, Taxpayer Advocate Service, Your 

Voice At The IRS, for addresses and 

phone numbers).

TTY/TDD help is available by calling 

1-800-829-4059.

Visit the website at www.irs.gov/

advocate.

How To Get Forms and 

Publications

Internet. You can access the 

IRS website 24 hours a day, 7 

days a week, at IRS.gov to:

Download forms, including talking tax 

forms, instructions, and publications;

Order IRS products;

Use the online Internal Revenue 

Code, regulations, and other official 

guidance;

Research your tax questions;

Search publications by topic or 

keyword;

Apply for an Employer Identification 

Number (EIN); and

Sign up to receive local and national 

tax news by email.

Phone. You can order forms 

and publications by calling 

1-800-TAX-FORM 

(1-800-829-3676). If you have access to 

TTY/TDD equipment, you can call 

1-800-829-4059 to ask tax questions or 

order forms and publications. The 

TTY/TDD telephone number is for 

people who are deaf, hard of hearing, or 

have a speech disability. These 

individuals can also contact the IRS 

through relay services such as the 

Federal Relay Service available at 

www.gsa.gov/fedrelay.

Walk-in. You can also get most 

forms and publications at your 

local IRS office.

General Instructions

Purpose of Form

The fiduciary of a domestic decedent's 

estate, trust, or bankruptcy estate uses 

Form 1041 to report:

The income, deductions, gains, 

losses, etc. of the estate or trust;

The income that is either 

accumulated or held for future 

distribution or distributed currently to the 

beneficiaries;

Any income tax liability of the estate 

or trust;

Employment taxes on wages paid to 

household employees; and

Net Investment Income Tax. See 

Schedule G, line 4, and the Instructions 

for Form 8960.

-2- 2014 Instructions for Form 1041
Income Taxation of Trusts 

and Decedents' Estates

A trust or a decedent's estate is a 

separate legal entity for federal tax 

purposes. A decedent's estate comes 

into existence at the time of death of an 

individual. A trust may be created during 

an individual's life (inter vivos) or at the 

time of his or her death under a will 

(testamentary). If the trust instrument 

contains certain provisions, then the 

person creating the trust (the grantor) is 

treated as the owner of the trust's 

assets. Such a trust is a grantor type 

trust. See Grantor Type Trusts, later, 

under Special Reporting Instructions.

A trust or decedent's estate figures 

its gross income in much the same 

manner as an individual. Most 

deductions and credits allowed to 

individuals are also allowed to estates 

and trusts. However, there is one major 

distinction. A trust or decedent's estate 

is allowed an income distribution 

deduction for distributions to 

beneficiaries. To figure this deduction, 

the fiduciary must complete Schedule B. 

The income distribution deduction 

determines the amount of any 

distributions taxed to the beneficiaries.

For this reason, a trust or decedent's 

estate sometimes is referred to as a 

“pass-through” entity. The beneficiary, 

and not the trust or decedent's estate, 

pays income tax on his or her 

distributive share of income. 

Schedule K-1 (Form 1041) is used to 

notify the beneficiaries of the amounts 

to be included on their income tax 

returns.

Before preparing Form 1041, the 

fiduciary must figure the accounting 

income of the estate or trust under the 

will or trust instrument and applicable 

local law to determine the amount, if 

any, of income that is required to be 

distributed, because the income 

distribution deduction is based, in part, 

on that amount.

Abusive Trust 

Arrangements

Certain trust arrangements claim to 

reduce or eliminate federal taxes in 

ways that are not permitted under the 

law. Abusive trust arrangements 

typically are promoted by the promise of 

tax benefits with no meaningful change 

in the taxpayer's control over or benefit 

from the taxpayer's income or assets. 

The promised benefits may include 

reduction or elimination of income 

subject to tax; deductions for personal 

expenses paid by the trust; depreciation 

deductions of an owner's personal 

residence and furnishings; a stepped-up 

basis for property transferred to the 

trust; the reduction or elimination of 

self-employment taxes; and the 

reduction or elimination of gift and 

estate taxes. These promised benefits 

are inconsistent with the tax rules 

applicable to trust arrangements.

Abusive trust arrangements often use 

trusts to hide the true ownership of 

assets and income or to disguise the 

substance of transactions. These 

arrangements frequently involve more 

than one trust, each holding different 

assets of the taxpayer (for example, the 

taxpayer's business, business 

equipment, home, automobile, etc.). 

Some trusts may hold interests in other 

trusts, purport to involve charities, or are 

foreign trusts. Funds may flow from one 

trust to another trust by way of rental 

agreements, fees for services, purchase 

agreements, and distributions.

Some of the abusive trust 

arrangements that have been identified 

include unincorporated business trusts 

(or organizations), equipment or service 

trusts, family residence trusts, charitable 

trusts, and final trusts. In each of these 

trusts, the original owner of the assets 

nominally subject to the trust effectively 

retains the authority to cause financial 

benefits of the trust to be directly or 

indirectly returned or made available to 

the owner. For example, the trustee may 

be the promoter, a relative, or a friend of 

the owner who simply carries out the 

directions of the owner whether or not 

permitted by the terms of the trust.

When trusts are used for legitimate 

business, family, or estate planning 

purposes, either the trust, the 

beneficiary, or the transferor of assets to 

the trust will pay the tax on income 

generated by the trust property. Trusts 

cannot be used to transform a 

taxpayer's personal, living, or 

educational expenses into deductible 

items, and cannot seek to avoid tax 

liability by ignoring either the true 

ownership of income and assets or the 

true substance of transactions. 

Therefore, the tax results promised by 

the promoters of abusive trust 

arrangements are not allowable under 

the law, and the participants in and 

promoters of these arrangements may 

be subject to civil or criminal penalties in 

appropriate cases.

For more details, including the legal 

principles that control the proper tax 

treatment of these abusive trust 

arrangements, see Notice 97-24, 

1997-1 C.B. 409.

For additional information about 

abusive tax arrangements, visit the IRS 

website at IRS.gov and type “Abusive 

Trusts” in the search box.

Definitions

Beneficiary. A beneficiary includes an 

heir, a legatee, or a devisee.

Decedent's estate. The decedent's 

estate is an entity that is formed at the 

time of an individual's death and 

generally is charged with gathering the 

decedent's assets, paying the 

decedent's debts and expenses, and 

distributing the remaining assets. 

Generally, the estate consists of all the 

property, real or personal, tangible or 

intangible, wherever situated, that the 

decedent owned an interest in at death.

Distributable net income (DNI). The 

income distribution deduction allowable 

to estates and trusts for amounts paid, 

credited, or required to be distributed to 

beneficiaries is limited to DNI. This 

amount, which is figured on Schedule B, 

line 7, is also used to determine how 

much of an amount paid, credited, or 

required to be distributed to a 

beneficiary will be includible in his or her 

gross income.

Income in respect of a decedent. 

When completing Form 1041, you must 

take into account any items that are 

income in respect of a decedent (IRD).

In general, IRD is income that a 

decedent was entitled to receive but 

that was not properly includible in the 

decedent's final income tax return under 

the decedent's method of accounting.

IRD includes:

All accrued income of a decedent 

who reported his or her income on the 

cash method of accounting,

Income accrued solely because of 

the decedent's death in the case of a 

decedent who reported his or her 

income on the accrual method of 

accounting, and

Income to which the decedent had a 

contingent claim at the time of his or her 

death.

Some examples of IRD for a 

decedent who kept his or her books on 

the cash method are:

Deferred salary payments that are 

payable to the decedent's estate,

Uncollected interest on U.S. savings 

bonds,

Proceeds from the completed sale of 

farm produce, and

The portion of a lump-sum 

distribution to the beneficiary of a 

decedent's IRA that equals the balance 

2014 Instructions for Form 1041 -3-
in the IRA at the time of the owner's 

death. This includes unrealized 

appreciation and income accrued to that 

date, less the aggregate amount of the 

owner's nondeductible contributions to 

the IRA. Such amounts are included in 

the beneficiary's gross income in the tax 

year that the distribution is received.

The IRD has the same character it 

would have had if the decedent had 

lived and received such amount.

Deductions and credits in respect 

of a decedent. The following 

deductions and credits, when paid by 

the decedent's estate, are allowed on 

Form 1041 even though they were not 

allowable on the decedent's final 

income tax return.

Business expenses deductible under 

section 162.

Interest deductible under section 163.

Taxes deductible under section 164.

Investment expenses described in 

section 212 (in excess of 2% of adjusted 

gross income (AGI)).

Percentage depletion allowed under 

section 611.

Foreign tax credit.

For more information on IRD, see 

section 691 and Pub. 559, Survivors, 

Executors, and Administrators.

Income required to be distributed 

currently. Income required to be 

distributed currently is income that is 

required under the terms of the 

governing instrument and applicable 

local law to be distributed in the year it is 

received. The fiduciary must be under a 

duty to distribute the income currently, 

even if the actual distribution is not 

made until after the close of the trust's 

tax year. See Regulations section 

1.651(a)-2.

Fiduciary. A fiduciary is a trustee of a 

trust, or an executor, executrix, 

administrator, administratrix, personal 

representative, or person in possession 

of property of a decedent's estate.

Note. Any reference in these 

instructions to “you” means the fiduciary 

of the estate or trust.

Trust. A trust is an arrangement 

created either by a will or by an inter 

vivos declaration by which trustees take 

title to property for the purpose of 

protecting or conserving it for the 

beneficiaries under the ordinary rules 

applied in chancery or probate courts.

Revocable living trust. A revocable 

living trust is an arrangement created by 

a written agreement or declaration 

during the life of an individual and can 

be changed or ended at any time during 

the individual's life. A revocable living 

trust is generally created to manage and 

distribute property. Many people use 

this type of trust instead of (or in 

addition to) a will.

Because this type of trust is 

revocable, it is treated as a grantor type 

trust for tax purposes. See Grantor Type 

Trusts under Special Reporting 

Instructions, later, for special filing 

instructions that apply to grantor trusts.

Be sure to read Optional Filing 

Methods for Certain Grantor 

Type Trusts. Generally, most 

people that have revocable living trusts 

will be able to use Optional Method 1. 

This method is the easiest and least 

burdensome way to meet your 

obligations.

Who Must File

Decedent's Estate

The fiduciary (or one of the joint 

fiduciaries) must file Form 1041 for a 

domestic estate that has:

1. Gross income for the tax year of 

$600 or more, or

2. A beneficiary who is a 

nonresident alien.

An estate is a domestic estate if it is 

not a foreign estate. A foreign estate is 

one the income of which is from sources 

outside the United States that is not 

effectively connected with the conduct 

of a U.S. trade or business and is not 

includible in gross income. If you are the 

fiduciary of a foreign estate, file Form 

1040NR, U.S. Nonresident Alien 

Income Tax Return, instead of Form 

1041.

Trust

The fiduciary (or one of the joint 

fiduciaries) must file Form 1041 for a 

domestic trust taxable under section 

641 that has:

1. Any taxable income for the tax 

year,

2. Gross income of $600 or more 

(regardless of taxable income), or

3. A beneficiary who is a 

nonresident alien.

Two or more trusts are treated as 

one trust if the trusts have substantially 

the same grantor(s) and substantially 

the same primary beneficiary(ies) and a 

principal purpose of such trusts is 

avoidance of tax. This provision applies 

only to that portion of the trust that is 

attributable to contributions to corpus 

made after March 1, 1984.

TIP

A trust is a domestic trust if:

A U.S. court is able to exercise 

primary supervision over the 

administration of the trust (court test), 

and

One or more U.S. persons have the 

authority to control all substantial 

decisions of the trust (control test).

See Regulations section 301.7701-7 

for more information on the court and 

control tests.

Also treated as a domestic trust is a 

trust (other than a trust treated as wholly 

owned by the grantor) that:

Was in existence on August 20, 1996,

Was treated as a domestic trust on 

August 19, 1996, and

Elected to continue to be treated as a 

domestic trust.

A trust that is not a domestic trust is 

treated as a foreign trust. If you are the 

trustee of a foreign trust, file Form 

1040NR instead of Form 1041. Also, a 

foreign trust with a U.S. owner generally 

must file Form 3520-A, Annual 

Information Return of Foreign Trust With 

a U.S. Owner.

If a domestic trust becomes a foreign 

trust, it is treated under section 684 as 

having transferred all of its assets to a 

foreign trust, except to the extent a 

grantor or another person is treated as 

the owner of the trust when the trust 

becomes a foreign trust.

Grantor Type Trusts

If all or any portion of a trust is a grantor 

type trust, then that trust or portion of a 

trust must follow the special reporting 

requirements discussed later, under 

Special Reporting Instructions. See 

Grantor Type Trust under Specific 

Instructions for more details on what 

makes a trust a grantor type trust.

Note. A trust may be part grantor trust 

and part “other” type of trust, for 

example, simple or complex, or electing 

small business trust (ESBT).

Qualified subchapter S trusts 

(QSSTs). QSSTs must follow the 

special reporting requirements for these 

trusts discussed later, under Special 

Reporting Instructions.

Special Rule for Certain Revocable 

Trusts

Section 645 provides that if both the 

executor (if any) of an estate (the 

related estate) and the trustee of a 

qualified revocable trust (QRT) elect the 

treatment in section 645, the trust must 

be treated and taxed as part of the 

-4- 2014 Instructions for Form 1041
related estate during the election period. 

This election may be made by a QRT 

even if no executor is appointed for the 

related estate.

In general, Form 8855, Election To 

Treat a Qualified Revocable Trust as 

Part of an Estate, must be filed by the 

due date for Form 1041 for the first tax 

year of the related estate. This applies 

even if the combined related estate and 

electing trust do not have sufficient 

income to be required to file Form 1041. 

However, if the estate is granted an 

extension of time to file Form 1041 for 

its first tax year, the due date for Form 

8855 is the extended due date.

Once made, the election is 

irrevocable.

Qualified revocable trusts. In 

general, a QRT is any trust (or part of a 

trust) that, on the day the decedent 

died, was treated as owned by the 

decedent because the decedent held 

the power to revoke the trust as 

described in section 676. An electing 

trust is a QRT for which a section 645 

election has been made.

Election period. The election period is 

the period of time during which an 

electing trust is treated as part of its 

related estate.

The election period begins on the 

date of the decedent's death and 

terminates on the earlier of:

The day on which the electing trust 

and related estate, if any, distribute all of 

their assets, or

The day before the applicable date.

To determine the applicable date, first 

determine whether a Form 706, United 

States Estate (and Generation-Skipping 

Transfer) Tax Return, is required to be 

filed as a result of the decedent's death. 

If no Form 706 is required to be filed, the 

applicable date is 2 years after the date 

of the decedent's death. If Form 706 is 

required, the applicable date is the later 

of 2 years after the date of the 

decedent's death or 6 months after the 

final determination of liability for estate 

tax. For additional information, see 

Regulations section 1.645-1(f).

Taxpayer identification number 

(TIN). All QRTs must obtain a new TIN 

following the death of the decedent 

whether or not a section 645 election is 

made. (Use Form W-9, Request for 

Taxpayer Identification Number and 

Certification, to notify payers of the new 

TIN.)

An electing trust that continues after 

the termination of the election period 

does not need to obtain a new TIN 

following the termination unless:

An executor was appointed and 

agreed to the election after the electing 

trust made a valid section 645 election, 

and the electing trust filed a return as an 

estate under the trust's TIN, or

No executor was appointed and the 

QRT was the filing trust (as explained 

later).

A related estate that continues after 

the termination of the election period 

does not need to obtain a new TIN.

For more information about TINs, 

including trusts with multiple owners, 

see Regulations sections 1.645-1 and 

301.6109-1(a).

General procedures for completing 

Form 1041 during the election period. 

If there is an executor. The 

following rules apply to filing Form 1041 

while the election is in effect.

The executor of the related estate is 

responsible for filing Form 1041 for the 

estate and all electing trusts. The return 

is filed under the name and TIN of the 

related estate. Be sure to check the 

Decedent's estate box at the top of 

Form 1041 and Item G if the estate has 

made a section 645 election. The 

executor continues to file Form 1041 

during the election period even if the 

estate distributes all of its assets before 

the end of the election period.

The Form 1041 includes all items of 

income, deduction, and credit for the 

estate and all electing trusts.

For Item G, the executor must provide 

the TIN of the electing trust with the 

highest total asset value.

The executor must attach a statement 

to Form 1041 providing the following 

information for each electing trust 

(including the electing trust provided in 

Item G): (a) the name of the electing 

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

and (c) the name and address of the 

trustee of the electing trust.

The related estate and the electing 

trust are treated as separate shares for 

purposes of computing DNI and 

applying distribution provisions. Also, 

each of those shares can contain two or 

more separate shares. For more 

information, see Separate share rule, 

later, and Regulations section 

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

The executor is responsible for 

insuring that the estate's share of the 

combined tax obligation is paid.

For additional information, including 

treatment of transfers between shares 

and charitable contribution deductions, 

see Regulations section 1.645-1(e).

If there is no executor. If no 

executor has been appointed for the 

related estate, the trustee of the electing 

trust files Form 1041 as if it was an 

estate. File using the TIN that the QRT 

obtained after the death of the 

decedent. The trustee can choose a 

fiscal year as the trust's tax year during 

the election period. Be sure to check the 

Decedent's estate box at the top of 

Form 1041 and Item G if the filing trust 

has made a section 645 election. For 

Item G, the filing trustee must provide 

the TIN of the electing trust with the 

highest total asset value. The electing 

trust is entitled to a single $600 personal 

exemption on returns filed for the 

election period.

If there is more than one electing 

trust, the trusts must appoint one trustee 

as the filing trustee. Form 1041 is filed 

under the name and TIN of the filing 

trustee's trust. A statement providing the 

same information about the electing 

trusts (except the filing trust) that is 

listed under, If there is an executor, 

above must be attached to these Forms 

1041. All electing trusts must choose 

the same tax year.

If there is more than one electing 

trust, the filing trustee is responsible for 

ensuring that the filing trust's share of 

the combined tax liability is paid.

For additional information on filing 

requirements when there is no executor, 

including application of the separate 

share rule, see Regulations section 

1.645-1(e). For information on the 

requirements when an executor is 

appointed after an election is made and 

the executor does not agree to the 

election, see below.

Responsibilities of the trustee 

when there is an executor (or there 

is no executor and the trustee is not 

the filing trustee). When there is an 

executor (or there is no executor and 

the trustee is not the filing trustee), the 

trustee of an electing trust is responsible 

for the following during the election 

period.

To timely provide the executor with all 

the trust information necessary to allow 

the executor to file a complete, 

accurate, and timely Form 1041.

To ensure that the electing trust's 

share of the combined tax liability is 

paid.

The trustee does not file a Form 1041 

during the election period (except for a 

final return if the trust terminates during 

the election period as explained later).

2014 Instructions for Form 1041 -5-
Procedure for completing Form 1041 

for the year in which the election terminates. 

If there is an executor. If there is an 

executor, the Form 1041 filed under the 

name and TIN of the related estate for 

the tax year in which the election 

terminates includes (a) the items of 

income, deduction, and credit for the 

related estate for its entire tax year, and 

(b) the income, deductions, and credits 

for the electing trust for the period that 

ends with the last day of the election 

period. If the estate will not continue 

after the close of the tax year, indicate 

that this Form 1041 is a final return.

At the end of the last day of the 

election period, the combined entity is 

deemed to distribute the share 

comprising the electing trust to a new 

trust. All items of income, including net 

capital gains, that are attributable to the 

share comprising the electing trust are 

included in the calculation of DNI of the 

electing trust and treated as distributed. 

The distribution rules of sections 661 

and 662 apply to this deemed 

distribution. The combined entity is 

entitled to an income distribution 

deduction for this deemed distribution, 

and the "new" trust must include its 

share of the distribution in its income. 

See Regulations sections 1.645-1(e)(2)

(iii) and 1.645-1(h) for more information.

If the electing trust continues in 

existence after the termination of the 

election period, the trustee must file 

Form 1041 under the name and TIN of 

the trust, using the calendar year as its 

accounting period, if it is otherwise 

required to file.

If there is no executor. If there is 

no executor, the following rules apply to 

filing Form 1041 for the tax year in which 

the election period ends.

The tax year of the electing trust 

closes on the last day of the election 

period, and the Form 1041 filed for that 

tax year includes all items of income, 

deduction, and credit for the electing 

trust for the period beginning with the 

first day of the tax year and ending with 

the last day of the election period.

The deemed distribution rules 

discussed above apply.

Check the box to indicate that this 

Form 1041 is a final return.

If the filing trust continues after the 

termination of the election period, the 

trustee must obtain a new TIN. If the 

trust meets the filing requirements, the 

trustee must file a Form 1041 under the 

new TIN for the period beginning with 

the day after the close of the election 

period and, in general, ending 

December 31 of that year.

Responsibilities of the trustee 

when there is an executor (or there 

is no executor and the trustee is not 

the filing trustee). In addition to the 

requirements listed above under this 

same heading, the trustee is 

responsible for the following.

If the trust will not continue after the 

close of the election period, the trustee 

must file a Form 1041 under the name 

and TIN of the trust. Complete the entity 

information and items A, C, D, and F. 

Indicate in item F that this is a final 

return. Do not report any items of 

income, deduction, or credit.

If the trust will continue after the close 

of the election period, the trustee must 

file a Form 1041 for the trust for the tax 

year beginning the day after the close of 

the election period and, in general, 

ending December 31 of that year. Use 

the TIN obtained after the decedent's 

death. Follow the general rules for 

completing the return.

Special filing instructions. 

When the election is not made by 

the due date of the QRT's Form 

1041. If the section 645 election has 

not been made by the time the QRT's 

first income tax return would be due for 

the tax year beginning with the 

decedent's death, but the trustee and 

executor (if any) have decided to make 

a section 645 election, then the QRT is 

not required to file a Form 1041 for the 

short tax year beginning with the 

decedent's death and ending on 

December 31 of that year. However, if a 

valid election is not subsequently made, 

the QRT may be subject to penalties 

and interest for failure to file and failure 

to pay.

If the QRT files a Form 1041 for this 

short period, and a valid section 645 

election is subsequently made, then the 

trustee must file an amended Form 

1041 for the electing trust, excluding all 

items of income, deduction, and credit 

of the electing trust. These amounts are 

then included on the first Form 1041 

filed by the executor for the related 

estate (or the filing trustee for the 

electing trust filing as an estate).

Later appointed executor. If an 

executor for the related estate is not 

appointed until after the trustee has 

made a valid section 645 election, the 

executor must agree to the trustee's 

election and they must file a revised 

Form 8855 within 90 days of the 

appointment of the executor. If the 

executor does not agree to the election, 

the election terminates as of the date of 

appointment of the executor.

If the executor agrees to the election, 

the trustee must amend any Form 1041 

filed under the name and TIN of the 

electing trust for the period beginning 

with the decedent's death. The 

amended returns are still filed under the 

name and TIN of the electing trust, and 

they must include the items of income, 

deduction, and credit for the related 

estate for the periods covered by the 

returns. Also, attach a statement to the 

amended Forms 1041 identifying the 

name and TIN of the related estate, and 

the name and address of the executor. 

Check the Final return box on the 

amended return for the tax year that 

ends with the appointment of the 

executor. Except for this amended 

return, all returns filed for the combined 

entity after the appointment of the 

executor must be filed under the name 

and TIN of the related estate.

If the election terminates as the result 

of a later appointed executor, the 

executor of the related estate must file 

Forms 1041 under the name and TIN of 

the related estate for all tax years of the 

related estate beginning with the 

decedent's death. The electing trust's 

election period and tax year terminate 

the day before the appointment of the 

executor. The trustee is not required to 

amend any of the returns filed by the 

electing trust for the period prior to the 

appointment of the executor. The trust 

must file a final Form 1041 following the 

instructions above for completing Form 

1041 in the year in which the election 

terminates and there is no executor.

Termination of the trust during 

the election period. If an electing 

trust terminates during the election 

period, the trustee of that trust must file 

a final Form 1041 by completing the 

entity information (using the trust's EIN), 

checking the Final return box, and 

signing and dating the form. Do not 

report items of income, deduction, and 

credit. These items are reported on the 

related estate's return.

Alaska Native Settlement 

Trusts

The trustee of an Alaska Native 

Settlement Trust may elect the special 

tax treatment for the trust and its 

beneficiaries provided for in section 

646. The election must be made by the 

due date (including extensions) for filing 

the trust's tax return for its first tax year 

ending after June 7, 2001. Do not use 

Form 1041. Use Form 1041-N, U.S. 

Income Tax Return for Electing Alaska 

-6- 2014 Instructions for Form 1041
Native Settlement Trusts, to make the 

election. Additionally, Form 1041-N is 

the trust's income tax return and 

satisfies the section 6039H information 

reporting requirement for the trust.

Bankruptcy Estate

The bankruptcy trustee or debtor-inpossession must file Form 1041 for the 

estate of an individual involved in 

bankruptcy proceedings under 

chapter 7 or 11 of title 11 of the United 

States Code if the estate has gross 

income for the tax year of $10,150 or 

more. See Bankruptcy Estates, later, for 

details.

Charitable Remainder Trusts

A section 664 charitable remainder trust 

(CRT) does not file Form 1041. Instead, 

a CRT files Form 5227, Split-Interest 

Trust Information Return. If the CRT has 

any unrelated business taxable income, 

it also must file Form 4720, Return of 

Certain Excise Taxes Under Chapters 

41 and 42 of the Internal Revenue 

Code.

Common Trust Funds

Do not file Form 1041 for a common 

trust fund maintained by a bank. 

Instead, the fund may use Form 1065, 

U.S. Return of Partnership Income, for 

its return. For more details, see section 

584 and Regulations section 1.6032-1.

Electing Small Business Trusts

Electing small business trusts file Form 

1041. However, see Electing Small 

Business Trusts (ESBTs), later, for a 

discussion of the special reporting 

requirements for these trusts.

Pooled Income Funds

Pooled income funds file Form 1041. 

See Pooled Income Funds, later, for the 

special reporting requirements for these 

trusts. Additionally, pooled income 

funds must file Form 5227, Split-Interest 

Trust Information Return.

Qualified Funeral Trusts

Trustees of pre-need funeral trusts who 

elect treatment under section 685 file 

Form 1041-QFT, U.S. Income Tax 

Return for Qualified Funeral Trusts. All 

other pre-need funeral trusts, see 

Grantor Type Trusts, later, for Form 

1041 reporting requirements.

Qualified Settlement Funds

The trustee of a designated or qualified 

settlement fund (QSF) generally must 

file Form 1120-SF, U.S. Income Tax 

Return for Settlement Funds, instead of 

Form 1041.

Special election. If a QSF has only 

one transferor, the transferor may elect 

to treat the QSF as a grantor type trust.

To make the grantor trust election, 

the transferor must attach an election 

statement to a timely filed Form 1041, 

including extensions, that the 

administrator files for the QSF for the 

tax year in which the settlement fund is 

established. If Form 1041 is not filed 

because Optional Method 1 or 2 

(described later) was chosen, attach the 

election statement to a timely filed 

income tax return, including extensions, 

of the transferor for the tax year in which 

the settlement fund is established.

Election statement. The election 

statement may be made separately or, if 

filed with Form 1041, on the attachment 

described under Grantor Type Trusts, 

later. At the top of the election 

statement, write “Section 1.468B-1(k) 

Election” and include the transferor's:

Name,

Address,

TIN, and

A statement that he or she will treat 

the qualified settlement fund as a 

grantor type trust.

Widely Held Fixed Investment 

Trust (WHFITs)

Trustees and middlemen of WHFITs do 

not file Form 1041. Instead, they report 

all items of gross income and proceeds 

on the appropriate Form 1099. For the 

definition of a WHFIT, see Regulations 

section 1.671-5(b)(22). A tax 

information statement that includes the 

information given to the IRS on Forms 

1099, as well as additional information 

identified in Regulations section 

1.671-5(e) must be given to trust 

interest holders. See the General 

Instructions for Certain Information 

Returns for more information.

Electronic Filing

Applications to become an IRS 

e-file provider must be 

submitted online. The IRS no 

longer accepts paper applications on 

Form 8633, Application to Participate in 

the IRS e-file Program.

Qualified fiduciaries or transmitters 

may be able to file Form 1041 and 

related schedules electronically. To 

become an e-file provider complete the 

following steps:

1. Create an IRS e-Services 

account.

2. Submit your e-file provider 

application online.

CAUTION

!

3. Pass a suitability check.

The online application process takes 

4-6 weeks to complete.

Note. Existing e-file providers must 

now use e-Services to make account 

updates.

Help is available at IRS.gov or 

through the e-Help Desk at 

1-866-255-0654 (512-416-7750 for 

international calls), Monday through 

Friday, 6:30 a.m.- 6:00 p.m. (Central 

time). Frequently asked questions under 

“Help,” and On-line Tutorials are 

available to answer questions or to 

guide users through the application 

process.

If you file Form 1041 electronically, 

you may sign the return electronically by 

using a personal identification number 

(PIN). See Form 8879-F, IRS e-file 

Signature Authorization for Form 1041, 

for details.

Beginning January 1, 2015, 

Form 8879-F can only be 

associated with a single Form 

1041. Form 8879-F can no longer be 

used with multiple Forms 1041.

For tax year 2014, Form 1041 

must be e-Filed using Form 

8453-FE, U.S. Estate or Trust 

Declaration for an IRS e-file return. 

Form 8453-F, U.S. Estate or Trust 

Income Tax Declaration and Signature 

for Electronic Filing, is obsolete.

For more information about e-filing 

returns through MeF, see Publication 

4164, Modernized e-File (MeF) Guide 

for Software Developers and 

Transmitters.

If Form 1041 is e-filed and there is a 

balance due, the fiduciary may 

authorize an electronic funds withdrawal 

with the return.

Private Delivery Services

You can use certain private delivery 

services designated by the IRS to meet 

the “timely mailing as timely filing/

paying” rule for tax returns and 

payments. These private delivery 

services include only the following.

Federal Express (FedEx): FedEx 

Priority Overnight, FedEx Standard 

Overnight, FedEx 2Day, FedEx 

International Priority, and FedEx 

International First.

United Parcel Service (UPS): UPS 

Next Day Air, UPS Next Day Air Saver, 

UPS 2nd Day Air, UPS 2nd Day Air 

A.M., UPS Worldwide Express Plus, 

and UPS Worldwide Express.

CAUTION

!

CAUTION

!

2014 Instructions for Form 1041 -7-
For the IRS mailing address to use if 

you are using a private delivery service, 

go to IRS.gov and enter “private delivery 

service” in the search box.

The private delivery service can tell 

you how to get written proof of the 

mailing date.

Private delivery services 

cannot deliver items to P.O. 

boxes. You must use the U.S. 

Postal Service to mail any item to an 

IRS P.O. box address.

When To File

For calendar year estates and trusts, file 

Form 1041 and Schedule(s) K-1 on or 

before April 15, 2015. For fiscal year 

estates and trusts, file Form 1041 by the 

15th day of the 4th month following the 

close of the tax year. For example, an 

estate that has a tax year that ends on 

June 30, 2015, must file Form 1041 by 

October 15, 2015. If the due date falls 

CAUTION

!

on a Saturday, Sunday, or legal holiday, 

file on the next business day.

Extension of Time To File

If more time is needed to file the estate 

or trust return, use Form 7004, 

Application for Automatic Extension of 

Time To File Certain Business Income 

Tax, Information, and Other Returns, to 

apply for an automatic 5 month 

extension of time to file.

Period Covered

File the 2014 return for calendar year 

2014 and fiscal years beginning in 2014 

and ending in 2015. If the return is for a 

fiscal year or a short tax year (less than 

12 months), fill in the tax year space at 

the top of the form.

The 2014 Form 1041 may also be 

used for a tax year beginning in 2015 if:

1. The estate or trust has a tax year 

of less than 12 months that begins and 

ends in 2015, and

2. The 2015 Form 1041 is not 

available by the time the estate or trust 

is required to file its tax return. However, 

the estate or trust must show its 2015 

tax year on the 2014 Form 1041 and 

incorporate any tax law changes that 

are effective for tax years beginning 

after December 31, 2014.

Who Must Sign

Fiduciary

The fiduciary, or an authorized 

representative, must sign Form 1041. If 

there are joint fiduciaries, only one is 

required to sign the return.

A financial institution that submitted 

estimated tax payments for trusts for 

which it is the trustee must enter its EIN 

in the space provided for the EIN of the 

fiduciary. Do not enter the EIN of the 

trust. For this purpose, a financial 

institution is one that maintains a 

Treasury Tax and Loan (TT&L) account. 

If you are an attorney or other individual 

functioning in a fiduciary capacity, leave 

this space blank. Do not enter your 

individual social security number (SSN).

Paid Preparer

Generally, anyone who is paid to 

prepare a tax return must sign the return 

and fill in the other blanks in the “Paid 

Preparer Use Only” area of the return.

The person required to sign the 

return must:

Complete the required preparer 

information,

Sign it in the space provided for the 

preparer's signature (a facsimile 

signature is acceptable), and

Give you a copy of the return for your 

records.

If you, as fiduciary, fill in Form 1041, 

leave the “Paid Preparer Use Only” 

space blank.

If someone prepares this return and 

does not charge you, that person should 

not sign the return.

Paid Preparer Authorization

If the fiduciary wants to allow the IRS to 

discuss the estate's or trust's 2014 tax 

return with the paid preparer who signed 

it, check the “Yes,” box in the signature 

area of the return. This authorization 

applies only to the individual whose 

signature appears in the Paid Preparer 

Use Only area of the estate's or trust's 

return. It does not apply to the firm, if 

any, shown in that section.

If the “Yes,” box is checked, the 

fiduciary is authorizing the IRS to call 

the paid preparer to answer any 

Where To File

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

Charitable Remainder Trusts).

THEN use this address if you:

IF you are located 

in ...

Are not enclosing a check or 

money order ...

Are enclosing a check or money 

order ...

Connecticut, Delaware, 

District of Columbia, 

Florida, Georgia, 

Illinois, Indiana, 

Kentucky, Maine, 

Maryland, 

Massachusetts, 

Michigan, New 

Hampshire, New 

Jersey, New York, 

North Carolina, Ohio, 

Pennsylvania, Rhode 

Island, South Carolina, 

Tennessee, Vermont, 

Virginia, West Virginia, 

Wisconsin

Department of the Treasury

Internal Revenue Service 

Cincinnati, Ohio 45999-0048

Department of the Treasury

Internal Revenue Service 

Cincinnati, Ohio 45999-0148

Alabama, Alaska, 

Arizona, Arkansas, 

California, Colorado, 

Hawaii, Idaho, Iowa, 

Kansas, Louisiana, 

Minnesota, Mississippi, 

Missouri, Montana, 

Nebraska, Nevada, 

New Mexico, North 

Dakota, Oklahoma, 

Oregon, South Dakota, 

Texas, Utah, 

Washington, Wyoming

Department of the Treasury

Internal Revenue Service 

Ogden, Utah 84201-0048

Department of the Treasury

Internal Revenue Service 

Ogden, Utah 84201-0148

A foreign country or 

United States 

possession

Internal Revenue Service

P.O. Box 409101

Ogden, Utah 84409

Internal Revenue Service 

P.O. Box 409101

Ogden, Utah 84409

-8- 2014 Instructions for Form 1041
questions that may arise during the 

processing of the estate's or trust's 

return. The fiduciary is also authorizing 

the paid preparer to:

Give the IRS any information that is 

missing from the estate's or trust's 

return,

Call the IRS for information about the 

processing of the estate's or trust's 

return or the status of its refund or 

payment(s), and

Respond to certain IRS notices that 

the fiduciary has shared with the 

preparer about math errors, offsets, and 

return preparation. The notices will not 

be sent to the preparer.

The fiduciary is not authorizing the 

paid preparer to receive any refund 

check, bind the estate or trust to 

anything (including any additional tax 

liability), or otherwise represent the 

estate or trust before the IRS.

The authorization will automatically 

end no later than the due date (without 

regard to extensions) for filing the 

estate's or trust's 2015 tax return. If the 

fiduciary wants to expand the paid 

preparer's authorization or revoke the 

authorization before it ends, see Pub. 

947, Practice Before the IRS and Power 

of Attorney.

Accounting Methods

Figure taxable income using the method 

of accounting regularly used in keeping 

the estate's or trust's books and 

records. Generally, permissible 

methods include the cash method, the 

accrual method, or any other method 

authorized by the Internal Revenue 

Code. In all cases, the method used 

must clearly reflect income.

Generally, the estate or trust may 

change its accounting method (for 

income as a whole or for any material 

item) only by getting consent on Form 

3115, Application for Change in 

Accounting Method. For more 

information, see Pub. 538, Accounting 

Periods and Methods.

Accounting Periods

For a decedent's estate, the moment of 

death determines the end of the 

decedent's tax year and the beginning 

of the estate's tax year. As executor or 

administrator, you choose the estate's 

tax period when you file its first income 

tax return. The estate's first tax year 

may be any period of 12 months or less 

that ends on the last day of a month. If 

you select the last day of any month 

other than December, you are adopting 

a fiscal tax year.

To change the accounting period of 

an estate, use Form 1128, Application 

To Adopt, Change, or Retain a Tax 

Year.

Generally, a trust must adopt a 

calendar year. The following trusts are 

exempt from this requirement:

A trust that is exempt from tax under 

section 501(a);

A charitable trust described in section 

4947(a)(1); and

A trust that is treated as wholly owned 

by a grantor under the rules of sections 

671 through 679.

Rounding Off to Whole 

Dollars

You may round off cents to whole 

dollars on the estate's or trust's return 

and schedules. If you do round to whole 

dollars, you must round all amounts. To 

round, drop amounts under 50 cents 

and increase amounts from 50 to 99 

cents to the next dollar. For example, 

$1.39 becomes $1 and $2.50 becomes 

$3.

If you have to add two or more 

amounts to figure the amount to enter 

on a line, include cents when adding the 

amounts and round off only the total.

Estimated Tax

Generally, an estate or trust must pay 

estimated income tax for 2015 if it 

expects to owe, after subtracting any 

withholding and credits, at least $1,000 

in tax, and it expects the withholding 

and credits to be less than the smaller 

of:

1. 90% of the tax shown on the 

2015 tax return, or

2. 100% of the tax shown on the 

2014 tax return (110% of that amount if 

the estate's or trust's adjusted gross 

income on that return is more than 

$150,000, and less than 2

3 of gross 

income for 2014 or 2015 is from farming 

or fishing).

However, if a return was not filed for 

2014 or that return did not cover a full 12 

months, item 2 does not apply.

For this purpose, include household 

employment taxes in the tax shown on 

the tax return, but only if either of the 

following is true:

The estate or trust will have federal 

income tax withheld for 2015 (see the 

instructions for line 24e), or

The estate or trust would be required 

to make estimated tax payments for 

2015 even if it did not include household 

employment taxes when figuring 

estimated tax.

Exceptions

Estimated tax payments are not 

required from:

1. An estate of a domestic decedent 

or a domestic trust that had no tax 

liability for the full 12-month 2014 tax 

year;

2. A decedent's estate for any tax 

year ending before the date that is 2 

years after the decedent's death; or

3. A trust that was treated as owned 

by the decedent if the trust will receive 

the residue of the decedent's estate 

under the will (or if no will is admitted to 

probate, the trust primarily responsible 

for paying debts, taxes, and expenses 

of administration) for any tax year 

ending before the date that is 2 years 

after the decedent's death.

For more information, see Form 

1041-ES, Estimated Income Tax for 

Estates and Trusts.

Electronic Deposits

A financial institution that has been 

designated as an authorized federal tax 

depository, and acts as a fiduciary for at 

least 200 taxable trusts that are required 

to pay estimated tax, is required to 

deposit the estimated tax payments 

electronically using the Electronic 

Federal Tax Payment System (EFTPS).

A fiduciary that is not required to 

make electronic deposits of estimated 

tax on behalf of a trust or an estate may 

voluntarily participate in EFTPS. To 

enroll in or get more information about 

EFTPS, visit the EFTPS website at 

www.eftps.gov or call 1-800-555-4477. 

Also, see Pub. 966, Electronic Federal 

Tax Payment System: A Guide to 

Getting Started.

Depositing on time. For a deposit 

using EFTPS to be on time, the deposit 

must be submitted by 8:00 p.m. Eastern 

time the day before the due date of the 

deposit.

Section 643(g) Election

Fiduciaries of trusts that pay estimated 

tax may elect under section 643(g) to 

have any portion of their estimated tax 

payments allocated to any of the 

beneficiaries.

The fiduciary of a decedent's estate 

may make a section 643(g) election only 

for the final year of the estate.

Make the election by filing Form 

1041-T, Allocation of Estimated Tax 

Payments to Beneficiaries, by the 65th 

day after the close of the estate's or 

trust's tax year. Then, include that 

amount on Schedule K-1 (Form 1041), 

2014 Instructions for Form 1041 -9-
box 13, code A, for any beneficiaries for 

whom it was elected.

If Form 1041-T was timely filed, the 

payments are treated as paid or 

credited to the beneficiary on the last 

day of the tax year and must be 

included as an other amount paid, 

credited, or required to be distributed on 

Form 1041, Schedule B, line 10. See 

the instructions for Schedule B, line 10, 

later.

Failure to make a timely election will 

result in the estimated tax payments not 

being transferred to the beneficiary(ies) 

even if you entered the amount on 

Schedule K-1.

See the instructions for line 24b for 

more details.

Interest and Penalties

Interest

Interest is charged on taxes not paid by 

the due date, even if an extension of 

time to file is granted.

Interest is also charged on penalties 

imposed for failure to file, negligence, 

fraud, substantial valuation 

misstatements, substantial 

understatements of tax, and reportable 

transaction understatements. Interest is 

charged on the penalty from the due 

date of the return (including extensions). 

The interest charge is figured at a rate 

determined under section 6621.

Late Filing of Return

The law provides a penalty of 5% of the 

tax due for each month, or part of a 

month, for which a return is not filed up 

to a maximum of 25% of the tax due 

(15% for each month, or part of a 

month, up to a maximum of 75% if the 

failure to file is fraudulent). If the return 

is more than 60 days late, the minimum 

penalty is the smaller of $135 or the tax 

due.

The penalty will not be imposed if 

you can show that the failure to file on 

time was due to reasonable cause. If 

you receive a notice about penalty and 

interest after you file this return, send us 

an explanation and we will determine if 

you meet reasonable-cause criteria. Do 

not attach an explanation when you file 

Form 1041.

Late Payment of Tax

Generally, the penalty for not paying tax 

when due is 1

2 of 1% of the unpaid 

amount for each month or part of a 

month it remains unpaid. The maximum 

penalty is 25% of the unpaid amount. 

The penalty applies to any unpaid tax on 

the return. Any penalty is in addition to 

interest charges on late payments.

If you include interest on either 

of these penalties with your 

payment, identify and enter 

these amounts in the bottom margin of 

Form 1041, page 1. Do not include the 

interest or penalty amount in the 

balance of tax due on line 27.

Failure To Provide Information 

Timely

You must provide Schedule K-1 (Form 

1041), on or before the day you are 

required to file Form 1041, to each 

beneficiary who receives a distribution 

of property or an allocation of an item of 

the estate.

For each failure to provide 

Schedule K-1 to a beneficiary when due 

and each failure to include on 

Schedule K-1 all the information 

required to be shown (or the inclusion of 

incorrect information), a $100 penalty 

may be imposed with regard to each 

Schedule K-1 for which a failure occurs. 

The maximum penalty is $1.5 million for 

all such failures during a calendar year. 

If the requirement to report information 

is intentionally disregarded, each $100 

penalty is increased to $250 or, if 

greater, 10% of the aggregate amount 

of items required to be reported, and the 

$1.5 million maximum does not apply.

The penalty will not be imposed if the 

fiduciary can show that not providing 

information timely was due to 

reasonable cause and not due to willful 

neglect.

Underpaid Estimated Tax

If the fiduciary underpaid estimated tax, 

use Form 2210, Underpayment of 

Estimated Tax by Individuals, Estates, 

and Trusts, to figure any penalty. Enter 

the amount of any penalty on Form 

1041, line 26.

Trust Fund Recovery Penalty

This penalty may apply if certain excise, 

income, social security, and Medicare 

taxes that must be collected or withheld 

are not collected or withheld, or these 

taxes are not paid. These taxes are 

generally reported on Forms 720, 941, 

943, 944, or 945. The trust fund 

recovery penalty may be imposed on all 

persons who are determined by the IRS 

to have been responsible for collecting, 

accounting for, or paying over these 

taxes, and who acted willfully in not 

doing so. The penalty is equal to the 

unpaid trust fund tax. See the 

Instructions for Form 720, Pub. 15 

(Circular E), Employer's Tax Guide, or 

TIP

Pub. 51 (Circular A), Agricultural 

Employer's Tax Guide, for more details, 

including the definition of responsible 

persons.

Other Penalties

Other penalties can be imposed for 

negligence, substantial understatement 

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

Federal Income Tax, for details on these 

penalties.

Other Forms That May Be 

Required

Form W-2, Wage and Tax Statement, 

and Form W-3, Transmittal of Wage and 

Tax Statements.

Form 56, Notice Concerning 

Fiduciary Relationship. You must notify 

the IRS of the creation or termination of 

a fiduciary relationship. You may use 

Form 56 to provide this notice to the 

IRS.

Form 706, United States Estate (and 

Generation-Skipping Transfer) Tax 

Return, or Form 706-NA, United States 

Estate (and Generation-Skipping 

Transfer) Tax Return, Estate of 

nonresident not a citizen of the United 

States.

Form 706-GS(D), 

Generation-Skipping Transfer Tax 

Return for Distributions.

Form 706-GS(D-1), Notification of 

Distribution From a Generation-Skipping 

Trust.

Form 706-GS(T), 

Generation-Skipping Transfer Tax 

Return for Terminations.

Form 709, United States Gift (and 

Generation-Skipping Transfer) Tax 

Return.

Form 720, Quarterly Federal Excise 

Tax Return. Use Form 720 to report 

environmental excise taxes, 

communications and air transportation 

taxes, fuel taxes, luxury tax on 

passenger vehicles, manufacturers' 

taxes, ship passenger tax, and certain 

other excise taxes.

Caution. See Trust Fund Recovery 

Penalty earlier.

Form 926, Return by a U.S. 

Transferor of Property to a Foreign 

Corporation. Use this form to report 

certain information required under 

section 6038B.

Form 940, Employer's Annual 

Federal Unemployment (FUTA) Tax 

Return. The estate or trust may be liable 

for FUTA tax and may have to file Form 

-10- 2014 Instructions for Form 1041
940 if it paid wages of $1,500 or more in 

any calendar quarter during the 

calendar year (or the preceding 

calendar year) or one or more 

employees worked for the estate or trust 

for some part of a day in any 20 different 

weeks during the calendar year (or the 

preceding calendar year).

Form 941, Employer's QUARTERLY 

Federal Tax Return. Employers must file 

this form quarterly to report income tax 

withheld on wages and employer and 

employee social security and Medicare 

taxes. Certain small employers must file 

Form 944, Employer's ANNUAL Federal 

Tax Return, instead of Form 941. For 

more information, see the Instructions 

for Form 944. Agricultural employers 

must file Form 943, Employer's Annual 

Federal Tax Return for Agricultural 

Employees, instead of Form 941, to 

report income tax withheld and 

employer and employee social security 

and Medicare taxes on farmworkers.

Caution. See Trust Fund Recovery 

Penalty earlier.

Form 945, Annual Return of Withheld 

Federal Income Tax. Use this form to 

report income tax withheld from 

nonpayroll payments, including 

pensions, annuities, IRAs, gambling 

winnings, and backup withholding.

Caution. See Trust Fund Recovery 

Penalty earlier.

Form 1040, U.S. Individual Income 

Tax Return.

Form 1040NR, U.S. Nonresident 

Alien Income Tax Return.

Form 1041-A, U.S. Information 

Return Trust Accumulation of Charitable 

Amounts.

Form 1042, Annual Withholding Tax 

Return for U.S. Source Income of 

Foreign Persons, and Form 1042-S, 

Foreign Person's U.S. Source Income 

Subject to Withholding. Use these forms 

to report and transmit withheld tax on 

payments or distributions made to 

nonresident alien individuals, foreign 

partnerships, or foreign corporations to 

the extent such payments or 

distributions constitute gross income 

from sources within the United States 

that is not effectively connected with a 

U.S. trade or business. For more 

information, see sections 1441 and 

1442, and Pub. 515, Withholding of Tax 

on Nonresident Aliens and Foreign 

Entities.

Forms 1099-A, B, INT, LTC, MISC, 

OID, Q, R, S, and SA. You may have to 

file these information returns to report 

acquisitions or abandonments of 

secured property; proceeds from broker 

and barter exchange transactions; 

interest payments; payments of 

long-term care and accelerated death 

benefits; miscellaneous income 

payments; original issue discount; 

distributions from Coverdell ESAs; 

distributions from pensions, annuities, 

retirement or profit-sharing plans, IRAs 

(including SEPs, SIMPLEs, Roth IRAs, 

Roth Conversions, and IRA 

recharacterizations), insurance 

contracts, etc.; proceeds from real 

estate transactions; and distributions 

from an HSA, Archer MSA, or Medicare 

Advantage MSA.

Also, use certain of these returns to 

report amounts received as a nominee 

on behalf of another person, except 

amounts reported to beneficiaries on 

Schedule K-1 (Form 1041).

Form 8275, Disclosure Statement. 

File Form 8275 to disclose items or 

positions, except those contrary to a 

regulation, that are not otherwise 

adequately disclosed on a tax return. 

The disclosure is made to avoid parts of 

the accuracy-related penalty imposed 

for disregard of rules or substantial 

understatement of tax. Form 8275 is 

also used for disclosures relating to 

preparer penalties for understatements 

due to unrealistic positions or disregard 

of rules.

Form 8275-R, Regulation Disclosure 

Statement, is used to disclose any item 

on a tax return for which a position has 

been taken that is contrary to Treasury 

regulations.

Form 8288, U.S. Withholding Tax 

Return for Dispositions by Foreign 

Persons of U.S. Real Property Interests, 

and Form 8288-A, Statement of 

Withholding on Dispositions by Foreign 

Persons of U.S. Real Property Interests. 

Use these forms to report and transmit 

withheld tax on the sale of U.S. real 

property by a foreign person. Also, use 

these forms to report and transmit tax 

withheld from amounts distributed to a 

foreign beneficiary from a “U.S. real 

property interest account” that a 

domestic estate or trust is required to 

establish under Regulations section 

1.1445-5(c)(1)(iii).

Form 8300, Report of Cash 

Payments Over $10,000 Received in a 

Trade or Business. Generally, this form 

is used to report the receipt of more 

than $10,000 in cash or foreign currency 

in one transaction (or a series of related 

transactions).

Form 8855, Election To Treat a 

Qualified Revocable Trust as Part of an 

Estate. This election allows a qualified 

revocable trust to be treated and taxed 

(for income tax purposes) as part of its 

related estate during the election period.

Form 8865, Return of U.S. Persons 

With Respect to Certain Foreign 

Partnerships. The estate or trust may 

have to file Form 8865 if it:

1. Controlled a foreign partnership 

(that is, owned more than a 50% direct 

or indirect interest in a foreign 

partnership);

2. Owned at least a 10% direct or 

indirect interest in a foreign partnership 

while U.S. persons controlled that 

partnership;

3. Had an acquisition, disposition, or 

change in proportional interest in a 

foreign partnership that:

a. Increased its direct interest to at 

least 10%;

b. Reduced its direct interest of at 

least 10% to less than 10%; or

c. Changed its direct interest by at 

least a 10% interest.

4. Contributed property to a foreign 

partnership in exchange for a 

partnership interest if:

a. Immediately after the 

contribution, the estate or trust owned, 

directly or indirectly, at least a 10% 

interest in the foreign partnership or

b. The fair market value (FMV) of 

the property the estate or trust 

contributed to the foreign partnership, 

for a partnership interest, when added 

to other contributions of property made 

to the foreign partnership during the 

preceding 12-month period, exceeds 

$100,000.

Also, the estate or trust may have to 

file Form 8865 to report certain 

dispositions by a foreign partnership of 

property it previously contributed to that 

foreign partnership if it was a partner at 

the time of the disposition.

For more details, including penalties 

for failing to file Form 8865, see Form 

8865 and its separate instructions.

Form 8886, Reportable Transaction 

Disclosure Statement. Use Form 8886 

to disclose information for each 

reportable transaction in which the trust 

participated, directly or indirectly. Form 

8886 must be filed for each tax year that 

the federal income tax liability of the 

estate or trust is affected by its 

participation in the transaction. The 

estate or trust may have to pay a 

penalty if it has a requirement to file 

2014 Instructions for Form 1041 -11-
Form 8886 but you fail to file it. The 

following are reportable transactions.

Any transaction that is the same as or 

substantially similar to tax avoidance 

transactions identified by the IRS as 

listed transactions.

Any transaction offered under 

conditions of confidentiality and for 

which the estate or trust paid a minimum 

fee (confidential transaction).

Any transaction for which the estate 

or trust or a related party has 

contractual protection against 

disallowance of the tax benefits 

(transaction with contractual protection).

Any transaction resulting in a loss of 

at least $2 million in any single year or 

$4 million in any combination of years 

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

generated by a section 988 transaction) 

(loss transactions).

Any transaction substantially similar 

to one of the types of transactions 

identified by the IRS as a transaction of 

interest.

See the Instructions for Form 8886 

for more details and exceptions.

Form 8918, Material Advisor 

Disclosure Statement. Material advisors 

who provide material aid, assistance, or 

advice on organizing, managing, 

promoting, selling, implementing, 

insuring, or carrying out any reportable 

transaction, and who directly or 

indirectly receive or expect to receive a 

minimum fee, must use Form 8918 to 

disclose any reportable transaction 

under Regulations section 301.6111-3. 

For more information, see Form 8918 

and its instructions.

Form 8939, Allocation of Increase in 

Basis for Property Acquired From a 

Decedent. This form is used to allocate 

any additional basis when an executor 

makes the special section 1022 election 

for property acquired from a decedent 

who died in 2010.

Form 8960, Net Investment Income 

Tax—Individuals, Estates, and Trusts.

Additional Information

The following publications may assist 

you in preparing Form 1041:

 Pub. 550, Investment Income and 

Expenses,

 Pub. 559, Survivors, Executors, and 

Administrators,

 Pub. 590-A, Contributions to 

Individual Retirement Arrangements 

(IRAs),

 Pub. 590-B, Distributions from 

Individual Retirement Arrangements 

(IRAs), and

 Pub 4895, Tax Treatment of Property 

Acquired From a Decedent Dying in 

2010.

Assembly and 

Attachments

Assemble any schedules, forms, and 

attachments behind Form 1041 in the 

following order:

1. Schedule I (Form 1041);

2. Schedule D (Form 1041);

3. Form 4952;

4. Schedule H (Form 1040);

5. Form 3800;

6. Form 4136;

7. Form 8855;

8. Form 8960;

9. All other schedules and

forms; and

10. All attachments.

Attachments

If you need more space on the forms or 

schedules, attach separate sheets. Use 

the same size and format as on the 

printed forms. But show the totals on the 

printed forms.

Attach these separate sheets after all 

the schedules and forms. Enter the 

estate's or trust's EIN on each sheet.

Do not file a copy of the decedent's 

will or the trust instrument unless the 

IRS requests it.

Special Reporting 

Instructions

Grantor type trusts, the S portion of 

electing small business trusts (ESBTs), 

and bankruptcy estates all have 

reporting requirements that are 

significantly different than other 

Subchapter J trusts and decedent's 

estates. Additionally, grantor type trusts 

have optional filing methods available. 

Pooled income funds have many similar 

reporting requirements that other 

Subchapter J trusts (other than grantor 

type trusts and electing small business 

trusts) have but there are some very 

important differences. These reporting 

differences and optional filing methods 

are discussed below by entity.

Grantor Type Trusts

A trust is a grantor trust if the grantor 

retains certain powers or ownership 

benefits. This can also apply to only a 

portion of a trust. See Grantor Type 

Trust, later, for details on what makes a 

trust a grantor trust.

In general, a grantor trust is ignored 

for income tax purposes and all of the 

income, deductions, etc., are treated as 

belonging directly to the grantor. This 

also applies to any portion of a trust that 

is treated as a grantor trust.

Note. If only a portion of the trust is a 

grantor type trust, indicate both grantor 

trust and the other type of trust, for 

example, simple or complex trust, as the 

type of entities checked in Section A on 

page 1 of Form 1041.

The following instructions apply 

only to grantor type trusts that 

are not using an optional filing 

method.

How to report. If the entire trust is a 

grantor trust, fill in only the entity 

information of Form 1041. Do not show 

any dollar amounts on the form itself; 

show dollar amounts only on an 

attachment to the form. Do not use 

Schedule K-1 (Form 1041) as the 

attachment.

If only part of the trust is a grantor 

type trust, the portion of the income, 

deductions, etc., that is allocable to the 

non-grantor part of the trust is reported 

on Form 1041, under normal reporting 

rules. The amounts that are allocable 

directly to the grantor are shown only on 

an attachment to the form. Do not use 

Schedule K-1 (Form 1041) as the 

attachment. However, Schedule K-1 is 

used to reflect any income distributed 

from the portion of the trust that is not 

taxable directly to the grantor or owner.

The fiduciary must give the grantor 

(owner) of the trust a copy of the 

attachment.

Attachment. On the attachment, 

show:

The name, identifying number, and 

address of the person(s) to whom the 

income is taxable;

The income of the trust that is taxable 

to the grantor or another person under 

sections 671 through 678. Report the 

income in the same detail as it would be 

reported on the grantor's return had it 

been received directly by the grantor; 

and

Any deductions or credits that apply 

to this income. Report these deductions 

and credits in the same detail as they 

would be reported on the grantor's 

return had they been received directly 

by the grantor.

The income taxable to the grantor or 

another person under sections 671 

through 678 and the deductions and 

credits that apply to that income must 

CAUTION

!

-12- 2014 Instructions for Form 1041
be reported by that person on their own 

income tax return.

Example. The John Doe Trust is a 

grantor type trust. During the year, the 

trust sold 100 shares of ABC stock for 

$1,010 in which it had a basis of $10 

and 200 shares of XYZ stock for $10 in 

which it had a $1,020 basis.

The trust does not report these 

transactions on Form 1041. Instead, a 

schedule is attached to the Form 1041 

showing each stock transaction 

separately and in the same detail as 

John Doe (grantor and owner) will need 

to report these transactions on his Form 

8949, Sales and Other Dispositions of 

Capital Assets and Schedule D (Form 

1040). The trust does not net the capital 

gains and losses, nor does it issue John 

Doe a Schedule K-1 (Form 1041) 

showing a $10 long-term capital loss.

QSSTs. Income allocated to S 

corporation stock held by the trust is 

treated as owned by the income 

beneficiary of the portion of the trust that 

owns the stock. Report this income 

following the rules discussed above for 

grantor type trusts. A QSST cannot 

elect any of the optional filing methods 

discussed below.

However, the trust, and not the 

income beneficiary, is treated as the 

owner of the S corporation stock for 

figuring and attributing the tax results of 

a disposition of the stock. For example, 

if the disposition is a sale, the QSST 

election ends as to the stock sold and 

any gain or loss recognized on the sale 

will be that of the trust. For more 

information on QSSTs, see Regulations 

section 1.1361-1(j).

Optional Filing Methods for Certain 

Grantor Type Trusts

Generally, if a trust is treated as owned 

by one grantor or other person, the 

trustee may choose Optional Method 1 

or Optional Method 2 as the trust's 

method of reporting instead of filing 

Form 1041. A husband and wife will be 

treated as one grantor for purposes of 

these two optional methods if:

All of the trust is treated as owned by 

the husband and wife, and

The husband and wife file their 

income tax return jointly for that tax 

year.

Generally, if a trust is treated as 

owned by two or more grantors or other 

persons, the trustee may choose 

Optional Method 3 as the trust's method 

of reporting instead of filing Form 1041.

Once you choose the trust's filing 

method, you must follow the rules under 

Changing filing methods if you want to 

change to another method.

Exceptions. The following trusts 

cannot report using the optional filing 

methods.

A common trust fund (as defined in 

section 584(a)).

A foreign trust or a trust that has any 

of its assets located outside the United 

States.

A qualified subchapter S trust (as 

defined in section 1361(d)(3)).

A trust all of which is treated as 

owned by one grantor or one other 

person whose tax year is other than a 

calendar year.

A trust all of which is treated as 

owned by one or more grantors or other 

persons, one of which is not a U.S. 

person.

A trust all of which is treated as 

owned by one or more grantors or other 

persons if at least one grantor or other 

person is an exempt recipient for 

information reporting purposes, unless 

at least one grantor or other person is 

not an exempt recipient and the trustee 

reports without treating any of the 

grantors or other persons as exempt 

recipients.

Optional Method 1. For a trust treated 

as owned by one grantor or by one 

other person, the trustee must give all 

payers of income during the tax year the 

name and TIN of the grantor or other 

person treated as the owner of the trust 

and the address of the trust. This 

method may be used only if the owner 

of the trust provides the trustee with a 

signed Form W-9, Request for Taxpayer 

Identification Number and Certification. 

In addition, unless the grantor or other 

person treated as owner of the trust is 

the trustee or a co-trustee of the trust, 

the trustee must give the grantor or 

other person treated as owner of the 

trust a statement that:

Shows all items of income, deduction, 

and credit of the trust;

Identifies the payer of each item of 

income;

Explains how the grantor or other 

person treated as owner of the trust 

takes those items into account when 

figuring the grantor's or other person's 

taxable income or tax; and

Informs the grantor or other person 

treated as the owner of the trust that 

those items must be included when 

figuring taxable income and credits on 

his or her income tax return.

Grantor trusts that have not 

applied for an EIN and are 

going to file under Optional 

Method 1 do not need an EIN for the 

trust as long as they continue to report 

under that method.

Optional Method 2. For a trust treated 

as owned by one grantor or by one 

other person, the trustee must give all 

payers of income during the tax year the 

name, address, and TIN of the trust. 

The trustee also must file with the IRS 

the appropriate Forms 1099 to report 

the income or gross proceeds paid to 

the trust during the tax year that shows 

the trust as the payer and the grantor, or 

other person treated as owner, as the 

payee. The trustee must report each 

type of income in the aggregate and 

each item of gross proceeds separately. 

The due date for any Forms 1099 

required to be filed with the IRS by a 

trustee under this method is March 2, 

2015 (March 31, 2015, if filed 

electronically).

In addition, unless the grantor, or 

other person treated as owner of the 

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

trust, the trustee must give the grantor 

or other person treated as owner of the 

trust a statement that:

Shows all items of income, deduction, 

and credit of the trust;

Explains how the grantor or other 

person treated as owner of the trust 

takes those items into account when 

figuring the grantor's or other person's 

taxable income or tax; and

Informs the grantor or other person 

treated as the owner of the trust that 

those items must be included when 

figuring taxable income and credits on 

his or her income tax return. This 

statement satisfies the requirement to 

give the recipient copies of the Forms 

1099 filed by the trustee.

Optional Method 3. For a trust treated 

as owned by two or more grantors or 

other persons, the trustee must give all 

payers of income during the tax year the 

name, address, and TIN of the trust. 

The trustee also must file with the IRS 

the appropriate Forms 1099 to report 

the income or gross proceeds paid to 

the trust by all payers during the tax 

year attributable to the part of the trust 

treated as owned by each grantor, or 

other person, showing the trust as the 

payer and each grantor, or other person 

treated as owner of the trust, as the 

payee. The trustee must report each 

type of income in the aggregate and 

each item of gross proceeds separately. 

The due date for any Forms 1099 

required to be filed with the IRS by a 

TIP

2014 Instructions for Form 1041 -13-
trustee under this method is March 2, 

2015 (March 31, 2015, if filed 

electronically).

In addition, the trustee must give 

each grantor or other person treated as 

owner of the trust a statement that:

Shows all items of income, deduction, 

and credit of the trust attributable to the 

part of the trust treated as owned by the 

grantor or other person;

Explains how the grantor or other 

person treated as owner of the trust 

takes those items into account when 

figuring the grantor's or other person's 

taxable income or tax; and

Informs the grantor or other person 

treated as the owner of the trust that 

those items must be included when 

figuring taxable income and credits on 

his or her income tax return. This 

statement satisfies the requirement to 

give the recipient copies of the Forms 

1099 filed by the trustee.

Changing filing methods. A trustee 

who previously had filed Form 1041 can 

change to one of the optional methods 

by filing a final Form 1041 for the tax 

year that immediately precedes the first 

tax year for which the trustee elects to 

report under one of the optional 

methods. On the front of the final Form 

1041, the trustee must write “Pursuant 

to section 1.671-4(g), this is the final 

Form 1041 for this grantor trust,” and 

check the Final return box in item F.

For more details on changing 

reporting methods, including changes 

from one optional method to another, 

see Regulations section 1.671-4(g).

Backup withholding. The following 

grantor trusts are treated as payors for 

purposes of backup withholding.

1. A trust established after 1995, all 

of which is owned by two or more 

grantors (treating spouses filing a joint 

return as one grantor).

2. A trust with 10 or more grantors 

established after 1983 but before 1996.

The trustee must withhold a certain 

percentage of reportable payments 

made to any grantor who is subject to 

backup withholding.

For more information, see section 

3406 and its regulations.

Pooled Income Funds

If you are filing for a pooled income 

fund, attach a statement to support the 

following:

The calculation of the yearly rate of 

return,

The computation of the deduction for 

distributions to the beneficiaries, and

The computation of any charitable 

deduction.

See section 642 and the regulations 

thereunder for more information.

You do not have to complete 

Schedules A or B of Form 1041.

Also, you must file Form 5227, 

Split-Interest Trust Information Return, 

for the pooled income fund. However, if 

all amounts were transferred in trust 

before May 27, 1969, or if an amount 

was transferred to the trust after May 

26, 1969, for which no deduction was 

allowed under any of the sections listed 

under section 4947(a)(2), then Form 

5227 does not have to be filed.

Note. Form 1041-A is no longer filed by 

pooled income funds.

Electing Small Business Trusts 

(ESBTs)

Special rules apply when figuring the tax 

on the S portion of an ESBT. The S 

portion of an ESBT is the portion of the 

trust that consists of stock in one or 

more S corporations and is not treated 

as a grantor type trust. The tax on the S 

portion:

Must be figured separately from the 

tax on the remainder of the ESBT (if 

any) and attached to the return,

Is entered to the left of the 

Schedule G, line 7, entry space 

preceded by “Sec. 641(c),” and

Is included in the total tax on 

Schedule G, line 7.

The tax on the remainder (non-S 

portion) of the ESBT is figured in the 

normal manner on Form 1041.

Tax computation attachment. Attach 

to the return the tax computation for the 

S portion of the ESBT.

To compute the tax on the S portion:

Treat that portion of the ESBT as if it 

were a separate trust;

Include only the income, losses, 

deductions, and credits allocated to the 

ESBT as an S corporation shareholder 

and gain or loss from the disposition of 

S corporation stock;

Aggregate items of income, losses, 

deductions, and credits allocated to the 

ESBT as an S corporation shareholder if 

the S portion of the ESBT has stock in 

more than one S corporation;

Deduct state and local income taxes 

and administrative expenses directly 

related to the S portion or allocated to 

the S portion if the allocation is 

reasonable in light of all the 

circumstances;

Deduct interest expense paid or 

accrued on indebtedness incurred to 

acquire stock in an S corporation;

Do not claim a deduction for capital 

losses in excess of capital gains;

Do not claim an income distribution 

deduction or an exemption amount;

Do not claim an exemption amount in 

figuring the AMT; and

Do not use the tax rate schedule to 

figure the tax. The tax is 39.6% of the S 

portion's taxable income except in 

figuring the maximum tax on qualified 

dividends and capital gains.

For additional information, see 

Regulations section 1.641(c)-1.

Other information. When figuring the 

tax and DNI on the remaining (non-S) 

portion of the trust, disregard the S 

corporation items.

Do not apportion to the beneficiaries 

any of the S corporation items.

If the ESBT consists entirely of stock 

in one or more S corporations, do not 

make any entries on lines 1–22

of page 1. Instead:

Complete the entity portion;

Follow the instructions above for 

figuring the tax on the S corporation 

items;

Carry the tax from line 7 of 

Schedule G to line 23 on page 1; and

Complete the rest of the return.

The grantor portion (if any) of an 

ESBT will follow the rules discussed 

under Grantor Type Trusts, earlier.

Bankruptcy Estates

The bankruptcy estate that is created 

when an individual debtor files a petition 

under either chapter 7 or 11 of title 11 of 

the U.S. Code is treated as a separate 

taxable entity. The bankruptcy estate is 

administered by a trustee or a 

debtor-in-possession. If the case is later 

dismissed by the bankruptcy court, the 

individual debtor is treated as if the 

bankruptcy petition had never been 

filed.

A separate taxable entity is not 

created if a partnership or corporation 

files a petition under any chapter of title 

11 of the U.S. Code.

For additional information about 

bankruptcy estates, see Pub. 908, 

Bankruptcy Tax Guide.

Who Must File

Every trustee (or debtor-in-possession) 

for an individual's bankruptcy estate 

under chapter 7 or 11 of title 11 of the 

U.S. Code must file a return if the 

bankruptcy estate has gross income of 

-14- 2014 Instructions for Form 1041
$10,150 or more for tax years beginning 

in 2014.

Failure to do so may result in an 

estimated Request for Administrative 

Expenses being filed by the IRS in the 

bankruptcy proceeding or a motion to 

compel filing of the return.

The filing of a tax return for the 

bankruptcy estate does not 

relieve the individual debtor(s) 

of his, her, or their individual tax 

obligations.

EIN

Every bankruptcy estate of an individual 

required to file a return must have its 

own EIN. The SSN of the individual 

debtor cannot be used as the EIN for 

the bankruptcy estate.

Accounting Period

A bankruptcy estate is allowed to have a 

fiscal year. However, this period cannot 

be longer than 12 months.

When To File

File Form 1041 on or before the 15th 

day of the 4th month following the close 

of the tax year. Use Form 7004 to apply 

for an automatic 6-month extension of 

time to file.

Disclosure of Return Information

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

individual debtors who have filed for 

bankruptcy under chapters 7 or 11 of 

title 11 are, upon written request, open 

to inspection by or disclosure to the 

trustee.

The returns subject to disclosure to 

the trustee are those for the year the 

bankruptcy begins and prior years. Use 

Form 4506, Request for Copy of Tax 

Return, to request copies of the 

individual debtor's tax returns.

If the bankruptcy case was not 

voluntary, disclosure cannot be made 

before the bankruptcy court has entered 

an order for relief, unless the court rules 

that the disclosure is needed for 

determining whether relief should be 

ordered.

Transfer of Tax Attributes From 

the Individual Debtor to the 

Bankruptcy Estate

The bankruptcy estate succeeds to the 

following tax attributes of the individual 

debtor:

1. Net operating loss (NOL)

CAUTION

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carryovers;

2. Charitable contribution

carryovers;

3. Recovery of tax benefit items;

4. Credit carryovers;

5. Capital loss carryovers;

6. Basis, holding period, and

character of assets;

7. Method of accounting;

8. Unused passive activity losses;

9. Unused passive activity credits;

and

10. Unused section 465 losses.

Income, Deductions, and Credits

Under section 1398(c), the taxable 

income of the bankruptcy estate 

generally is figured in the same manner 

as that of an individual. The gross 

income of the bankruptcy estate 

includes any income included in 

property of the estate as defined in U.S. 

Code, title 11, sections 541 and 1115.

Under section 1115 of title 11, 

property of the bankruptcy estate 

includes (a) earnings from services 

performed by the debtor after the 

beginning of the case (both wages and 

self-employment income) and before 

the case is closed, dismissed, or 

converted to a case under a different 

chapter and (b) property described in 

section 541 of title 11 and income 

earned therefrom that the debtor 

acquires after the beginning of the case 

and before the case is closed, 

dismissed, or converted. If section 1115 

of title 11 applies, the bankruptcy 

estate's gross income includes, as 

described above, (a) the debtor's 

earnings from services performed after 

the beginning of the case and (b) the 

income from property acquired after the 

beginning of the case.

The income from property owned by 

the debtor when the case began is also 

included in the bankruptcy estate's 

gross income. However, if this property 

is exempted from the bankruptcy estate 

or is abandoned by the trustee or 

debtor-in-possession, the income from 

the property is not included in the 

bankruptcy estate's gross income. Also 

included in income is gain from the sale 

of the bankruptcy estate's property. To 

figure gain, the trustee or 

debtor-in-possession must determine 

the correct basis of the property.

To determine whether any amount 

paid or incurred by the bankruptcy 

estate is allowable as a deduction or 

credit, or is treated as wages for 

employment tax purposes, treat the 

amount as if it were paid or incurred by 

the individual debtor in the same trade 

or business or other activity the debtor 

engaged in before the bankruptcy 

proceedings began.

Administrative expenses. The 

bankruptcy estate is allowed a 

deduction for any administrative 

expense allowed under section 503 of 

title 11 of the U.S. Code, and any fee or 

charge assessed under chapter 123 of 

title 28 of the U.S. Code, to the extent 

not disallowed under an Internal 

Revenue Code provision (for example, 

section 263, 265, or 275).

Administrative expense loss. When 

figuring an NOL, nonbusiness 

deductions (including administrative 

expenses) are limited under section 

172(d)(4) to the bankruptcy estate's 

nonbusiness income. The excess 

nonbusiness deductions are an 

administrative expense loss that may be 

carried back to each of the 3 preceding 

tax years and forward to each of the 7 

succeeding tax years of the bankruptcy 

estate. The amount of an administrative 

expense loss that may be carried to any 

tax year is determined after the NOL 

deductions allowed for that year. An 

administrative expense loss is allowed 

only to the bankruptcy estate and 

cannot be carried to any tax year of the 

individual debtor.

Carryback of NOLs and credits. If 

the bankruptcy estate itself incurs an 

NOL (apart from losses carried forward 

to the estate from the individual debtor), 

it can carry back its NOLs not only to 

previous tax years of the bankruptcy 

estate, but also to tax years of the 

individual debtor prior to the year in 

which the bankruptcy proceedings 

began. Excess credits, such as the 

foreign tax credit, also may be carried 

back to pre-bankruptcy years of the 

individual debtor.

Exemption. A bankruptcy estate is 

allowed a personal exemption of 

$3,950, for tax year 2014.

Note. The personal exemption is 

subject to phaseout. See the 

Instructions for Form 1040, Line 42, 

regarding the personal exemption 

phaseout for a taxpayer using the 

married filing separately status.

Standard deduction. A bankruptcy 

estate that does not itemize deductions 

is allowed a standard deduction of 

$6,200, for tax year 2014.

2014 Instructions for Form 1041 -15-
Discharge of indebtedness. In a title 

11 case, gross income does not include 

amounts that normally would be 

included in gross income resulting from 

the discharge of indebtedness. 

However, any amounts excluded from 

gross income must be applied to reduce 

certain tax attributes in a certain order. 

Attach Form 982, Reduction of Tax 

Attributes Due to Discharge of 

Indebtedness (and Section 1082 Basis 

Adjustment), to show the reduction of 

tax attributes.

Tax Rate Schedule

Figure the tax for the bankruptcy estate 

using the tax rate schedule below. Enter 

the tax on Form 1040, line 44.

If taxable income is:

Over— But not 

over—

The tax is:

Of the 

amount 

over—

$0 $9,075 10% $0

9,075 36,900 $907.50 + 15% 9,075

36,900 74,425 5,081.25 + 25% 36,900

74,425 113,425 14,462.50 + 28% 74,425

113,425 202,550 25,382.50 + 33% 113,425

202,550 228,800 54,793.75 + 35% 202,550

228,800 ...... 63,981.25 + 39.6% 228,800

Prompt Determination of Tax 

Liability

To request a prompt determination of 

the tax liability of the bankruptcy estate, 

the trustee or debtor-in-possession 

must file a written request for the 

determination with the IRS. The request 

must be submitted in duplicate and 

executed under penalties of perjury. 

The request must include a statement 

indicating that it is a request for prompt 

determination of tax liability and: (a) the 

return type, and all the tax periods for 

which prompt determination is sought; 

(b) the name and location of the office 

where the return was filed; (c) the 

debtor's name; (d) the debtor's SSN, 

TIN, or EIN; (e) the type of bankruptcy 

estate; (f) the bankruptcy case number; 

and (g) the court where the bankruptcy 

is pending. Send the request to the 

Centralized Insolvency Operation, P.O. 

Box 7346, Philadelphia, PA 19101-7346 

(marked “Request for Prompt 

Determination”).

The IRS will notify the trustee or 

debtor-in-possession within 60 days 

from receipt of the request if the return 

filed by the trustee or 

debtor-in-possession has been selected 

for examination or has been accepted 

as filed. If the return is selected for 

examination, it will be examined as soon 

as possible. The IRS will notify the 

trustee or debtor-in-possession of any 

tax due within 180 days from receipt of 

the request or within any additional time 

permitted by the bankruptcy court.

See Rev. Proc. 2006-24, 2006-22 

I.R.B. 943, available at www.irs.gov/irb/

2006-22_IRB/ar12.html, modified by 

Announcement 2011–77, available at 

www.irs.gov/irb/2011-51_IRB/ar13.

Special Filing Instructions for 

Bankruptcy Estates

Use Form 1041 only as a transmittal for 

Form 1040. In the top margin of Form 

1040 write “Attachment to Form 1041. 

DO NOT DETACH.” Attach Form 1040 

to Form 1041. Complete only the 

identification area at the top of Form 

1041. Enter the name of the individual 

debtor in the following format: “John Q. 

Public Bankruptcy Estate.” Beneath, 

enter the name of the trustee in the 

following format: “Avery Snow, Trustee.” 

In item D, enter the date the petition was 

filed or the date of conversion to a 

chapter 7 or 11 case.

Enter on Form 1041, line 23, the total 

tax from line 63 of Form 1040. Complete 

lines 24 through 29 of Form 1041, and 

sign and date it.

In a chapter 11 case filed after 

October 16, 2005, the bankruptcy 

estate's gross income may be affected 

by section 1115 of title 11 of the U.S. 

Code. See Income, Deductions, and 

Credits earlier. The debtor may receive 

a Form W-2, 1099-INT, 1099-DIV, or 

1099-MISC or other information return 

reporting wages or other income to the 

debtor for the entire year, even though 

some or all of this income is includible in 

the bankruptcy estate's gross income 

under section 1115 of title 11 of the U.S. 

Code. If this happens, the income 

reported to the debtor on the Form W-2 

or 1099, or other information return (and 

the withheld income tax shown on these 

forms) must be reasonably allocated 

between the debtor and the bankruptcy 

estate. The debtor-in-possession (or the 

chapter 11 trustee, if one was 

appointed) must attach a schedule that 

shows (a) all the income reported on the 

Form W-2, Form 1099, or other 

information return, (b) the portion of this 

income includible in the bankruptcy 

estate's gross income, and (c) all the 

withheld income tax, if any, and the 

portion of withheld tax reasonably 

allocated to the bankruptcy estate. Also, 

the debtor-in-possesion (or the 

chapter 11 trustee, if one was 

appointed) must attach a copy of the 

Form W-2, if any, issued to the debtor 

for the tax year if the Form W-2 reports 

wages to the debtor and some or all of 

the wages are includible in the 

bankruptcy estate's gross income 

because of section 1115 of title 11 of 

the U.S. Code. For more details, 

including acceptable allocation 

methods, see Notice 2006-83, 2006-40 

I.R.B. 596, available at www.irs.gov/irb/

2006-40_IRB/ar12.html.

Specific Instructions

Name of Estate or Trust

Copy the exact name of the estate or 

trust from the Form SS-4, Application for 

Employer Identification Number, that 

you used to apply for the EIN. If the 

name of the trust was changed during 

the tax year for which you are filing, 

enter the trust's new name and check 

the Change in trust's name box in item 

F.

If a grantor type trust (discussed 

later), write the name, identification 

number, and address of the grantor(s) 

or other owner(s) in parentheses after 

the name of the trust.

Name and Title of 

Fiduciary

Enter the name and title of the fiduciary. 

If the name entered is different than the 

name on the prior year's return, see 

Change in Fiduciary's Name and 

Change in Fiduciary, later.

Address

Include the suite, room, or other unit 

number after the street address. If the 

post office does not deliver mail to the 

street address and the fiduciary has a 

P.O. box, show the box number instead.

If you want a third party (such as an 

accountant or an attorney) to receive 

mail for the estate or trust, enter on the 

street address line “C/O” followed by the 

third party's name and street address or 

P.O. box.

If the estate or trust has had a 

change of address (including a change 

to an “in care of” name and address) 

and did not file Form 8822-B, Change of 

Address or Responsible Party — 

Business, check the Change in 

fiduciary's address box in item F.

If the estate or trust has a change of 

mailing address (including a new "in 

care of" name and address) or 

responsible party after filing its return, 

-16-
file Form 8822-B to notify the IRS of the 

change.

A. Type of Entity

Check the appropriate box(es) that 

describes the entity for which you are 

filing the return.

In some cases, more than one box is 

checked. Check all boxes that apply to 

your trust. For example, if only a portion 

of a trust is a grantor type trust or if only 

a portion of an electing small business 

trust is the S portion, then more than 

one box is checked.

Note. Determination of entity status is 

made on an annual basis.

There are special reporting 

requirements for grantor type 

trusts, pooled income funds, 

electing small business trusts, and 

bankruptcy estates. See Special 

Reporting Instructions, earlier.

Decedent's Estate

An estate of a deceased person is a 

taxable entity separate from the 

decedent. It generally continues to exist 

until the final distribution of the assets of 

the estate is made to the heirs and other 

beneficiaries. The income earned from 

the property of the estate during the 

period of administration or settlement 

must be accounted for and reported by 

the estate.

Simple Trust

A trust may qualify as a simple trust if:

1. The trust instrument requires that 

all income must be distributed currently;

2. The trust instrument does not 

provide that any amounts are to be paid, 

permanently set aside, or used for 

charitable purposes; and

3. The trust does not distribute 

amounts allocated to the corpus of the 

trust.

Complex Trust

A complex trust is any trust that does 

not qualify as a simple trust as 

explained above.

Qualified Disability Trust

A qualified disability trust is any 

nongrantor trust:

1. Described in 42 U.S.C. 1396p(c)

(2)(B)(iv) and established solely for the 

benefit of an individual under 65 years 

of age who is disabled, and

2. All the beneficiaries of which are 

determined by the Commissioner of 

Social Security to have been disabled 

CAUTION

!

for some part of the tax year within the 

meaning of 42 U.S.C. 1382c(a)(3).

A trust will not fail to meet item 2 

above just because the trust's corpus 

may revert to a person who is not 

disabled after the trust ceases to have 

any disabled beneficiaries.

ESBT (S Portion Only)

The S portion of an ESBT is the portion 

of the trust that consists of S corporation 

stock and that is not treated as owned 

by the grantor or another person. See 

Electing Small Business Trusts 

(ESBTs), earlier, for more information 

about an ESBT.

Grantor Type Trust

A grantor type trust is a legal trust under 

applicable state law that is not 

recognized as a separate taxable entity 

for income tax purposes because the 

grantor or other substantial owners have 

not relinquished complete dominion and 

control over the trust.

Generally, for transfers made in trust 

after March 1, 1986, the grantor is 

treated as the owner of any portion of a 

trust in which he or she has a 

reversionary interest in either the 

income or corpus therefrom, if, as of the 

inception of that portion of the trust, the 

value of the reversionary interest is 

more than 5% of the value of that 

portion. Also, the grantor is treated as 

holding any power or interest that was 

held by either the grantor's spouse at 

the time that the power or interest was 

created or who became the grantor's 

spouse after the creation of that power 

or interest. See Grantor Type Trusts, 

earlier, for more information.

Pre-need funeral trusts. The 

purchasers of pre-need funeral services 

are the grantors and the owners of 

pre-need funeral trusts established 

under state laws. See Rev. Rul. 87-127, 

1987-2 C.B. 156. However, the trustees 

of pre-need funeral trusts can elect to 

file the return and pay the tax for 

qualified funeral trusts. For more 

information, see Form 1041-QFT, U.S. 

Income Tax Return for Qualified Funeral 

Trusts.

Nonqualified deferred compensation 

plans. Taxpayers may adopt and 

maintain grantor trusts in connection 

with nonqualified deferred 

compensation plans (sometimes 

referred to as “rabbi trusts”). Rev. Proc. 

92-64, 1992-2 C.B. 422, provides a 

“model grantor trust” for use in rabbi 

trust arrangements. The procedure also 

provides guidance for requesting rulings 

on the plans that use these trusts.

QSSTs. The beneficiary of a qualified 

subchapter S trust is treated as the 

substantial owner of that portion of the 

trust which consists of stock in an S 

corporation for which an election under 

section 1361(d)(2) has been made. See 

QSSTs, earlier.

Bankruptcy Estate

A chapter 7 or 11 bankruptcy estate is a 

separate and distinct taxable entity from 

the individual debtor for federal income 

tax purposes. See Bankruptcy Estates, 

earlier.

For more information, see section 

1398 and Pub. 908, Bankruptcy Tax 

Guide.

Pooled Income Fund

A pooled income fund is a split-interest 

trust with a remainder interest for a 

public charity and a life income interest 

retained by the donor or for another 

person. The property is held in a pool 

with other pooled income fund property 

and does not include any tax-exempt 

securities. The income for a retained life 

interest is figured using the yearly rate 

of return earned by the trust. See 

section 642(c) and the related 

regulations for more information.

B. Number of Schedules 

K-1 Attached

Every trust or decedent's estate 

claiming an income distribution 

deduction on page 1, line 18, must enter 

the number of Schedules K-1 (Form 

1041) that are attached to Form 1041.

C. Employer Identification 

Number

Every estate or trust that is required to 

file Form 1041 must have an EIN. An 

EIN may be applied for:

Online by clicking on the EIN link at 

www.irs.gov/businesses/small. The EIN 

is issued immediately once the 

application information is validated.

By mailing or faxing Form SS-4, 

Application for Employer Identification 

Number.

If the estate or trust has not received 

its EIN by the time the return is due, 

write “Applied for” and the date you 

applied in the space for the EIN. For 

more details, see Pub. 583, Starting a 

Business and Keeping Records.

D. Date Entity Created

Enter the date the trust was created, or, 

if a decedent's estate, the date of the 

decedent's death.

2014 Instructions for Form 1041 -17-
E. Nonexempt Charitable 

and Split-Interest Trusts

Section 4947(a)(1) Trust

Check this box if the trust is a 

nonexempt charitable trust within the 

meaning of section 4947(a)(1).

A nonexempt charitable trust is a 

trust:

That is not exempt from tax under 

section 501(a);

In which all of the unexpired interests 

are devoted to one or more charitable 

purposes described in section 170(c)(2)

(B); and

For which a deduction was allowed 

under section 170 (for individual 

taxpayers) or similar Code section for 

personal holding companies, foreign 

personal holding companies, or estates 

or trusts (including a deduction for 

estate or gift tax purposes).

Nonexempt charitable trust treated 

as a private foundation. If a 

nonexempt charitable trust is treated as 

though it were a private foundation 

under section 509, then the fiduciary 

must file Form 990-PF, Return of Private 

Foundation, in addition to Form 1041.

If a nonexempt charitable trust is 

treated as though it were a private 

foundation, and it has no taxable 

income under Subtitle A, it may check 

the box on Form 990-PF, Part VII-A, 

line 15 and enter the tax-exempt interest 

received or accrued during the year on 

that line, instead of filing Form 1041 to 

meet its section 6012 filing requirement 

for that tax year.

Excise taxes. If a nonexempt 

charitable trust is treated as a private 

foundation, then it is subject to the same 

excise taxes under chapters 41 and 42 

that a private foundation is subject to. If 

the nonexempt charitable trust is liable 

for any of these taxes (except the 

section 4940 tax), then it reports these 

taxes on Form 4720, Return of Certain 

Excise Taxes Under Chapters 41 and 

42 of the Internal Revenue Code. Taxes 

paid by the trust on Form 4720 or on 

Form 990-PF (the section 4940 tax) 

cannot be taken as a deduction on Form 

1041.

Not a Private Foundation

Check this box if the nonexempt 

charitable trust (section 4947(a)(1)) is 

not treated as a private foundation 

under section 509. For more 

information, see Regulations section 

53.4947-1.

Other returns that must be filed. If a 

nonexempt charitable trust is not treated 

as though it were a private foundation, 

the fiduciary must file Form 990, Return 

of Organization Exempt From Income 

Tax, or Form 990-EZ, Short Form 

Return of Organization Exempt From 

Income Tax, in addition to Form 1041, if 

the trust meets the filing requirements 

for either of those forms.

If a nonexempt charitable trust is not 

treated as though it were a private 

foundation, and it has no taxable 

income under Subtitle A, it may answer 

“Yes” on Form 990, Part V, line 12a and 

enter the tax-exempt interest received 

or accrued during the year on Form 990, 

Part V, line 12b instead of filing Form 

1041 to meet its section 6012 filing 

requirement for that tax year (or if Form 

990-EZ is filed instead of Form 990, you 

may check the box on Form 990-EZ, 

line 43 and enter the tax-exempt interest 

received or accrued during the year on 

that line).

Section 4947(a)(2) Trust

Check this box if the trust is a 

split-interest trust described in section 

4947(a)(2).

A split-interest trust is a trust that:

Is not exempt from tax under section 

501(a);

Has some unexpired interests that 

are devoted to purposes other than 

religious, charitable, or similar purposes 

described in section 170(c)(2)(B); and

Has amounts transferred in trust after 

May 26, 1969, for which a deduction 

was allowed under section 170 (for 

individual taxpayers) or similar Code 

sections for personal holding 

companies, foreign personal holding 

companies, or estates or trusts 

(including a deduction for estate or gift 

tax purposes).

Other returns that must be filed. The 

fiduciary of a split-interest trust must file 

Form 5227. However, see the 

Instructions for Form 5227 for the 

exception that applies to split-interest 

trusts other than section 664 charitable 

remainder trusts.

F. Initial Return, Amended 

Return, etc.

Amended Return

If you are filing an amended Form 1041:

Check the “Amended return” box in 

Item F,

Complete the entire return,

Correct the appropriate lines with the 

new information, and

Refigure the estate's or trust's tax 

liability.

Note. If you are amending the return 

for an NOL carryback, also check the 

“Net operating loss carryback” box in 

Item F.

If the total tax on line 23 is larger on 

the amended return than on the original 

return, you generally should pay the 

difference with the amended return. 

However, you should adjust this amount 

if there is any increase or decrease in 

the total payments shown on line 25.

Attach a sheet that explains the 

reason for the amendments and 

identifies the lines and amounts being 

changed on the amended return.

Amended Schedule H (Form 1040). 

If you discover an error on a Schedule H 

that you previously filed with Form 1041, 

file an “Amended” Form 1041 and 

attach a corrected Schedule H.

In the top margin of your corrected 

Schedule H, write “Amended,” (using 

red ink, if possible) and the date you 

discovered the error. Also, on an 

attachment explain the reason for your 

correction. If you owe tax, pay the tax in 

full with your amended Form 1041. If 

you overpaid tax on a previously filed 

Schedule H, depending on whether you 

choose the adjustment or claim for 

refund process to correct the error, you 

must either repay or reimburse the 

employee's share of social security and 

Medicare tax or get the employee's 

consent to the filing of a refund claim for 

their share. See Pub. 926, Household 

Employer's Tax Guide, for more 

information.

Amended Schedule K-1 (Form 1041). 

If the amended return results in a 

change to income, or a change in 

distribution of any income or other 

information provided to a beneficiary, an 

amended Schedule K-1 (Form 1041) 

must also be filed with the amended 

Form 1041 and given to each 

beneficiary. Check the “Amended K-1” 

box at the top of the amended 

Schedule K-1.

Final Return

Check this box if this is a final return 

because the estate or trust has 

terminated. Also, check the “Final K-1” 

box at the top of Schedule K-1.

If, on the final return, there are 

excess deductions, an unused capital 

loss carryover, or an NOL carryover, 

see the instructions for Schedule K-1, 

box 11, later.

Change in Trust's Name

If the name of the trust has changed 

from the name shown on the prior year's 

-18- 2014 Instructions for Form 1041
return (or Form SS-4 if this is the first 

return being filed), be sure to check this 

box.

Change in Fiduciary

If a different fiduciary enters his or her 

name on the line for Name and title of 

fiduciary than was shown on the prior 

year's return (or Form SS-4 if this is the 

first return being filed) and you did not 

file a Form 8822-B, be sure to check this 

box. If there is a change in the fiduciary 

whose address is used as the mailing 

address for the estate or trust after the 

return is filed, use Form 8822-B to notify 

the IRS.

Change in Fiduciary's Name

If the fiduciary changed his or her name 

from the name that he or she entered on 

the prior year's return (or Form SS-4 if 

this is the first return being filed), be 

sure to check this box.

Change in Fiduciary's Address

If the same fiduciary who filed the prior 

year's return (or Form SS-4 if this is the 

first return being filed) files the current 

year's return and changed the address 

on the return (including a change to an 

"in care of" name and address), and did 

not report the change on Form 8822-B, 

check this box.

If the address shown on Form 1041 

changes after you file the form 

(including a change to an "in care of" 

name and address), file Form 8822-B to 

notify the IRS of the change.

G. Section 645 Election

If a section 645 election was made by 

filing Form 8855, check the box in item 

G. See Special Rule for Certain 

Revocable Trusts under Who Must File 

and Form 8855 for more information 

about this election.

Income

Special Rule for Blind Trust

If you are reporting income from a 

qualified blind trust (under the Ethics in 

Government Act of 1978), do not 

identify the payer of any income to the 

trust but complete the rest of the return 

as provided in the instructions. Also 

write “Blind Trust” at the top of page 1.

Extraterritorial Income 

Exclusion

The extraterritorial income exclusion is 

not allowed for transactions after 2006. 

However, income from certain long-term 

sales and leases may still qualify for the 

exclusion. For details and to figure the 

amount of the exclusion, see Form 

8873, Extraterritorial Income Exclusion, 

and its separate instructions. The estate 

or trust must report the extraterritorial 

income exclusion on line 15a of Form 

1041, page 1.

Although the extraterritorial income 

exclusion is entered on line 15a, it is an 

exclusion from income and should be 

treated as tax-exempt income when 

completing other parts of the return.

Line 1—Interest Income

Report the estate's or trust's share of all 

taxable interest income that was 

received during the tax year. Examples 

of taxable interest include interest from:

Accounts (including certificates of 

deposit and money market accounts) 

with banks, credit unions, and thrift 

institutions;

Notes, loans, and mortgages;

U.S. Treasury bills, notes, and bonds;

U.S. savings bonds;

Original issue discount; and

Income received as a regular interest 

holder of a real estate mortgage 

investment conduit (REMIC).

For taxable bonds acquired after 

1987, amortizable bond premium is 

treated as an offset to the interest 

income instead of as a separate interest 

deduction. See Pub. 550.

For the year of the decedent's death, 

Forms 1099-INT issued in the 

decedent's name may include interest 

income earned after the date of death 

that should be reported on the income 

tax return of the decedent's estate. 

When preparing the decedent's final 

income tax return, report on Schedule B 

(Form 1040A or 1040), line 1 the total 

interest shown on Form 1099-INT. 

Under the last entry on line 1, subtotal 

all the interest reported on line 1. Below 

the subtotal, write “Form 1041” and the 

name and address shown on Form 

1041 for the decedent's estate. Also, 

show the part of the interest reported on 

Form 1041 and subtract it from the 

subtotal.

Line 2a—Total Ordinary 

Dividends

Report the estate's or trust's share of all 

ordinary dividends received during the 

tax year.

For the year of the decedent's death, 

Forms 1099-DIV issued in the 

decedent's name may include dividends 

earned after the date of death that 

should be reported on the income tax 

return of the decedent's estate. When 

preparing the decedent's final income 

tax return, report on Schedule B (Form 

1040A or 1040), line 5 the ordinary 

dividends shown on Form 1099-DIV. 

Under the last entry on line 5, subtotal 

all the dividends reported on line 5. 

Below the subtotal, write “Form 1041” 

and the name and address shown on 

Form 1041 for the decedent's estate. 

Also, show the part of the ordinary 

dividends reported on Form 1041 and 

subtract it from the subtotal.

Report capital gain distributions 

on Schedule D (Form 1041), 

Line 13.

Line 2b—Qualified Dividends

Enter the beneficiary's allocable share 

of qualified dividends on line 2b(1) and 

enter the estate's or trust's allocable 

share on line 2b(2).

If the estate or trust received qualified 

dividends that were derived from IRD, 

you must reduce the amount on 

line 2b(2) by the portion of the estate tax 

deduction claimed on Form 1041, 

page 1, line 19, that is attributable to 

those qualified dividends. Do not reduce 

the amounts on line 2b by any other 

allocable expenses.

Note. The beneficiary's share (as 

figured above) may differ from the 

amount entered on line 2b of 

Schedule K-1 (Form 1041).

Qualified dividends. Qualified 

dividends are eligible for a lower tax rate 

than other ordinary income. Generally, 

these dividends are reported to the 

estate or trust in box 1b of Form(s) 

1099-DIV. See Pub. 550 for the 

definition of qualified dividends if the 

estate or trust received dividends not 

reported on Form 1099-DIV.

Exception. Some dividends may be 

reported to the estate or trust as in 

box 1b of Form 1099-DIV but are not 

qualified dividends. These include:

Dividends received on any share of 

stock that the estate or trust held for 

less than 61 days during the 121-day 

period that began 60 days before the 

ex-dividend date. The ex-dividend date 

is the first date following the declaration 

of a dividend on which the purchaser of 

a stock is not entitled to receive the next 

dividend payment. When counting the 

number of days the stock was held, 

include the day the estate or trust 

disposed of the stock but not the day it 

acquired the stock. However, you 

cannot count certain days during which 

the estate's or trust's risk of loss was 

diminished. See Pub. 550 for more 

details.

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2014 Instructions for Form 1041 -19-
Dividends attributable to periods 

totaling more than 366 days that the 

estate or trust received on any share of 

preferred stock held for less than 91 

days during the 181-day period that 

began 90 days before the ex-dividend 

date. When counting the number of 

days the stock was held, include the day 

the estate or trust disposed of the stock 

but not the day it acquired the stock. 

However, you cannot count certain days 

during which the estate's or trust's risk 

of loss was diminished. See Pub. 550 

for more details. Preferred dividends 

attributable to periods totaling less than 

367 days are subject to the 61-day 

holding period rule above.

Dividends on any share of stock to 

the extent that the estate or trust is 

under an obligation (including a short 

sale) to make related payments with 

respect to positions in substantially 

similar or related property.

Payments in lieu of dividends, but 

only if you know or have reason to know 

that the payments are not qualified 

dividends.

If you have an entry on 

line 2b(2), be sure you use 

Schedule D (Form 1041), the 

Schedule D Tax Worksheet, or the 

Qualified Dividends Tax Worksheet, 

whichever applies, to figure the estate's 

or trust's tax. Figuring the estate's or 

trust's tax liability in this manner will 

usually result in a lower tax.

Line 3—Business Income or 

(Loss)

If the estate operated a business, report 

the income and expenses on 

Schedule C (Form 1040), Profit or Loss 

From Business (or Schedule C-EZ 

(Form 1040), Net Profit From Business). 

Enter the net profit or (loss) from 

Schedule C (or Schedule C-EZ) on 

line 3.

Line 4—Capital Gain or (Loss)

Enter the gain from Schedule D (Form 

1041), Part III, line 19, column (3) or the 

loss from Part IV, line 20.

Do not substitute Schedule D 

(Form 1040) for Schedule D 

(Form 1041).

Line 5—Rents, Royalties, 

Partnerships, Other Estates 

and Trusts, etc.

Use Schedule E (Form 1040), 

Supplemental Income and Loss, to 

report the estate's or trust's share of 

income or (losses) from rents, royalties, 

partnerships, S corporations, other 

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CAUTION

!

estates and trusts, and REMICs. Also 

use Schedule E (Form 1040) to report 

farm rental income and expenses based 

on crops or livestock produced by a 

tenant. Enter the net profit or (loss) from 

Schedule E on line 5. See the 

Instructions for Schedule E (Form 1040) 

for reporting requirements.

If the estate or trust received a 

Schedule K-1 from a partnership, S 

corporation, or other flow-through entity, 

use the corresponding lines on Form 

1041 to report the interest, dividends, 

capital gains, etc., from the flow-through 

entity.

Line 6—Farm Income or (Loss)

If the estate or trust operated a farm, 

use Schedule F (Form 1040), Profit or 

Loss From Farming, to report farm 

income and expenses. Enter the net 

profit or (loss) from Schedule F on 

line 6.

If an estate or trust has farm 

rental income and expenses 

based on crops or livestock 

produced by a tenant, report the income 

and expenses on Schedule E (Form 

1040). Do not use Form 4835, Farm 

Rental Income and Expenses, or 

Schedule F (Form 1040) to report such 

income and expenses and do not 

include the net profit or (loss) from such 

income and expenses on line 6.

Line 7—Ordinary Gain or (Loss)

Enter from line 17, Form 4797, Sales of 

Business Property, the ordinary gain or 

loss from the sale or exchange of 

property other than capital assets and 

also from involuntary conversions (other 

than casualty or theft).

Line 8—Other Income

Enter other items of income not included 

on lines 1, 2a, and 3 through 7. List the 

type and amount on an attached 

schedule if the estate or trust has more 

than one item.

Items to be reported on line 8 

include:

Unpaid compensation received by 

the decedent's estate that is IRD, and

Any part of a total distribution shown 

on Form 1099-R, Distributions From 

Pensions, Annuities, Retirement or 

Profit-Sharing Plans, IRAs, Insurance 

Contracts, etc., that is treated as 

ordinary income. For more information, 

see Form 4972, Tax on Lump-Sum 

Distributions, and its instructions.

CAUTION

!

Deductions

Depreciation, Depletion, and 

Amortization

A trust or decedent's estate is allowed a 

deduction for depreciation, depletion, 

and amortization only to the extent the 

deductions are not apportioned to the 

beneficiaries. An estate or trust is not 

allowed to make an election under 

section 179 to expense depreciable 

business assets.

The estate's or trust's share of 

depreciation, depletion, and 

amortization is generally reported on the 

appropriate lines of Schedule C (or 

C-EZ), E, or F (Form 1040), the net 

income or loss from which is shown on 

lines 3, 5, or 6 of Form 1041. If the 

deduction is not related to a specific 

business or activity, then report it on 

line 15a.

Depreciation. For a decedent's estate, 

the depreciation deduction is 

apportioned between the estate and the 

heirs, legatees, and devisees on the 

basis of the estate's income allocable to 

each.

For a trust, the depreciation 

deduction is apportioned between the 

income beneficiaries and the trust on 

the basis of the trust income allocable to 

each, unless the governing instrument 

(or local law) requires or permits the 

trustee to maintain a depreciation 

reserve. If the trustee is required to 

maintain a reserve, the deduction is first 

allocated to the trust, up to the amount 

of the reserve. Any excess is allocated 

among the income beneficiaries and the 

trust in the same manner as the trust's 

accounting income. See Regulations 

section 1.167(h)-1(b).

Depletion. For mineral or timber 

property held by a decedent's estate, 

the depletion deduction is apportioned 

between the estate and the heirs, 

legatees, and devisees on the basis of 

the estate's income from such property 

allocable to each.

For mineral or timber property held in 

trust, the depletion deduction is 

apportioned between the income 

beneficiaries and the trust based on the 

trust income from such property 

allocable to each, unless the governing 

instrument (or local law) requires or 

permits the trustee to maintain a reserve 

for depletion. If the trustee is required to 

maintain a reserve, the deduction is first 

allocated to the trust, up to the amount 

of the reserve. Any excess is allocated 

among the beneficiaries and the trust in 

the same manner as the trust's 

-20- 2014 Instructions for Form 1041
accounting income. See Regulations 

section 1.611-1(c)(4).

Amortization. The deduction for 

amortization is apportioned between an 

estate or trust and its beneficiaries 

under the same principles used to 

apportion the deductions for 

depreciation and depletion.

The deduction for the amortization of 

reforestation expenditures under 

section 194 is allowed only to an estate.

Allocable share from a pass-through 

entity. Depreciation, depletion, and 

amortization received from a 

pass-through entity on a Schedule K-1 

is apportioned and reported in the same 

manner as discussed above. A section 

179 expense received from a 

pass-through entity on a Schedule K-1 

is not deductible by the estate or trust.

Allocation of Deductions for 

Tax-Exempt Income

Generally, no deduction that would 

otherwise be allowable is allowed for 

any expense (whether for business or 

for the production of income) that is 

allocable to tax-exempt income. 

Examples of tax-exempt income 

include:

Certain death benefits (section 101),

Interest on state or local bonds 

(section 103),

Compensation for injuries or sickness 

(section 104), and

Income from discharge of 

indebtedness in a title 11 case (section 

108).

Exception. State income taxes and 

business expenses that are allocable to 

tax-exempt interest are deductible.

Expenses that are directly allocable 

to tax-exempt income are allocated only 

to tax-exempt income. A reasonable 

proportion of expenses indirectly 

allocable to both tax-exempt income 

and other income must be allocated to 

each class of income.

Deductions That May Be 

Allowable for Estate Tax 

Purposes

Administration expenses and casualty 

and theft losses deductible on Form 706 

may be deducted, to the extent 

otherwise deductible for income tax 

purposes, on Form 1041 if the fiduciary 

files a statement waiving the right to 

deduct the expenses and losses on 

Form 706. The statement must be filed 

before the expiration of the statutory 

period of limitations for the tax year the 

deduction is claimed. See Pub. 559 for 

more information.

Accrued Expenses

Generally, an accrual basis taxpayer 

can deduct accrued expenses in the tax 

year that: (a) all events have occurred 

that determine the liability; and (b) the 

amount of the liability can be figured 

with reasonable accuracy. However, all 

the events that establish liability are 

treated as occurring only when 

economic performance takes place. 

There are exceptions for recurring 

items. See section 461(h).

Limitations on Deductions

At-Risk Loss Limitations

Generally, the amount the estate or trust 

has “at-risk” limits the loss it can deduct 

for any tax year. Use Form 6198, 

At-Risk Limitations, to figure the 

deductible loss for the year and file it 

with Form 1041. For more information, 

see Pub. 925, Passive Activity and 

At-Risk Rules.

Passive Activity Loss and 

Credit Limitations

In general. Section 469 and the 

regulations thereunder generally limit 

losses from passive activities to the 

amount of income derived from all 

passive activities. Similarly, credits from 

passive activities are generally limited to 

the tax attributable to such activities. 

These limitations are first applied at the 

estate or trust level.

Generally, an activity is a passive 

activity if it involves the conduct of any 

trade or business, and the taxpayer 

does not materially participate in the 

activity. Passive activities do not include 

working interests in oil and gas 

properties. See section 469(c)(3).

Note. Material participation standards 

for estates and trusts have not been 

established by regulations.

For a grantor trust, material 

participation is determined at the 

grantor level.

If the estate or trust distributes an 

interest in a passive activity, the basis of 

the property immediately before the 

distribution is increased by the passive 

activity losses allocable to the interest, 

and such losses cannot be deducted. 

See section 469(j)(12).

Losses from passive activities 

are first subject to the at-risk 

rules. When the losses are 

deductible under the at-risk rules, the 

passive activity rules then apply.

Rental activities. Generally, rental 

activities are passive activities, whether 

TIP

or not the taxpayer materially 

participates. However, certain taxpayers 

who materially participate in real 

property trades or businesses are not 

subject to the passive activity limitations 

on losses from rental real estate 

activities in which they materially 

participate. For more details, see 

section 469(c)(7).

For tax years of an estate ending less 

than 2 years after the decedent's date of 

death, up to $25,000 of deductions and 

deduction equivalents of credits from 

rental real estate activities in which the 

decedent actively participated are 

allowed. Any excess losses or credits 

are suspended for the year and carried 

forward.

Portfolio income. Portfolio income is 

not treated as income from a passive 

activity, and passive losses and credits 

generally may not be applied to offset it. 

Portfolio income generally includes 

interest, dividends, royalties, and 

income from annuities. Portfolio income 

of an estate or trust must be accounted 

for separately.

Forms to file. See Form 8582, Passive 

Activity Loss Limitations, to figure the 

amount of losses allowed from passive 

activities. See Form 8582-CR, Passive 

Activity Credit Limitations, to figure the 

amount of credit allowed for the current 

year.

Transactions Between Related 

Taxpayers

Under section 267, a trust that uses the 

accrual method of accounting may only 

deduct business expenses and interest 

owed to a related party in the year the 

payment is included in the income of the 

related party. For this purpose, a related 

party includes:

1. A grantor and a fiduciary of any 

trust;

2. A fiduciary of a trust and a 

fiduciary of another trust, if the same 

person is a grantor of both trusts;

3. A fiduciary of a trust and a 

beneficiary of such trust;

4. A fiduciary of a trust and a 

beneficiary of another trust, if the same 

person is a grantor of both trusts;

5. A fiduciary of a trust and a 

corporation more than 50% in value of 

the outstanding stock of which is 

owned, directly or indirectly, by or for 

the trust or by or for a person who is a 

grantor of the trust; and

6. An executor of an estate and a 

beneficiary of that estate, except for a 

sale or exchange to satisfy a pecuniary 

2014 Instructions for Form 1041 -21-
bequest (that is, a bequest of a sum of 

money).

Line 10—Interest

Enter the amount of interest (subject to 

limitations) paid or incurred by the 

estate or trust on amounts borrowed by 

the estate or trust, or on debt acquired 

by the estate or trust (for example, 

outstanding obligations from the 

decedent) that is not claimed elsewhere 

on the return.

If the proceeds of a loan were used 

for more than one purpose (for example, 

to purchase a portfolio investment and 

to acquire an interest in a passive 

activity), the fiduciary must make an 

interest allocation according to the rules 

in Temporary Regulations section 

1.163-8T.

Do not include interest paid on 

indebtedness incurred or continued to 

purchase or carry obligations on which 

the interest is wholly exempt from 

income tax.

Personal interest is not deductible. 

Examples of personal interest include 

interest paid on:

Revolving charge accounts used to 

purchase personal use property;

Personal notes for money borrowed 

from a bank, credit union, or other 

person;

Installment loans on personal use 

property; and

Underpayments of federal, state, or 

local income taxes.

Interest that is paid or incurred on 

indebtedness allocable to a trade or 

business (including a rental activity) 

should be deducted on the appropriate 

line of Schedule C (or C-EZ), E, or F 

(Form 1040), the net income or loss 

from which is shown on line 3, 5, or 6 of 

Form 1041.

Types of interest to include on line 10 

are:

1. Any investment interest (subject 

to limitations—see below);

2. Any qualified residence interest 

(see later); and

3. Any interest payable under 

section 6601 on any unpaid portion of 

the estate tax attributable to the value of 

a reversionary or remainder interest in 

property for the period during which an 

extension of time for payment of such 

tax is in effect.

Investment interest. Generally, 

investment interest is interest (including 

amortizable bond premium on taxable 

bonds acquired after October 22, 1986, 

but before January 1, 1988) that is paid 

or incurred on indebtedness that is 

properly allocable to property held for 

investment. Investment interest does 

not include any qualified residence 

interest, or interest that is taken into 

account under section 469 in figuring 

income or loss from a passive activity.

Generally, net investment income is 

the excess of investment income over 

investment expenses. Investment 

expenses are those expenses (other 

than interest) allowable after application 

of the 2% floor on miscellaneous 

itemized deductions.

The amount of the investment 

interest deduction may be limited. Use 

Form 4952, Investment Interest 

Expense Deduction, to figure the 

allowable investment interest deduction.

If you must complete Form 4952, 

check the box on line 10 of Form 1041 

and attach Form 4952. Then, add the 

deductible investment interest to the 

other types of deductible interest and 

enter the total on line 10.

Qualified residence interest. Interest 

paid or incurred by an estate or trust on 

indebtedness secured by a qualified 

residence of a beneficiary of an estate 

or trust is treated as qualified residence 

interest if the residence would be a 

qualified residence (that is, the principal 

residence or the secondary residence 

selected by the beneficiary) if owned by 

the beneficiary. The beneficiary must 

have a present interest in the estate or 

trust or an interest in the residuary of the 

estate or trust. See Pub. 936, Home 

Mortgage Interest Deduction, for an 

explanation of the general rules for 

deducting home mortgage interest.

See section 163(h)(3) for a definition 

of qualified residence interest and for 

limitations on indebtedness.

Qualified mortgage insurance premiums. Enter (on the worksheet later) the 

qualified mortgage insurance premiums 

paid under a mortgage insurance 

contract issued after December 31, 

2006, in connection with qualified 

residence acquisition debt that was 

secured by a principal or secondary 

residence. See Prepaid mortgage 

insurance below if the estate or trust 

paid any premiums allocable after 2014. 

If at least one other person was liable for 

and paid the premiums in connection 

with the loan, and the premiums were 

reported on Form 1098, Mortgage 

Interest Statement, include the estate's 

or trust's share of the 2014 premiums on 

the worksheet later.

Qualified mortgage insurance is 

mortgage insurance provided by the 

Department of Veterans Affairs, the 

Federal Housing Administration, or the 

Rural Housing Service, and private 

mortgage insurance (as defined in 

section 2 of the Homeowners Protection 

Act of 1998 as in effect on December 

20, 2006).

Mortgage insurance provided by the 

Department of Veterans Affairs and the 

Rural Housing Service is commonly 

known as a funding fee and guarantee 

fee, respectively. These fees can be 

deducted fully in 2014 if the mortgage 

insurance contract was issued in 2014. 

Contact the mortgage insurance issuer 

to determine the deductible amount if it 

is not included in box 4 of Form 1098.

Prepaid mortgage insurance. If 

the estate or trust paid mortgage 

insurance premiums allocable to 

periods after 2014, such premiums must 

be allocated over the shorter of:

The stated term of the mortgage, or

84 months, beginning with the month 

the insurance was obtained.

The premiums are treated as paid in 

the year to which they are allocated. If 

the mortgage is satisfied before its term, 

no deduction is allowed for the 

unamortized balance. See Pub. 936 for 

details. These allocation rules do not 

apply to qualified mortgage insurance 

provided by the Department of Veterans 

Affairs or the Rural Housing Service.

Limit on the amount that is 

deductible. The estate or trust cannot 

deduct mortgage insurance premiums if 

the estate's or trust's AGI is more than 

$109,000. If the estate's or trust's AGI is 

more than $100,000, its deduction is 

limited and you must use the worksheet 

later to figure the deduction. See How to 

figure AGI for estates and trusts, later, 

for information on figuring AGI.

Line 11—Taxes

Enter any deductible taxes paid or 

incurred during the tax year that are not 

deductible elsewhere on Form 1041. 

Deductible taxes include the following:

State and local income taxes. You 

can deduct state and local income taxes 

unless you elect to deduct state and 

local general sales taxes. You cannot 

deduct both.

State and local general sales taxes. 

You can elect to deduct state and local 

general sales taxes instead of state and 

local income taxes. Generally, you can 

elect to deduct the actual state and local 

general sales taxes (including 

compensating use taxes) you paid in 

2014 if the tax rate was the same as the 

-22- 2014 Instructions for Form 1041
general sales tax rate. However, sales 

taxes on food, clothing, medical 

supplies, and motor vehicles are 

deductible as a general sales tax even if 

the tax rate was less than the general 

sales tax rate. Sales taxes on motor 

vehicles are also deductible as a 

general sales tax if the tax rate was 

more than the general sales tax rate, but 

the tax is deductible only up to the 

amount of tax that would have been 

imposed at the general sales tax rate. 

Motor vehicles include cars, 

motorcycles, motor homes, recreational 

vehicles, sport utility vehicles, trucks, 

vans, and off-road vehicles. Also 

include any state and local general 

sales taxes paid for a leased motor 

vehicle.

Do not include sales taxes paid on 

items used in a trade or business. An 

estate or trust cannot use the Optional 

Sales Tax Tables for individuals in the 

Instructions for Schedule A (Form 

1040), Itemized Deductions, to figure its 

deduction.

State, local, and foreign real property 

taxes.

State and local personal property 

taxes.

Foreign or U.S. possession income 

taxes. You may want to take a credit for 

the tax instead of a deduction. See the 

instructions for Schedule G, line 2a, 

later, for more details.

The generation-skipping transfer 

(GST) tax imposed on income 

distributions.

Do not deduct:

Federal income taxes;

Estate, inheritance, legacy, 

succession, and gift taxes; or

Federal duties and excise taxes.

Line 12—Fiduciary Fees

Enter the deductible fees paid or 

incurred to the fiduciary for 

administering the estate or trust during 

the tax year.

Fiduciary fees deducted on 

Form 706 cannot be deducted 

on Form 1041.

Line 15a—Other Deductions 

Not Subject to the 2% Floor

Attach your own statement, listing by 

type and amount all allowable 

deductions that are not deductible 

elsewhere on Form 1041.

Do not include any losses on 

worthless bonds and similar obligations 

and nonbusiness bad debts. Report 

these losses as applicable on Form 

8949, Sales and Other Dispositions of 

Capital Assets.

Do not deduct medical or funeral 

expenses on Form 1041. Medical 

expenses of the decedent paid by the 

estate may be deductible on the 

decedent's income tax return for the 

year incurred. See section 213(c). 

Funeral expenses are deductible only 

on Form 706.

The following are examples of 

deductions that are reported on 

line 15a.

Bond premium(s). For taxable bonds 

acquired before October 23, 1986, if the 

fiduciary elected to amortize the 

premium, report the amortization on this 

line. If you made the election to amortize 

the premium, the basis in the taxable 

TIP

bond must be reduced by the amount of 

amortization.

For tax-exempt bonds, you cannot 

deduct the premium that is amortized. 

Although the premium cannot be 

deducted, you must amortize the 

premium and reduce the estate's or 

trust's basis in the tax-exempt bond by 

the amount of premium amortized.

For more information, see section 

171 and Pub. 550.

If you claim a bond premium 

deduction for the estate or trust, figure 

the deduction on a separate sheet and 

attach it to Form 1041.

Casualty and theft losses. Use Form 

4684, Casualties and Thefts, to figure 

any deductible casualty and theft 

losses.

Domestic production activities deduction. The estate or trust may be 

able to deduct up to 9% of its share of 

qualified production activities income 

(QPAI) from the following activities.

1. Construction performed in the 

United States.

2. Engineering or architectural 

services performed in the United States 

for construction projects in the United 

States.

3. Any lease, rental, license, sale, 

exchange, or other disposition of:

a. Tangible personal property, 

computer software, and sound 

recordings that the estate or trust 

manufactured, produced, grew, or 

extracted in whole or in significant part 

within the United States;

b. Any qualified film the estate or 

trust produced; or

Qualified Mortgage Insurance Premiums Deduction Worksheet Keep for Your Records

1. Enter the total premiums the estate or trust paid in 2014 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.

2014 Instructions for Form 1041 -23-
c. Electricity, natural gas, or potable 

water the estate or trust produced in the 

United States.

In certain cases, the United States 

includes the Commonwealth of Puerto 

Rico.

The deduction does not apply to 

income derived from:

The sale of food and beverages the 

estate or trust prepared at a retail 

establishment;

Property the estate or trust leased, 

licensed, or rented for use by any 

related person; or

The transmission or distribution of 

electricity, natural gas, or potable water.

The deduction cannot exceed 9% of 

modified AGI or 50% of certain Form 

W-2 wages. QPAI, as well as Form W-2 

wages, must be apportioned between 

the trust or estate and its beneficiaries. 

For more details, see Form 8903, 

Domestic Production Activities 

Deduction, and its separate instructions.

Special rule for oil-related QPAI. If 

the estate or trust has oil-related QPAI, 

the domestic production activities 

deduction is reduced by 3% of the 

smallest of:

Oil-related QPAI,

QPAI, or

Modified AGI.

See Form 8903 for details.

Estate's or trust's share of amortization, depreciation, and depletion not 

claimed elsewhere. If you cannot 

deduct the estate's or trust's 

apportioned share of amortization, 

depreciation, and depletion as rent or 

royalty expenses on Schedule E (Form 

1040), or as business or farm expenses 

on Schedule C, C-EZ, or F (Form 1040), 

itemize the estate's or trust's 

apportioned share of the deductions on 

an attached sheet and include them on 

line 15a.

Note. Do not report the beneficiary's 

apportioned share of depreciation, 

depletion, and amortization on line 15a. 

Report the beneficiary's apportioned 

share of deductions on Schedule K-1 

(Form 1041), box 9.

Itemize each beneficiary's 

apportioned share of the deductions 

and report them in the appropriate box 

of Schedule K-1 (Form 1041).

Line15b—Net Operating Loss 

Deduction

An estate or trust is allowed a net 

operating loss deduction (NOLD) under 

section 172.

If you claim a NOLD for the estate or 

trust, figure the deduction on a separate 

sheet and attach it to the return.

Line 15c—Allowable 

Miscellaneous Itemized 

Deductions Subject to the 2% 

Floor

Miscellaneous itemized deductions are 

deductible only to the extent that the 

aggregate amount of such deductions 

exceeds 2% of AGI.

Among the miscellaneous itemized 

deductions that must be included on 

line 15c are expenses for the production 

or collection of income under section 

212, such as investment advisory fees, 

subscriptions to investment advisory 

publications, and the cost of safe 

deposit boxes.

Miscellaneous itemized deductions 

do not include deductions for:

Interest under section 163,

Taxes under section 164,

The amortization of bond premium 

under section 171,

Estate taxes attributable to IRD under 

section 691(c), or

Expenses paid or incurred in 

connection with the administration of the 

estate or trust that would not have been 

incurred if the property were not held in 

the estate or trust.

For other exceptions, see section 

67(b).

How to figure AGI for estates and 

trusts. You figure AGI by subtracting 

the following from total income on line 9 

of page 1:

1. The administration costs of the 

estate or trust (the total of lines 12, 14, 

and 15a to the extent they are costs 

incurred in the administration of the 

estate or trust) that would not have been 

incurred if the property were not held by 

the estate or trust;

2. The income distribution 

deduction (line 18);

3. The amount of the exemption 

(line 20);

4. The domestic production 

activities deduction claimed on line 15a; 

and

5. The NOLD claimed on line 15b.

For those estates and trusts whose 

income distribution deduction is limited 

to the actual distribution, and not the 

DNI (that is, the income distribution is 

less than the DNI), when computing the 

AGI, use the amount of the actual 

distribution.

For those estates and trusts whose 

income distribution deduction is limited 

to the DNI (that is, the actual distribution 

exceeds the DNI), the DNI must be 

figured taking into account the allowable 

miscellaneous itemized deductions 

(AMID) after application of the 2% floor. 

In this situation there are two unknown 

amounts: (a) the AMID and (b) the DNI.

Computing line 15c. To compute 

line 15c, use the equation below:

AMID = Total miscellaneous itemized 

deductions – (.02(AGI))

The following example illustrates how 

algebraic equations can be used to 

solve for these unknown amounts.

Example. The Malcolm Smith Trust, 

a complex trust, earned $20,000 of 

dividend income, $20,000 of capital 

gains, and a fully deductible $5,000 loss 

from XYZ partnership (chargeable to 

corpus) in 2014. The trust instrument 

provides that capital gains are added to 

corpus. Fifty percent of the fiduciary 

fees are allocated to income and 50% to 

corpus. The trust claimed a $2,000 

deduction on line 12 of Form 1041. The 

trust incurred $1,500 of miscellaneous 

itemized deductions (chargeable to 

income), which are subject to the 2% 

floor. There are no other deductions. 

The trustee made a discretionary 

distribution of the accounting income of 

$17,500 to the trust's sole beneficiary.

Because the actual distribution can 

reasonably be expected to exceed the 

DNI, the trust must figure the DNI, taking 

into account the allowable 

miscellaneous itemized deductions, to 

determine the amount to enter on 

line 15c.

The trust also claims an exemption of 

$100 on line 20.

Using the facts in this example:

AMID = 1,500 – (.02(AGI))

In all situations, use the following 

equation to compute the AGI:

AGI = (line 9) – (the total of lines 12, 

14, and 15a to the extent they are costs 

incurred in the administration of the 

estate or trust that would not have been 

incurred if the property were not held by 

the estate or trust) – (line 15b) – (line 18) 

– (line 20).

Note. There are no other deductions 

claimed by the trust on line 15a that are 

deductible in arriving at AGI.

Figuring AGI in this example, we get:

AGI = 35,000 – 2,000 – DNI – 100

-24- 2014 Instructions for Form 1041
Since the value of line 18 is not 

known because it is limited to the DNI, 

you are left with the following:

AGI = 32,900 – DNI

Substitute the value of AGI in the 

equation:

AMID = 1,500 – (.02(32,900 – DNI))

The equation cannot be solved until 

the value of DNI is known. The DNI can 

be expressed in terms of the AMID. To 

do this, compute the DNI using the 

known values. In this example, the DNI 

is equal to the total income of the trust 

(less any capital gains allocated to 

corpus or plus any capital loss from 

line 4); less total deductions from line 16 

(excluding any miscellaneous itemized 

deductions); less the AMID.

Thus, DNI = (line 9) – (line 19, 

column (2) of Schedule D (Form 1041)) 

– (line 16) – (AMID)

Substitute the known values:

DNI = 35,000 – 20,000 – 2,000 – 

AMID

DNI = 13,000 – AMID

Substitute the value of DNI in the 

equation to solve for AMID:

AMID = 1,500 – (.02(32,900 – 

(13,000 – AMID)))

AMID = 1,500 – (.02(32,900 – 13,000 

+ AMID))

AMID = 1,500 – (658 – 260 

+ .02AMID)

AMID = 1,102 – .02AMID

1.02AMID = 1,102

AMID = 1,080

DNI = 11,920 (i.e., 13,000 – 1,080)

AGI = 20,980 (i.e., 32,900 – 11,920)

Note. The income distribution 

deduction is equal to the smaller of the 

distribution ($17,500) or the DNI 

($11,920).

Enter the value of AMID on line 15b 

(the DNI should equal line 7 of 

Schedule B) and complete the rest of 

Form 1041 according to the instructions.

If the 2% floor is more than the 

deductions subject to the 2% floor, no 

deductions are allowed.

Line 18—Income Distribution 

Deduction

If the estate or trust was required to 

distribute income currently or if it paid, 

credited, or was required to distribute 

any other amounts to beneficiaries 

during the tax year, complete 

Schedule B to determine the estate's or 

trust's income distribution deduction. 

However, if you are filing for a pooled 

income fund, do not complete 

Schedule B. Instead, attach a statement 

to support the computation of the 

income distribution deduction. For more 

information, see Pooled Income Funds, 

earlier.

If the estate or trust claims an income 

distribution deduction, complete and 

attach:

Part I (through line 26) and Part II of 

Schedule I (Form 1041) to refigure the 

deduction on a minimum tax basis, and

Schedule K-1 (Form 1041) for each 

beneficiary to which a distribution was 

made or required to be made.

Cemetery perpetual care fund. On 

line 18, deduct the amount, not more 

than $5 per gravesite, paid for 

maintenance of cemetery property. To 

the right of the entry space for line 18, 

enter the number of gravesites. Also 

write “Section 642(i) trust” in 

parentheses after the trust's name at the 

top of Form 1041. You do not have to 

complete Schedules B of Form 1041 

and K-1 (Form 1041).

Do not enter less than zero on 

line 18.

Line 19—Estate Tax Deduction 

(Including Certain 

Generation-Skipping Transfer 

Taxes)

If the estate or trust includes IRD in its 

gross income, and such amount was 

included in the decedent's gross estate 

for estate tax purposes, the estate or 

trust is allowed to deduct in the same 

tax year that the income is included that 

portion of the estate tax imposed on the 

decedent's estate that is attributable to 

the inclusion of the IRD in the 

decedent's estate. For an example of 

the computation, see Regulations 

section 1.691(c)-1 and Pub. 559.

If any amount properly paid, credited, 

or required to be distributed by an 

estate or trust to a beneficiary consists 

of IRD received by the estate or trust, do 

not include such amounts in 

determining the estate tax deduction for 

the estate or trust. Figure the deduction 

on a separate sheet. Attach the sheet to 

your return.

If you claim a deduction for 

estate tax attributable to 

qualified dividends or capital 

gains, you may have to adjust the 

amount on Form 1041, page 1, 

line 2b(2), or Schedule D (Form 1041), 

line 22.

Also, a deduction is allowed for the 

GST tax imposed as a result of a 

CAUTION

!

taxable termination or a direct skip 

occurring as a result of the death of the 

transferor. See section 691(c)(3). Enter 

the estate's or trust's share of these 

deductions on line 19.

Line 20—Exemption

Decedents' estates. A decedent's 

estate is allowed a $600 exemption.

Trusts required to distribute all income currently. A trust whose 

governing instrument requires that all 

income be distributed currently is 

allowed a $300 exemption, even if it 

distributed amounts other than income 

during the tax year.

Qualified disability trusts. A qualified 

disability trust is allowed a $3,950 

exemption if the trust's modified AGI is 

less than or equal to $254,200. If its 

modified AGI exceeds $254,200, 

complete the worksheet, later, to figure 

the amount of the trust's exemption. To 

figure modified AGI, follow the 

instructions for figuring AGI for line 15c 

earlier, except use zero as the amount 

of the trust's exemption when figuring 

AGI.

A qualified disability trust is any trust:

1. Described in 42 U.S.C. 1396p(c)

(2)(B)(iv) and established solely for the 

benefit of an individual under 65 years 

of age who is disabled, and

2. All of the beneficiaries of which 

are determined by the Commissioner of 

Social Security to have been disabled 

for some part of the tax year within the 

meaning of 42 U.S.C. 1382c(a)(3).

A trust will not fail to meet item 2 

above just because the trust's corpus 

may revert to a person who is not 

disabled after the trust ceases to have 

any disabled beneficiaries.

All other trusts. A trust not described 

above is allowed a $100 exemption.

Tax and Payments

Line 22—Taxable Income

Minimum taxable income. Line 22 

cannot be less than the larger of:

The inversion gain of the estate or 

trust, as figured under section 7874, if 

the estate or trust is an expatriated 

entity or a partner in an expatriated 

entity, or

The sum of the excess inclusions of 

the estate or trust from Schedule Q 

(Form 1066), Quarterly Notice to 

Residual Interest Holder of REMIC 

Taxable Income or Net Loss Allocation, 

line 2c.

2014 Instructions for Form 1041 -25-
Net operating loss (NOL). If line 22 

(figured without regard to the minimum 

taxable income rule stated above) is a 

loss, the estate or trust may have an 

NOL. Do not include the deductions 

claimed on lines 13, 18, and 20 when 

figuring the amount of the NOL.

Generally, an NOL may be carried 

back to the prior 2 tax years and forward 

for up to 20 years. The 2-year carryback 

period does not apply to the portion of 

an NOL attributable to an eligible loss; a 

farming loss; a qualified disaster, GO 

Zone, or disaster recovery assistance 

loss; or a specified liability loss. An 

estate or trust may also elect to carry an 

NOL forward only, instead of first 

carrying it back. For more information, 

see the Instructions for Form 1045, 

Application for Tentative Refund.

Complete Schedule A of Form 1045 

to figure the amount of the NOL that is 

available for carryback or carryover. 

Use Form 1045 or file an amended 

return to apply for a refund based on an 

NOL carryback. For more details, see 

Pub. 536, Net Operating Losses (NOLs) 

for Individuals, Estates, and Trusts.

On the termination of the estate or 

trust, any unused NOL carryover that 

would be allowable to the estate or trust 

in a later tax year, but for the 

termination, is allowed to the 

beneficiaries succeeding to the property 

of the estate or trust. See the 

instructions for Schedule K-1 (Form 

1041), box 11, codes D and E, later.

Excess deductions on termination. If 

the estate or trust has for its final year 

deductions (excluding the charitable 

deduction and exemption) in excess of 

its gross income, the excess is allowed 

as an itemized deduction to the 

beneficiaries succeeding to the property 

of the estate or trust.

In general, an unused NOL carryover 

that is allowed to beneficiaries (as 

explained above) cannot also be treated 

as an excess deduction. However, if the 

final year of the estate or trust is also the 

last year of the NOL carryover period, 

the NOL carryover not absorbed in that 

tax year by the estate or trust is included 

as an excess deduction. See the 

instructions for Schedule K-1 (Form 

1041), box 11, code A, later.

Line 24a—2014 Estimated Tax 

Payments and Amount Applied 

From 2013 Return

Enter the amount of any estimated tax 

payment you made with Form 1041-ES 

for 2014 plus the amount of any 

overpayment from the 2013 return that 

was applied to the 2014 estimated tax.

If the estate or trust is the beneficiary 

of another trust and received a payment 

of estimated tax that was credited to the 

trust (as reflected on the Schedule K-1 

issued to the trust), then report this 

amount separately with the notation 

“section 643(g)” in the space next to 

line 24a and include this amount in the 

amount entered on line 24a.

Do not include on Form 1041 

estimated tax paid by an 

individual before death. 

Instead, include those payments on the 

decedent's final income tax return.

CAUTION

!

Line 24b—Estimated Tax 

Payments Allocated to 

Beneficiaries

The trustee (or executor, for the final 

year of the estate) may elect under 

section 643(g) to have any portion of its 

estimated tax treated as a payment of 

estimated tax made by a beneficiary or 

beneficiaries. The election is made on 

Form 1041-T, Allocation of Estimated 

Tax Payments to Beneficiaries, which 

must be filed by the 65th day after the 

close of the trust's tax year. Form 

1041-T shows the amounts to be 

allocated to each beneficiary. This 

amount is reported on the beneficiary's 

Schedule K-1 (Form 1041), box 13, 

code A.

Attach Form 1041-T to your return 

only if you have not yet filed it; however, 

attaching Form 1041-T to Form 1041 

does not extend the due date for filing 

Form 1041-T. If you have already filed 

Form 1041-T, do not attach a copy to 

your return.

Failure to file Form 1041-T by 

the due date (March 6, 2015, 

for calendar year estates and 

trusts) will result in an invalid election. 

An invalid election will require the filing 

of amended Schedules K-1 for each 

beneficiary who was allocated a 

payment of estimated tax.

Line 24d—Tax Paid With

Form 7004

If you filed Form 7004 to request an 

extension of time to file Form 1041, 

enter the amount that you paid with the 

extension request.

CAUTION

!

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 $254,200, enter $3,950 on Form 1041, line 20. Otherwise, complete the 

worksheet below to figure the trust’s exemption.

1. Maximum exemption ................................................................... 1. $3,950

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

3. Threshold amount ................................................ 3. $254,200

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

Note: If line 4 is more than $122,500, enter -0- on line 8 below. Do not complete lines 5 through 7.

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. Exemption. Subtract line 7 from line 1. Enter the result here and on Form 1041, line 20 ............ 8.

*Figure the trust’s modified AGI in the same manner as AGI is figured in the line 15c instructions earlier,

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

-26- 2014 Instructions for Form 1041
Line 24e—Federal Income Tax 

Withheld

Use line 24e to claim a credit for any 

federal income tax withheld (and not 

repaid) by: (a) an employer on wages 

and salaries of a decedent received by 

the decedent's estate; (b) a payer of 

certain gambling winnings (for example, 

state lottery winnings); or (c) a payer of 

distributions from pensions, annuities, 

retirement or profit-sharing plans, IRAs, 

insurance contracts, etc., received by a 

decedent's estate or trust. Attach a copy 

of Form W-2, Form W-2G, or Form 

1099-R to the front of the return.

Except for backup withholding 

(as explained below), withheld 

income tax cannot be passed 

through to beneficiaries on either 

Schedule K-1 or Form 1041-T.

Backup withholding. If the estate or 

trust received a 2014 Form 1099 

showing federal income tax withheld 

(that is, backup withholding) on interest 

income, dividends, or other income, 

check the box and include the amount 

withheld on income retained by the 

estate or trust in the total for line 24e.

Report on Schedule K-1 (Form 

1041), box 13, code B, any credit for 

backup withholding on income 

distributed to the beneficiary.

Line 24f—Credit for Tax Paid on 

Undistributed Capital Gains

Attach Copy B of Form 2439, Notice to 

Shareholder of Undistributed 

Long-Term Capital Gains.

Line 24g—Credit for Federal 

Tax on Fuels

Enter any credit for federal excise taxes 

paid on fuels that are ultimately used for 

nontaxable purposes (for example, an 

off-highway business use). Attach Form 

4136, Credit for Federal Tax Paid on 

Fuels. See Pub. 510, Excise Taxes, for 

more information.

Line 26—Estimated Tax Penalty

If line 27 is at least $1,000 and more 

than 10% of the tax shown on Form 

1041, or the estate or trust underpaid its 

2014 estimated tax liability for any 

payment period, it may owe a penalty. 

See Form 2210 to determine whether 

the estate or trust owes a penalty and to 

figure the amount of the penalty.

Note. The penalty may be waived 

under certain conditions. See Pub. 505, 

Tax Withholding and Estimated Tax, for 

details.

CAUTION

!

Line 27—Tax Due

You must pay the tax in full when the 

return is filed. You may pay by EFTPS. 

For more information about EFTPS, see 

Electronic Deposits, earlier. Also, you 

may pay by check or money order or by 

credit or debit card.

To pay by check or money order. 

If you pay by check or money order:

Make it payable to “United States 

Treasury”,

Make sure the name of the estate or 

trust appears on the payment,

Write the estate’s or trust’s EIN and 

“2014 Form 1041” on the payment,

Consider completing the 2014 Form 

1041-V, and

Enclose, but do not attach, the 

payment (and Form 1041-V, if 

completed) with Form 1041.

To pay by credit or debit card. 

For information on paying your taxes 

electronically, including by credit or 

debit card, go to www.irs.gov/e-pay.

Line 29a—Credited to 2015 

Estimated Tax

Enter the amount from line 28 that you 

want applied to the estate's or trust's 

2015 estimated tax.

Schedule A—Charitable 

Deduction

General Instructions

Generally, any part of the gross income 

of an estate or trust (other than a simple 

trust) that, under the terms of the will or 

governing instrument, is paid (or treated 

as paid) during the tax year for a 

charitable purpose specified in section 

170(c) is allowed as a deduction to the 

estate or trust. It is not necessary that 

the charitable organization be created 

or organized in the United States.

A pooled income fund or a section 

4947(a)(1) nonexempt charitable trust 

treated as a private foundation must 

attach a separate sheet to Form 1041 

instead of using Schedule A of Form 

1041 to figure the charitable deduction.

Additional return to be filed by 

trusts. Trusts, other than split-interest 

trusts or nonexempt charitable trusts, 

that claim a charitable deduction also 

file Form 1041-A unless the trust is 

required to distribute currently to the 

beneficiaries all the income for the year 

determined under section 643(b) and 

related regulations.

Pooled income funds and charitable 

lead trusts also file Form 5227. See 

Form 5227 for information about any 

exceptions.

Election to treat contributions as 

paid in the prior tax year. The 

fiduciary of an estate or trust may elect 

to treat as paid during the tax year any 

amount of gross income received during 

that tax year or any prior tax year that 

was paid in the next tax year for a 

charitable purpose.

For example, if a calendar year 

estate or trust makes a qualified 

charitable contribution on February 7, 

2015, from income earned in 2014 or 

prior, then the fiduciary can elect to treat 

the contribution as paid in 2014.

To make the election, the fiduciary 

must file a statement with Form 1041 for 

the tax year in which the contribution is 

treated as paid. This statement must 

include:

1. The name and address of the 

fiduciary;

2. The name of the estate or trust;

3. An indication that the fiduciary is 

making an election under section 642(c)

(1) for contributions treated as paid 

during such tax year;

4. The name and address of each 

organization to which any such 

contribution is paid; and

5. The amount of each contribution 

and date of actual payment or, if 

applicable, the total amount of 

contributions paid to each organization 

during the next tax year, to be treated as 

paid in the prior tax year.

The election must be filed by the due 

date (including extensions) for Form 

1041 for the next tax year. If the original 

return was filed on time, you may make 

the election on an amended return filed 

no later than 6 months after the due 

date of the return (excluding 

extensions). Write “Filed pursuant to 

section 301.9100-2” at the top of the 

amended return and file it at the same 

address you used for your original 

return.

For more information about the 

charitable deduction, see section 642(c) 

and related regulations.

Specific Instructions

Line 1—Amounts Paid or 

Permanently Set Aside for 

Charitable Purposes From Gross 

Income

Enter amounts that were paid for a 

charitable purpose out of the estate's or 

trust's gross income, including any 

capital gains that are attributable to 

2014 Instructions for Form 1041 -27-
income under the governing instrument 

or local law. Include amounts paid 

during the tax year from gross income 

received in a prior tax year, but only if no 

deduction was allowed for any prior tax 

year for these amounts.

Estates, and certain trusts, may claim 

a deduction for amounts permanently 

set aside for a charitable purpose from 

gross income. Such amounts must be 

permanently set aside during the tax 

year to be used exclusively for religious, 

charitable, scientific, literary, or 

educational purposes, or for the 

prevention of cruelty to children or 

animals, or for the establishment, 

acquisition, maintenance, or operation 

of a public cemetery not operated for 

profit.

For a trust to qualify, the trust may 

not be a simple trust, and the set aside 

amounts must be required by the terms 

of a trust instrument that was created on 

or before October 9, 1969.

Further, the trust instrument must 

provide for an irrevocable remainder 

interest to be transferred to or for the 

use of an organization described in 

section 170(c); or the trust must have 

been created by a grantor who was at 

all times after October 9, 1969, under a 

mental disability to change the terms of 

the trust.

Also, certain testamentary trusts that 

were established by a will that was 

executed on or before October 9, 1969, 

may qualify. See Regulations section 

1.642(c)-2(b).

Do not include any capital gains for 

the tax year allocated to corpus and 

paid or permanently set aside for 

charitable purposes. Instead, enter 

these amounts on line 4.

Line 2—Tax-Exempt Income 

Allocable to Charitable 

Contributions

Any estate or trust that pays or sets 

aside any part of its income for a 

charitable purpose must reduce the 

deduction by the portion allocable to 

any tax-exempt income. If the governing 

instrument specifically provides as to 

the source from which amounts are 

paid, permanently set aside, or to be 

used for charitable purposes, the 

specific provisions control. In all other 

cases, determine the amount of 

tax-exempt income allocable to 

charitable contributions by multiplying 

line 1 by a fraction, the numerator of 

which is the total tax-exempt income of 

the estate or trust, and the denominator 

of which is the gross income of the 

estate or trust. Do not include in the 

denominator any losses allocated to 

corpus.

Line 4—Capital Gains for the Tax 

Year Allocated to Corpus and Paid 

or Permanently Set Aside for 

Charitable Purposes

Enter the total of all capital gains for the 

tax year that are:

Allocated to corpus, and

Paid or permanently set aside for 

charitable purposes.

Line 6—Section 1202 Exclusion 

Allocable to Capital Gains Paid or 

Permanently Set Aside for 

Charitable Purposes

If the exclusion of gain from the sale or 

exchange of qualified small business 

(QSB) stock was claimed, enter the part 

of the gain included on Schedule A, 

lines 1 and 4, that was excluded under 

section 1202.

Schedule B—Income 

Distribution Deduction

General Instructions

If the estate or trust was required to 

distribute income currently or if it paid, 

credited, or was required to distribute 

any other amounts to beneficiaries 

during the tax year, complete 

Schedule B to determine the estate's or 

trust's income distribution deduction.

Note. Use Schedule I (Form 1041) to 

compute the DNI and income 

distribution deduction on a minimum tax 

basis.

Pooled income funds. Do not 

complete Schedule B for these funds. 

Instead, attach a separate statement to 

support the computation of the income 

distribution deduction. See Pooled 

Income Funds, earlier, for more 

information.

Separate share rule. If a single trust or 

an estate has more than one 

beneficiary, and if different beneficiaries 

have substantially separate and 

independent shares, their shares are 

treated as separate trusts or estates for 

the sole purpose of determining the DNI 

allocable to the respective beneficiaries.

If the separate share rule applies, 

figure the DNI allocable to each 

beneficiary on a separate sheet and 

attach the sheet to this return. Any 

deduction or loss that is applicable 

solely to one separate share of the trust 

or estate is not available to any other 

share of the same trust or estate.

For more information, see section 

663(c) and related regulations.

Withholding of tax on foreign persons. The fiduciary may be liable for 

withholding tax on distributions to 

beneficiaries who are foreign persons. 

For more information, see Pub. 515, 

Withholding of Tax on Nonresident 

Aliens and Foreign Entities, and Forms 

1042 and 1042-S.

Specific Instructions

Line 1—Adjusted Total Income

Generally, enter on line 1, Schedule B, 

the amount from line 17 on page 1 of 

Form 1041. However, if both line 4 and 

line 17 on page 1 of Form 1041 are 

losses, enter on line 1, Schedule B, the 

smaller of those losses. If line 4 is zero 

or a gain and line 17 is a loss, enter zero 

on line 1, Schedule B.

If you are filing for a simple trust, 

subtract from adjusted total income any 

extraordinary dividends or taxable stock 

dividends included on page 1, line 2, 

and determined under the governing 

instrument and applicable local law to 

be allocable to corpus.

Line 2—Adjusted Tax-Exempt 

Interest

To figure the adjusted tax-exempt 

interest:

Step 1. Add tax-exempt interest 

income on line 2 of Schedule A, any 

expenses allowable under section 212 

allocable to tax-exempt interest, and 

any interest expense allocable to 

tax-exempt interest.

Step 2. Subtract the Step 1 total from 

the amount of tax-exempt interest 

(including exempt-interest dividends) 

received.

Section 212 expenses that are 

directly allocable to tax-exempt interest 

are allocated only to tax-exempt 

interest. A reasonable proportion of 

section 212 expenses that are indirectly 

allocable to both tax-exempt interest 

and other income must be allocated to 

each class of income.

Figure the interest expense allocable 

to tax-exempt interest according to the 

guidelines in Rev. Proc. 72-18, 1972-1 

C.B. 740.

-28- 2014 Instructions for Form 1041
See Regulations sections 1.643(a)-5 

and 1.265-1 for more information.

Line 3

Include all capital gains, whether or not 

distributed, that are attributable to 

income under the governing instrument 

or local law. For example, if the trustee 

distributed 50% of the current year's 

capital gains to the income beneficiaries 

(and reflects this amount in column (1), 

line 19 of Schedule D (Form 1041)), but 

under the governing instrument all 

capital gains are attributable to income, 

then include 100% of the capital gains 

on line 3. If the amount on Schedule D 

(Form 1041), line 19, column (1), is a 

net loss, enter zero.

If the exclusion of gain from the sale 

or exchange of QSB stock was claimed, 

do not reduce the gain on line 3 by any 

amount excluded under section 1202.

Line 5

In figuring the amount of long-term and 

short-term capital gain for the tax year 

included on Schedule A, line 1, the 

specific provisions of the governing 

instrument control if the instrument 

specifically provides as to the source 

from which amounts are paid, 

permanently set aside, or to be used for 

charitable purposes.

In all other cases, determine the 

amount to enter by multiplying line 1 of 

Schedule A by a fraction, the numerator 

of which is the amount of net capital 

gains that are included in the accounting 

income of the estate or trust (that is, not 

allocated to corpus) and are distributed 

to charities, and the denominator of 

which is all items of income (including 

the amount of such net capital gains) 

included in the DNI.

Reduce the amount on line 5 by any 

allocable section 1202 exclusion.

Line 8—Accounting Income

If you are filing for a decedent's estate 

or a simple trust, skip this line. If you are 

filing for a complex trust, enter the 

income for the tax year determined 

under the terms of the governing 

instrument and applicable local law. Do 

not include extraordinary dividends or 

taxable stock dividends determined 

under the governing instrument and 

applicable local law to be allocable to 

corpus.

Lines 9 and 10

Do not include any:

Amount that was deducted on the 

prior year's return that was required to 

be distributed in the prior year;

Amount that is paid or permanently 

set aside for charitable purposes or 

otherwise qualifying for the charitable 

deduction; or

Amount that is properly paid or 

credited as a gift or bequest of a specific 

amount of money or specific property.

Note. An amount that can be paid or 

credited only from income is not 

considered a gift or bequest. Also, to 

qualify as a gift or bequest, the amount 

must be paid in three or fewer 

installments.

Line 9—Income Required To Be 

Distributed Currently

Line 9 is to be completed by all simple 

trusts as well as complex trusts and 

decedent's estates that are required to 

distribute income currently, whether it is 

distributed or not. The determination of 

whether trust income is required to be 

distributed currently depends on the 

terms of the governing instrument and 

the applicable local law.

The line 9 distributions are referred to 

as first tier distributions and are 

deductible by the estate or trust to the 

extent of the DNI. The beneficiary 

includes such amounts in his or her 

income to the extent of his or her 

proportionate share of the DNI.

Line 10—Other Amounts Paid, 

Credited, or Otherwise Required 

To Be Distributed

Line 10 is to be completed only by a 

decedent's estate or complex trust. 

These distributions consist of any other 

amounts paid, credited, or required to 

be distributed and are referred to as 

second tier distributions. Such amounts 

include annuities to the extent not paid 

out of income, mandatory and 

discretionary distributions of corpus, 

and distributions of property in kind.

If Form 1041-T was timely filed to 

elect to treat estimated tax payments as 

made by a beneficiary, the payments 

are treated as paid or credited to the 

beneficiary on the last day of the tax 

year and must be included on line 10.

Unless a section 643(e)(3) election is 

made, the value of all noncash property 

actually paid, credited, or required to be 

distributed to any beneficiaries is the 

smaller of:

1. The estate's or trust's adjusted 

basis in the property immediately before 

distribution, plus any gain or minus any 

loss recognized by the estate or trust on 

the distribution (basis of beneficiary), or

2. The FMV of such property.

If a section 643(e)(3) election is made 

by the fiduciary, then the amount 

entered on line 10 will be the FMV of the 

property.

A fiduciary of a complex trust or a 

decedent's estate may elect to treat any 

amount paid or credited to a beneficiary 

within 65 days following the close of the 

tax year as being paid or credited on the 

last day of that tax year. To make this 

election, see the instructions for 

Question 6, later.

The beneficiary includes the amounts 

on line 10 in his or her income only to 

the extent of his or her proportionate 

share of the DNI.

Complex trusts. If the second tier 

distributions exceed the DNI allocable to 

the second tier, the trust may have an 

accumulation distribution. See the 

line 11 instructions below.

Line 11—Total Distributions

If line 11 is more than line 8, and you are 

filing for a complex trust that has 

previously accumulated income, see the 

instructions for Schedule J, later, to see 

if you must complete Schedule J (Form 

1041).

Line 12—Adjustment for 

Tax-Exempt Income

In figuring the income distribution 

deduction, the estate or trust is not 

allowed a deduction for any item of the 

DNI that is not included in the gross 

income of the estate or trust. Thus, for 

purposes of figuring the allowable 

income distribution deduction, the DNI 

(line 7) is figured without regard to any 

tax-exempt interest.

If tax-exempt interest is the only 

tax-exempt income included in the total 

distributions (line 11), and the DNI 

(line 7) is less than or equal to line 11, 

then enter on line 12 the amount from 

line 2.

If tax-exempt interest is the only 

tax-exempt income included in the total 

distributions (line 11), and the DNI is 

more than line 11 (that is, the estate or 

trust made a distribution that is less than 

2014 Instructions for Form 1041 -29-
the DNI), then figure the adjustment by 

multiplying line 2 by a fraction, the 

numerator of which is the total 

distributions (line 11), and the 

denominator of which is the DNI (line 7). 

Enter the result on line 12.

If line 11 includes tax-exempt income 

other than tax-exempt interest, figure 

line 12 by subtracting the total of the 

following from tax-exempt income 

included on line 11:

1. The charitable contribution 

deduction allocable to such tax-exempt 

income, and

2. Expenses allocable to tax-exempt 

income.

Expenses that are directly allocable 

to tax-exempt income are allocated only 

to tax-exempt income. A reasonable 

proportion of expenses indirectly 

allocable to both tax-exempt income 

and other income must be allocated to 

each class of income.

Schedule G—Tax 

Computation

Line 1a

2014 tax rate schedule. For tax years 

beginning in 2014, figure the tax using 

the Tax Rate Schedule below and enter 

the tax on line 1a. However, see the 

Instructions for Schedule D (Form 1041) 

and the Qualified Dividends Tax 

Worksheet later.

2014 Tax Rate Schedule

If taxable 

income 

is:

Over— But not 

over—

Its tax is:

Of the 

amount 

over—

$0 $2,500 15% $0

2,500 5,800 $375 + 25% 2,500

5,800 8,900 1,200.00 + 28% 5,800

8,900 12,150 2,068.00 + 33% 8,900

12,150 ----- 3,140.50 + 39.6% 12,150

Schedule D (Form 1041) and Schedule D Tax Worksheet. Use Part V of 

Schedule D (Form 1041) or the 

Schedule D Tax Worksheet, whichever 

is applicable, to figure the estate's or 

trust's tax if the estate or trust files 

Schedule D (Form 1041) and has:

A net capital gain and any taxable 

income, or

Qualified dividends on line 2b(2) of 

Form 1041 and any taxable income.

Qualified Dividends Tax Worksheet. 

If you do not have to complete Part I or 

Part II of Schedule D and the estate or 

trust has an amount entered on 

line 2b(2) of Form 1041 and any taxable 

income (line 22), then figure the estate's 

or trust's tax using the worksheet, later, 

and enter the tax on line 1a.

Note. You must reduce the amount you 

enter on line 2b(2) of Form 1041 by the 

portion of the section 691(c) deduction 

claimed on line 19 of Form 1041 if the 

estate or trust received qualified 

dividends that were IRD.

Line 1c—AMT. Attach Schedule I 

(Form 1041) if:

The estate or trust must complete 

Schedule B.

The estate or trust claims a credit on 

line 2b, 2c, or 2d of Schedule G.

The estate's or trust's share of 

alternative minimum taxable income 

(line 29 of Schedule I (Form 1041)) 

exceeds $23,500.

Enter the amount from line 56 of 

Schedule I (Form 1041) on line 1c.

Line 2a—Foreign Tax Credit

Attach Form 1116, Foreign Tax Credit 

(Individual, Estate, or Trust), if you elect 

to claim credit for income or profits 

taxes paid or accrued to a foreign 

country or a U.S. possession. The 

estate or trust may claim credit for that 

part of the foreign taxes not allocable to 

the beneficiaries (including charitable 

beneficiaries). Enter the estate's or 

trust's share of the credit on line 2a. See 

Pub. 514, Foreign Tax Credit for 

Individuals, for details.

Line 2b—General Business 

Credit

Do not include any amounts 

that are allocated to a 

beneficiary. Credits that are 

allocated between the estate or trust 

and the beneficiaries are listed in the 

instructions for Schedule K-1, box 13, 

later. Generally, these credits are 

apportioned on the basis of the income 

allocable to the estate or trust and the 

beneficiaries.

Enter on line 2b the estate's or trust's 

total general business credit allowed for 

the current year from Form 3800. The 

estate or trust must file Form 3800 to 

claim any of the general business 

credits. Generally, if the estate's or 

trust's only source of a credit is from a 

pass-through entity and the beneficiary 

is not entitled to an allocable share of a 

credit, you are not required to complete 

the source form for that credit. However, 

certain credits have limitations and 

special computations that may require 

CAUTION

!

you to complete the source form. See 

the Instructions for Form 3800 for more 

information.

Line 2c—Credit for Prior Year 

Minimum Tax

An estate or trust that paid AMT in a 

previous year may be eligible for a 

minimum tax credit in 2014. See Form 

8801, Credit for Prior Year Minimum 

Tax—Individuals, Estates, and Trusts.

Line 2d—Bond Credits

Complete and attach Form 8912, Credit 

to Holders of Tax Credit Bonds, if the 

estate or trust claims a credit for holding 

a tax credit bond. Also, be sure to 

include the credit in interest income.

Line 2e—Total Credits

To claim a credit allowable to the estate 

or trust other than the credits entered on 

lines 2a through 2d, include the 

allowable credit in the total for line 2e. 

Complete and attach the appropriate 

form and write the form number and 

amount of the allowable credit on the 

dotted line to the left of the entry space.

Line 4—Net Investment Income 

Tax

Enter the amount of net investment 

income tax calculated and attach Form 

8960. See the Instructions for Form 

8960 to calculate the tax and Net 

Investment Income Tax, later, for more 

information.

Line 5—Recapture Taxes

Recapture of investment credit. If 

the estate or trust disposed of 

investment credit property or changed 

its use before the end of the recapture 

period, see Form 4255, Recapture of 

Investment Credit, to figure the 

recapture tax allocable to the estate or 

trust. Include the tax on line 5 and write 

“ICR” on the dotted line to the left of the 

entry space.

Recapture of low-income housing 

credit. If the estate or trust disposed of 

property (or there was a reduction in the 

qualified basis of the property) on which 

the low-income housing credit was 

claimed, see Form 8611, Recapture of 

Low-Income Housing Credit, to figure 

any recapture tax allocable to the estate 

or trust. Include the tax on line 5 and 

write “LIHCR” on the dotted line to the 

left of the entry space.

Recapture of qualified electric vehicle credit. If the estate or trust claimed 

the qualified electric vehicle credit in a 

prior tax year for a vehicle that ceased 

to qualify for the credit, part or all of the 

-30- 2014 Instructions for Form 1041
credit may have to be recaptured. See 

Regulations section 1.30-1(b) for 

details. If the estate or trust owes any 

recapture tax, include it on line 5 and 

write “QEVCR” on the dotted line to the 

left of the entry space.

Recapture of the Indian employment 

credit. Generally, if the estate or trust 

terminates a qualified employee less 

than 1 year after the date of initial 

employment, any Indian employment 

credit allowed for a prior tax year by 

reason of wages paid or incurred to that 

employee must be recaptured. See 

Form 8845 for details. If the estate or 

trust owes any recapture tax, include it 

on line 5 and write “IECR” on the dotted 

line to the left of the entry space.

Recapture of the new markets credit. 

If the estate or trust owes any new 

markets recapture tax, include it on 

line 5 and write “NMCR” on the dotted 

line to the left of the entry space. For 

more information, including how to 

figure the recapture amount, see section 

45D(g).

Recapture of the credit for employer-provided child care facilities. If 

the facility ceased to operate as a 

qualified child care facility or there was 

a change in ownership, part or all of the 

credit may have to be recaptured. See 

Form 8882 for details. If the estate or 

trust owes any recapture tax, include it 

on line 5 and write “ECCFR” on the 

dotted line to the left of the entry space.

Recapture of the alternative motor 

vehicle credit. See section 30B(h)(8) 

for details. Include the tax on line 5 and 

write “AMVCR” on the dotted line to the 

left of the entry space.

Recapture of the alternative fuel vehicle refueling property credit. See 

section 30C(e)(5) for details. Include the 

tax on line 5 and write “ARPCR” on the 

dotted line to the left of the entry space.

Line 6—Household 

Employment Taxes

If any of the following apply, get 

Schedule H (Form 1040), Household 

Employment Taxes, and its instructions, 

to see if the estate or trust owes these 

taxes.

1. The estate or trust paid any one 

household employee cash wages of 

$1,900 or more in 2014. Cash wages 

include wages paid by checks, money 

orders, etc. When figuring the amount of 

cash wages paid, combine cash wages 

paid by the estate or trust with cash 

wages paid to the household employee 

in the same calendar year by the 

household of the decedent or 

beneficiary for whom the administrator, 

executor, or trustee of the estate or trust 

is acting.

2. The estate or trust withheld 

federal income tax during 2014 at the 

request of any household employee.

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 $2,500 .................... 6.

7. Enter the smaller of the amount on line 5 or line 6 ...................... 7.

8. Subtract line 7 from line 6. If zero or less, enter -0-. This amount is taxed at 0% ................ 8.

9. Enter the smaller of line 1 or line 4 ................................... 9.

10. Subtract line 8 from line 4 .......................................... 10.

11. Enter the smaller of line 1 or $12,150 ................................ 11.

12. Add lines 5 and 8 ................................................. 12.

13. Subtract line 12 from line 11. If zero or less, enter -0- .................... 13.

14. Enter the smaller of line 10 or line 13 ................................ 14.

15. Multiply line 14 by 15% (.15) .......................................................... 15.

16. Enter the amount from line 9 ........................................ 16.

17. Add lines 8 and 14 ................................................ 17.

18. Subtract line 17 from line 16. If zero or less, enter -0- .................... 18.

19. Multiply line 18 by 20% (.20) .......................................................... 19.

20. Figure the tax on the amount on line 5. Use the 2014 Tax Rate Schedule ..................... 20.

21. Add lines 15, 19 and 20 .............................................................. 21.

22. Figure the tax on the amount on line 1. Use the 2014 Tax Rate Schedule ..................... 22.

23. Tax on all taxable income. Enter the smaller of line 21 or line 22 here and on Sch. 

G, line 1a .......................................................................... 23.

2014 Instructions for Form 1041 -31-
3. The estate or trust paid total cash 

wages of $1,000 or more in any 

calendar quarter of 2013 or 2014 to 

household employees.

Note. See Amended Schedule H (Form 

1040) under F. Initial Return, Amended 

Return, etc., earlier for information on 

filing an amended Schedule H (Form 

1040) for a Form 1041.

Line 7—Total Tax

Tax on ESBTs. Attach the tax 

computation to the return. To the left of 

the line 7 entry space, write “Sec. 

641(c)” and the amount of tax on the S 

corporation items. Include this amount 

in the total tax on line 7.

See Electing Small Business Trusts 

(ESBTs), earlier, for the special tax 

computation rules that apply to the 

portion of an ESBT consisting of stock 

in one or more S corporations.

Interest on deferred tax attributable 

to installment sales of certain timeshares and residential lots and certain nondealer real property installment obligations. If an obligation 

arising from the disposition of real 

property to which section 453(l) or 453A 

applies is outstanding at the close of the 

year, the estate or trust must include the 

interest due under section 453(l)(3)(B) 

or 453A(c), whichever is applicable, in 

the amount to be entered on line 7 of 

Schedule G, Form 1041, with the 

notation “Section 453(l) interest” or 

“Section 453A(c) interest,” whichever is 

applicable. Attach a schedule showing 

the computation.

Form 4970, Tax on Accumulation 

Distribution of Trusts. Include on this 

line any tax due on an accumulation 

distribution from a trust. To the left of the 

entry space, write “From Form 4970” 

and the amount of the tax.

Form 8697, Interest Computation 

Under the Look-Back Method for 

Completed Long-Term Contracts. 

Include the interest due under the 

look-back method of section 460(b)(2).

To the left of the entry space, write 

“From Form 8697” and the amount of 

interest due.

Form 8866, Interest Computation 

Under the Look-Back Method for 

Property Depreciated Under the Income Forecast Method. Include the 

interest due under the look-back 

method of section 167(g)(2). To the left 

of the entry space, write “From Form 

8866” and the amount of interest due.

Interest on deferral of gain from certain constructive ownership transactions. Include the interest due under 

section 1260(b) on any deferral of gain 

from certain constructive ownership 

transactions. To the left of the entry 

space, write “1260(b)” and the amount 

of interest due.

Form 5329, Additional Taxes on 

Qualified Plans (Including IRAs) and 

Other Tax-Favored Accounts. If the 

estate or trust fails to receive the 

minimum distribution under section 

4974, use Form 5329 to pay the excise 

tax. To the left of the entry space, write 

“From Form 5329” and the amount of 

the tax.

Net Investment Income 

Tax

For taxable years beginning after 

December 31, 2012, certain estates and 

trusts may be subject to the Net 

Investment Income Tax (NIIT). Estates 

and trusts use Form 8960 to report their 

Net Investment Income (NII) and 

calculate the tax. The amount of NIIT 

payable by the estate or trust is reported 

on Form 1041, Schedule G, line 4.

The NIIT is imposed on estates and 

trusts to the extent that they have 

undistributed net investment income 

and adjusted gross income (AGI) 

exceeding $12,150. See instructions to 

line 15c for the calculation of an estate 

or trust’s AGI. The following types of 

estates and trusts may owe the NIIT in 

addition to their regular income tax 

liability:

Decedent’s estates,

Simple and complex trusts,

Electing small business trusts 

(ESBTs),

Pooled income funds, and

Bankruptcy estates.

However, in the case of bankruptcy 

estates, the adjusted gross income 

threshold is $125,000.

Calculation of Net Investment Income. In general, an estate or trust’s 

NII is calculated in the same way as an 

individual. However, there are special 

rules for the calculation of NII in the 

case of an ESBT. See instructions to 

Form 8960 and Regulations section 

1.1411-3(e) for information on the 

calculation (and Regulations section 

1.1411-3(c)(1) for information on the 

ESBT calculation).

Distributions on Net Investment Income. The NIIT is imposed on estates 

and trusts to the extent it has 

undistributed net investment income. In 

order to arrive at the estate or trust’s 

undistributed net investment income, 

the estate or trust’s NII is reduced for (1) 

distributions of NII to beneficiaries, and 

(2) NII allocable to charities when the 

estate or trust is allowed a deduction 

under section 642(c). Instructions for 

Form 8960, line 18, provide more 

information on the calculation of 

undistributed net investment income.

NII allocable to the deduction under 

section 642(c). An estate, trust, or 

pooled income fund’s NII is reduced by 

the amount of NII allocable to the 

charitable deduction allowed under 

section 642(c). In the case of an estate, 

trust, or pooled income fund that has NII 

and non-NII income in a year when a 

section 642(c) deduction is claimed, the 

amount of the NII deduction allocable to 

the section 642(c) deduction will be less 

than the amount reported on Form 

1041, Schedule A, line 7 (or on the 

separate calculation in the case of a 

pooled income fund).

Beneficiary reporting. In general, the 

amount of the income distribution 

deduction (from Form 1041, 

Schedule B, line 15) that reduces the 

estate or trust’s NII will be the amount of 

NII that will be taxable to the 

beneficiaries on their Schedules 

K-1(Form 1041).

The Schedule K-1 has a code H in 

box 14 to report the amount of net 

investment income distributed to the 

beneficiary. The amount reported in 

code H represents an adjustment (either 

positive or negative) that the beneficiary 

must use in completing its Form 8960 (if 

necessary). In the case where the trust’s 

income distribution deduction allowed in 

calculating undistributed net investment 

income is less than the amount on 

Schedule B, line 15, then code H will 

show a negative number that is the 

difference between the two amounts. In 

the case of an estate or trust that issues 

more than one Schedule K-1 for a year, 

the sum of the amounts reported in 

code H on all of the Schedules K-1 will 

be the difference between Schedule B, 

line 15, and the amount deducted on 

Form 8960, line 18b, for amounts of NII 

distributed to a beneficiary.

The beneficiary's NII will equal 

all taxable amounts reported on 

the Schedule K-1, adjusted by 

the amount reported in box 14, code H.

The only instance where code 

H will be a positive number is 

when:

The estate or trust owns directly, or 

indirectly, an (a) interest in a section 

1291 fund, or (b) interest in a controlled 

foreign corporation or qualified electing 

TIP TIP

-32- 2014 Instructions for Form 1041
fund and no election under Regulations 

section 1.1411–10(g) has been made 

with respect to that interest, and

The distribution from one of the 

entities described above is (a) net 

investment income to the estate or trust, 

but not included in its taxable income, 

and (b) the distributions from the estate 

or trust to the beneficiary(s) in the year 

exceed the amount of the income 

distribution deduction allowed for 

regular tax purposes (from Schedule B, 

line 15).

Special rules. In the final year of an 

estate or trust, deductions in excess of 

income may be reported to the 

beneficiary on Schedule K-1, box 11. 

These deductions may also be 

deductible by the beneficiary for NIIT 

purposes. In this situation, the 

terminating estate or trust should 

provide the beneficiary information 

regarding whether the amounts reported 

in box 11, codes A through D, include 

any amounts that are deductible for NIIT 

purposes. See Regulations section 

1.1411-4(g)(4).

Other Information

Question 1

If the estate or trust received tax-exempt 

income, figure the allocation of 

expenses between tax-exempt and 

taxable income on a separate sheet and 

attach it to the return. Enter only the 

deductible amounts on the return. Do 

not figure the allocation on the return 

itself. For more information, see the 

instructions for Allocation of Deductions 

for Tax-Exempt Income, earlier.

Report the amount of tax-exempt 

interest income received or accrued in 

the space provided below Question 1.

Also, include any exempt-interest 

dividends the estate or trust received as 

a shareholder in a mutual fund or other 

regulated investment company.

Question 2

All salaries, wages, and other 

compensation for personal services 

must be included on the return of the 

person who earned the income, even if 

the income was irrevocably assigned to 

a trust by a contract assignment or 

similar arrangement.

The grantor or person creating the 

trust is considered the owner if he or 

she keeps “beneficial enjoyment” of or 

substantial control over the trust 

property. The trust's income, 

deductions, and credits are allocable to 

the owner.

If you checked “Yes” for Question 2, 

see Special Reporting Instructions, 

earlier.

Question 3

Check the “Yes” box and enter the 

name of the foreign country if either 1 or 

2 below applies.

1. The estate or trust owns more 

than 50% of the stock in any corporation 

that owns one or more foreign bank 

accounts.

2. At any time during the year the 

estate or trust had an interest in or 

signature or other authority over a bank, 

securities, or other financial account in a 

foreign country.

Exception. Check “No” if either of the 

following applies to the estate or trust:

The combined value of the accounts 

was $10,000 or less during the whole 

year, or

The accounts were with a U.S. 

military banking facility operated by a 

U.S. financial institution.

If you checked “Yes” for Question 3, 

electronically file FinCEN Form 114, 

Report of Foreign Bank and Financial 

Accounts (FBAR) by June 30, 2015, 

with the Department of the Treasury 

using the FinCEN's BSA E-Filing Sytem. 

Because FinCEN Form 114 is not a tax 

form, do not file it with Form 1041.

See www.fincen.gov for more 

information.

If you are required to file 

FinCEN Form 114 but do not, 

you may have to pay a penalty 

of up to $10,000 (or more in some 

cases).

Question 4

The estate or trust may be required to 

file Form 3520, Annual Return To 

Report Transactions With Foreign 

Trusts and Receipt of Certain Foreign 

Gifts, if:

It directly or indirectly transferred 

property or money to a foreign trust. For 

this purpose, any U.S. person who 

created a foreign trust is considered a 

transferor;

It is treated as the owner of any part 

of the assets of a foreign trust under the 

grantor trust rules; or

It received a distribution from a 

foreign trust.

An owner of a foreign trust 

must ensure that the trust files 

an annual information return on 

Form 3520-A, Annual Information 

Return of Foreign Trust With a U.S. 

Owner.

CAUTION

!

TIP

Question 5

An estate or trust claiming an interest 

deduction for qualified residence 

interest (as defined in section 163(h)(3)) 

on seller-provided financing must 

include on an attachment to the 2014 

Form 1041 the name, address, and TIN 

of the person to whom the interest was 

paid or accrued (that is, the seller).

If the estate or trust received or 

accrued such interest, it must provide 

identical information on the person 

liable for such interest (that is, the 

buyer). This information does not need 

to be reported if it duplicates information 

already reported on Form 1098.

Question 6

To make the section 663(b) election to 

treat any amount paid or credited to a 

beneficiary within 65 days following the 

close of the tax year as being paid or 

credited on the last day of that tax year, 

check the box. This election can be 

made by the fiduciary of a complex trust 

or the executor of a decedent's estate. 

For the election to be valid, you must file 

Form 1041 by the due date (including 

extensions). Once made, the election is 

irrevocable.

Question 7

To make the section 643(e)(3) election 

to recognize gain on property distributed 

in kind, check the box and see the 

Instructions for Schedule D (Form 

1041).

Question 9

Generally, a beneficiary is a skip person 

if the beneficiary is in a generation that 

is two or more generations below the 

generation of the transferor to the trust.

To determine if a beneficiary that is a 

trust is a skip person, and for exceptions 

to the general rules, see the definition of 

a skip person in the instructions for 

Schedule R of Form 706.

Schedule J (Form 1041) — 

Accumulation Distribution 

for Certain Complex 

Trusts

General Instructions

Use Schedule J (Form 1041) to report 

an accumulation distribution for a 

domestic complex trust that was:

Previously treated at any time as a 

foreign trust (unless an exception is 

provided in future regulations), or

Created before March 1, 1984, 

unless that trust would not be 

aggregated with other trusts under the 

2014 Instructions for Form 1041 -33-
rules of section 643(f) if that section 

applied to the trust.

An accumulation distribution is the 

excess of amounts properly paid, 

credited, or required to be distributed 

(other than income required to be 

distributed currently) over the DNI of the 

trust reduced by income required to be 

distributed currently. To have an 

accumulation distribution, the 

distribution must exceed the accounting 

income of the trust.

Specific Instructions

Part I—Accumulation Distribution 

in 2014

Line 1—Distribution Under Section 

661(a)(2)

Enter the amount from Form 1041, 

Schedule B, line 10, for 2014. This is the 

amount properly paid, credited, or 

required to be distributed other than the 

amount of income for the current tax 

year required to be distributed currently.

Line 2—DNI

Enter the amount from Form 1041, 

Schedule B, line 7, for 2014. This is the 

amount of DNI for the current tax year 

determined under section 643(a).

Line 3—Distribution Under Section 

661(a)(1)

Enter the amount from Form 1041, 

Schedule B, line 9, for 2014. This is the 

amount of income for the current tax 

year required to be distributed currently.

Line 5—Accumulation Distribution

If line 11 of Form 1041, Schedule B, is 

more than line 8 of Form 1041, 

Schedule B, complete the rest of 

Schedule J and file it with Form 1041, 

unless the trust has no previously 

accumulated income.

Generally, amounts accumulated 

before a beneficiary reaches age 21 

may be excluded by the beneficiary. 

See sections 665 and 667(c) for 

exceptions relating to multiple trusts. 

The trustee reports to the IRS the total 

amount of the accumulation distribution 

before any reduction for income 

accumulated before the beneficiary 

reaches age 21. If the multiple trust 

rules do not apply, the beneficiary 

claims the exclusion when filing Form 

4970, as you may not be aware that the 

beneficiary may be a beneficiary of 

other trusts with other trustees.

For examples of accumulation 

distributions that include payments from 

one trust to another trust, and amounts 

distributed for a dependent's support, 

see Regulations section 1.665(b)-1A(b).

Part II—Ordinary Income 

Accumulation Distribution

Enter the applicable year at the top of 

each column for each throwback year.

Line 6—DNI for Earlier Years

Enter the applicable amounts as 

follows:

Throwback 

year(s) Amount from line

1969–1977 ....... Form 1041, Schedule C, line 5

1978–1979 ....... Form 1041, line 61

1980............ Form 1041, line 60

1981–1982 ....... Form 1041, line 58

1983–1996 ....... Form 1041, Schedule B, line 9

1997–2013 ....... Form 1041, Schedule B, line 7

For information about throwback 

years, see the instructions for line 13. 

For purposes of line 6, in figuring the 

DNI of the trust for a throwback year, 

subtract any estate tax deduction for 

IRD if the income is includible in figuring 

the DNI of the trust for that year.

Line 7—Distributions Made During 

Earlier Years

Enter the applicable amounts as 

follows:

Throwback 

year(s)

Amount from line

1969–1977 ...... Form 1041, Schedule C, line 8

1978........... Form 1041, line 64

1979........... Form 1041, line 65

1980........... Form 1041, line 64

1981–1982 ...... Form 1041, line 62

1983–1996 ...... Form 1041, Schedule B, line 13

1997–2013 ...... Form 1041, Schedule B, line 11

Line 11—Prior Accumulation 

Distribution Thrown Back to Any 

Throwback Year

Enter the amount of prior accumulation 

distributions thrown back to the 

throwback years. Do not enter 

distributions excluded under section 

663(a)(1) for gifts, bequests, etc.

Line 13—Throwback Years

Allocate the amount on line 5 that is an 

accumulation distribution to the earliest 

applicable year first, but do not allocate 

more than the amount on line 12 for any 

throwback year. An accumulation 

distribution is thrown back first to the 

earliest preceding tax year in which 

there is undistributed net income (UNI). 

Then, it is thrown back beginning with 

the next earliest year to any remaining 

preceding tax years of the trust. The 

portion of the accumulation distribution 

allocated to the earliest preceding tax 

year is the amount of the UNI for that 

year. The portion of the accumulation 

distribution allocated to any remaining 

preceding tax year is the amount by 

which the accumulation distribution is 

larger than the total of the UNI for all 

earlier preceding tax years.

A tax year of a trust during which the 

trust was a simple trust for the entire 

year is not a preceding tax year unless 

(a) during that year the trust received 

outside income, or (b) the trustee did 

not distribute all of the trust's income 

that was required to be distributed 

currently for that year. In this case, UNI 

for that year must not be more than the 

greater of the outside income or income 

not distributed during that year.

The term “outside income” means 

amounts that are included in the DNI of 

the trust for that year but that are not 

“income” of the trust as defined in 

Regulations section 1.643(b)-1. Some 

examples of outside income are: (a) 

income taxable to the trust under 

section 691; (b) unrealized accounts 

receivable that were assigned to the 

trust; and (c) distributions from another 

trust that include the DNI or UNI of the 

other trust.

Line 16—Tax-Exempt Interest 

Included on Line 13

For each throwback year, divide line 15 

by line 6 and multiply the result by the 

following:

Throwback 

year(s)

Amount from line

1969–1977 .... Form 1041, Schedule C, line 2(a)

1978–1979 .... Form 1041, line 58(a)

1980......... Form 1041, line 57(a)

1981–1982 .... Form 1041, line 55(a)

1983–2013 .... Form 1041, Schedule B, line 2

Part III—Taxes Imposed on 

Undistributed Net Income

For the regular tax computation, if there 

is a capital gain, complete lines 18 

through 25 for each throwback year. If 

the trustee elected the alternative tax on 

capital gains, complete lines 26 through 

31 instead of lines 18 through 25 for 

each applicable year. If there is no 

capital gain for any year, or there is a 

-34- 2014 Instructions for Form 1041
capital loss for every year, enter on 

line 9 the amount of the tax for each 

year identified in the instruction for 

line 18 and do not complete Part III. If 

the trust received an accumulation 

distribution from another trust, see 

Regulations section 1.665(b)-1A.

Note. The alternative tax on capital 

gains was repealed for tax years 

beginning after December 31, 1978. 

The maximum rate on net capital gain 

for 1981, 1987, and 1991 through 2013 

is not an alternative tax for this purpose.

Line 18—Regular Tax

Enter the applicable amounts as 

follows:

Throwback 

year(s)

Amount from line

1969–1976 ... Form 1041, page 1, line 24

1977........ Form 1041, page 1, line 26

1978–1979 ... Form 1041, line 27

1980–1984 ... Form 1041, line 26c

1985–1986 ... Form 1041, line 25c

1987........ Form 1041, line 22c

1988–2013 ... Form 1041, Schedule G, line 1a

Line 19—Trust's Share of Net 

Short-Term Gain

For each throwback year, enter the 

smaller of the capital gain from the two 

lines indicated. If there is a capital loss 

or a zero on either or both of the two 

lines indicated, enter zero on line 19.

Throwback 

year(s)

Amount from line

1969–1970 ... Schedule D, line 10, column 2, or

Schedule D, line 12, column 2

1971–1978 ... Schedule D, line 14, column 2, or

Schedule D, line 16, column 2

1979........ Schedule D, line 18, column (b), or

Schedule D, line 20, column (b)

1980–1981 ... Schedule D, line 14, column (b), or

Schedule D, line 16, column (b)

1982........ Schedule D, line 16, column (b), or

Schedule D, line 18, column (b)

1983–1996 ... Schedule D, line 15, column (b), or

Schedule D, line 17, column (b)

1997–2002 ... Schedule D, line 14, column (2), or

Schedule D, line 16, column (2)

2003........ Schedule D, line 14a, column (2), 

or

Schedule D, line 16a, column (2)

2004–2012 ... Schedule D, line 13, column (2), or

Schedule D, line 15, column (2)

2013... Schedule D, line 17, column (2), or

Schedule D, line 19, column (2)

Line 20—Trust's Share of Net 

Long-Term Gain

Enter the applicable amounts as 

follows:

Throwback 

year(s)

Amount from line

1969–1970 ...... 50% of Schedule D, line 13(e)

1971–1977 ...... 50% of Schedule D, line 17(e)

1978........... Schedule D, line 17(e), or line

31, whichever is applicable,

less Form 1041, line 23

1979........... Schedule D, line 25 or line 27,

whichever is applicable, less

Form 1041, line 23

1980–1981 ...... Schedule D, line 21, less

Schedule D, line 22

1982........... Schedule D, line 23, less

Schedule D, line 24

1983–1986 ...... Schedule D, line 22, less

Schedule D, line 23

1987–1996 ...... Schedule D, the smaller 

of any gain on line 16 

 or line 17, column (b)

1997–2001 ...... Schedule D, the smaller

of any gain on line 15c or

line 16, column (2)

2002........... Schedule D, the smaller

of any gain on line 15a or

line 16, column (2)

2003........... Schedule D, the smaller

of any gain on line 15a or

line 16a, column (2)

2004–2012 ...... Schedule D, the smaller 

of any gain on line 14a

 or line 15, column (2)

2013........ Schedule D, the smaller of any 

gain on line 18a or line 19, 

column (2) 

Line 22—Taxable Income

Enter the applicable amounts as 

follows:

Throwback 

year(s)

Amount from line

1969–1976 ........ Form 1041, page 1, line 23

1977............. Form 1041, page 1, line 25

1978–1979 ........ Form 1041, line 26

1980–1984 ........ Form 1041, line 25

1985–1986 ........ Form 1041, line 24

1987............. Form 1041, line 21

1988–1996 ........ Form 1041, line 22

1997............. Form 1041, line 23

1998–2013 ........ Form 1041, line 22

Line 26—Tax on Income Other 

Than Long-Term Capital Gain

Enter the applicable amounts as 

follows:

Throwback 

year(s)

Amount from line

1969.............. Schedule D, line 20

1970.............. Schedule D, line 19

1971.............. Schedule D, line 50

1972–1975 ......... Schedule D, line 48

1976–1978 ......... Schedule D, line 27

Line 27—Trust's Share of Net 

Short-Term Gain

If there is a loss on any of the following 

lines, enter zero on line 27 for the 

applicable throwback year. Otherwise, 

enter the applicable amounts as follows:

Throwback 

year(s)

Amount from line

1969–1970 ...... Schedule D, line 10, column 2

1971–1978 ...... Schedule D, line 14, column 2

Line 28—Trust's Share of Taxable 

Income Less Section 1202 

Deduction

Enter the applicable amounts as 

follows:

Throwback year(s) Amount from line

1969............... Schedule D, line 19

1970............... Schedule D, line 18

1971............... Schedule D, line 38

1972–1975 .......... Schedule D, line 39

1976–1978 .......... Schedule D, line 21

Part IV—Allocation to 

Beneficiary

Complete Part IV for each beneficiary. If 

the accumulation distribution is 

allocated to more than one beneficiary, 

attach an additional copy of Schedule J 

with Part IV completed for each 

additional beneficiary. Give each 

beneficiary a copy of his or her 

respective Part IV information. If more 

than 5 throwback years are involved, 

use another Schedule J, completing 

Parts II and III for each additional 

throwback year.

If the beneficiary is a nonresident 

alien individual or a foreign corporation, 

see section 667(e) about retaining the 

character of the amounts distributed to 

determine the amount of the U.S. 

withholding tax.

The beneficiary uses Form 4970 to 

figure the tax on the distribution. The 

beneficiary also uses Form 4970 for the 

section 667(b)(6) tax adjustment if an 

accumulation distribution is subject to 

estate or generation-skipping transfer 

tax. This is because the trustee may not 

be the estate or generation-skipping 

transfer tax return filer.

2014 Instructions for Form 1041 -35-
Schedule K-1 (Form 

1041)— Beneficiary's 

Share of Income, 

Deductions, Credits, etc.

General Instructions

Use Schedule K-1 (Form 1041) to report 

the beneficiary's share of income, 

deductions, and credits from a trust or a 

decedent's estate.

Grantor type trusts do not use 

Schedule K-1 (Form 1041) to 

report the income, deductions, 

or credits of the grantor (or other person 

treated as owner). See Grantor Type 

Trusts, earlier.

Who Must File

The fiduciary (or one of the joint 

fiduciaries) must file Schedule K-1. A 

copy of each beneficiary's Schedule K-1 

is attached to the Form 1041 filed with 

the IRS, and each beneficiary is given a 

copy of his or her respective 

Schedule K-1. One copy of each 

Schedule K-1 must be retained for the 

fiduciary's records.

Beneficiary's Identifying Number

As a payer of income, you are required 

to request and provide a proper 

identifying number for each recipient of 

income. Enter the beneficiary's number 

on the respective Schedule K-1 when 

you file Form 1041. Individuals and 

business recipients are responsible for 

giving you their TINs upon request. You 

may use Form W-9 to request the 

beneficiary's identifying number.

Penalty. You may be charged a $100 

penalty for each failure to provide a 

required TIN, unless reasonable cause 

is established for not providing it. 

Explain any reasonable cause in a 

signed affidavit and attach it to this 

return.

Truncating recipient's identification 

number on beneficiary's statement. 

The estate or trust can truncate a 

beneficiary’s identifying number on the 

Schedule K-1 the estate or trust sends 

to the beneficiary. Truncation is not 

allowed on the Schedule K-1 the estate 

or trust files with the IRS. Also, the 

estate or trust may not truncate its own 

identification number on any form.

To truncate, where allowed, replace 

the first five digits of the nine-digit 

number with asterisks (*) or Xs (for 

example, a SSN xxx-xx-xxxx would 

appear as ***-**-xxxx or XXX-XX-xxxx). 

CAUTION

!

For more information, see Regulations 

section 301.6109-4.

Substitute Forms

You do not need IRS approval to use a 

substitute Schedule K-1 if it is an exact 

copy of the IRS schedule. The boxes 

must use the same numbers and titles 

and must be in the same order and 

format as on the comparable IRS 

Schedule K-1. The substitute schedule 

must include the OMB number and the 

6-digit form ID code in the upper 

right-hand corner of the schedule.

You must provide each beneficiary 

with the Instructions for Beneficiary 

Filing Form 1040 or other prepared 

specific instructions for each item 

reported on the beneficiary's 

Schedule K-1.

Inclusion of Amounts in 

Beneficiaries' Income

Simple trust. The beneficiary of a 

simple trust must include in his or her 

gross income the amount of the income 

required to be distributed currently, 

whether or not distributed, or if the 

income required to be distributed 

currently to all beneficiaries exceeds the 

DNI, his or her proportionate share of 

the DNI. The determination of whether 

trust income is required to be distributed 

currently depends on the terms of the 

trust instrument and applicable local 

law. See Regulations section 1.652(c)-4 

for a comprehensive example.

Estates and complex trusts. The 

beneficiary of a decedent's estate or 

complex trust must include in his or her 

gross income the sum of:

1. The amount of the income 

required to be distributed currently, or if 

the income required to be distributed 

currently to all beneficiaries exceeds the 

DNI (figured without taking into account 

the charitable deduction), his or her 

proportionate share of the DNI (as so 

figured), and

2. All other amounts properly paid, 

credited, or required to be distributed, or 

if the sum of the income required to be 

distributed currently and other amounts 

properly paid, credited, or required to be 

distributed to all beneficiaries exceeds 

the DNI, his or her proportionate share 

of the excess of DNI over the income 

required to be distributed currently.

See Regulations section 1.662(c)-4 

for a comprehensive example.

For complex trusts that have more 

than one beneficiary, and if different 

beneficiaries have substantially 

separate and independent shares, their 

shares are treated as separate trusts for 

the sole purpose of determining the 

amount of DNI allocable to the 

respective beneficiaries. A similar rule 

applies to treat substantially separate 

and independent shares of different 

beneficiaries of an estate as separate 

estates. For examples of the application 

of the separate share rule, see the 

regulations under section 663(c).

Gifts and bequests. Do not include in 

the beneficiary's income any gifts or 

bequests of a specific sum of money or 

of specific property under the terms of 

the governing instrument that are paid 

or credited in three installments or less.

Amounts that can be paid or credited 

only from income of the estate or trust 

do not qualify as a gift or bequest of a 

specific sum of money.

Past years. Do not include in the 

beneficiary's income any amounts 

deducted on Form 1041 for an earlier 

year that were credited or required to be 

distributed in that earlier year.

Character of income. The 

beneficiary's income is considered to 

have the same proportion of each class 

of items entering into the computation of 

DNI that the total of each class has to 

the DNI (for example, half dividends and 

half interest if the income of the estate 

or trust is half dividends and half 

interest).

Allocation of deductions. 

Generally, items of deduction that enter 

into the computation of DNI are 

allocated among the items of income to 

the extent such allocation is not 

inconsistent with the rules set out in 

section 469 and its regulations, relating 

to passive activity loss limitations, in the 

following order.

First, all deductions directly 

attributable to a specific class of income 

are deducted from that income. For 

example, rental expenses, to the extent 

allowable, are deducted from rental 

income.

Second, deductions that are not 

directly attributable to a specific class of 

income generally may be allocated to 

any class of income, as long as a 

reasonable portion is allocated to any 

tax-exempt income. Deductions 

considered not directly attributable to a 

specific class of income under this rule 

include fiduciary fees, safe deposit box 

rental charges, and state income and 

personal property taxes. The charitable 

deduction, however, must be ratably 

-36- 2014 Instructions for Form 1041
apportioned among each class of 

income included in DNI.

Finally, any excess deductions that 

are directly attributable to a class of 

income may be allocated to another 

class of income. However, in no case 

can excess deductions from a passive 

activity be allocated to income from a 

nonpassive activity, or to portfolio 

income earned by the estate or trust. 

Excess deductions attributable to 

tax-exempt income cannot offset any 

other class of income.

In no case can deductions be 

allocated to an item of income that is not 

included in the computation of DNI, or 

attributable to corpus.

You cannot show any negative 

amounts for any class of income shown 

in boxes 1 through 8 of Schedule K-1. 

However, for the final year of the estate 

or trust, certain deductions or losses 

can be passed through to the 

beneficiary(ies). See the instructions for 

box 11 for more information on these 

deductions and losses. Also, the 

beneficiary's share of depreciation and 

depletion is apportioned separately. 

These deductions may be allocated to 

the beneficiary(ies) in amounts greater 

than his or her income. See 

Depreciation, Depletion, and 

Amortization, earlier, and Rev. Rul. 

74-530, 1974-2 C.B. 188.

Beneficiary's Tax Year

The beneficiary's income from the 

estate or trust must be included in the 

beneficiary's tax year during which the 

tax year of the estate or trust ends. See 

Pub. 559 for more information, including 

the effect of the death of a beneficiary 

during the tax year of the estate or trust.

General Reporting Information

If the return is for a fiscal year or a short 

tax year, fill in the tax year space at the 

top of each Schedule K-1. On each 

Schedule K-1, enter the information 

about the estate or trust and the 

beneficiary in Parts I and II (items A 

through H). In Part III, enter the 

beneficiary's share of each item of 

income, deduction, credit, and any other 

information the beneficiary needs to file 

his or her income tax return.

Codes. In box 9 and boxes 11 through 

14, identify each item by entering a 

code in the column to the left of the 

entry space for the dollar amount. 

These codes are identified in these 

instructions and on the back of the 

Schedule K-1.

Attached statements. Enter an 

asterisk (*) after the code, if any, in the 

column to the left of the dollar amount 

entry space for each item for which you 

have attached a statement providing 

additional information. For those 

informational items that cannot be 

reported as a single dollar amount, 

enter the code and asterisk in the 

left-hand column and enter “STMT” in 

the entry space to the right to indicate 

that the information is provided on an 

attached statement. More than one 

attached statement can be placed on 

the same sheet of paper and should be 

identified in alphanumeric order by box 

number followed by the letter code (if 

any). For example: “Box 9, Code 

A—Depreciation” (followed by the 

information the beneficiary needs).

Too few entry spaces on Schedule K-1? If the estate or trust has more 

coded items than the number of spaces 

in box 9 or boxes 11 through 14, do not 

enter a code or dollar amount in the last 

entry space of the box. In the last entry 

space, enter an asterisk in the left 

column and enter “STMT” in the entry 

space to the right. Report the additional 

items on an attached statement and 

provide the box number, code, 

description, and dollar amount or 

information for each additional item. For 

example: “Box 13, Code H—Biofuel 

Producer Credit, $500.00.”

Specific Instructions

Part I. Information About the 

Estate or Trust

On each Schedule K-1, enter the name, 

address, and identifying number of the 

estate or trust. Also, enter the name and 

address of the fiduciary.

Item D

If the fiduciary of a trust or decedent's 

estate filed Form 1041-T, you must 

check this box and enter the date it was 

filed.

Item E

If this is the final year of the estate or 

trust, you must check this box.

Note. If this is the final K-1 for the 

beneficiary, check the “Final K-1” box at 

the top of Schedule K-1.

Part II. Information About the 

Beneficiary

Complete a Schedule K-1 for each 

beneficiary. On each Schedule K-1, 

enter the beneficiary's name, address, 

and identifying number.

Item H

Check the foreign beneficiary box if the 

beneficiary is a nonresident alien 

individual, a foreign corporation, or a 

foreign estate or trust. Otherwise, check 

the domestic beneficiary box.

Part III. Beneficiary's Share of 

Current Year Income, 

Deductions, Credits, and Other 

Items

Box 1—Interest

Enter the beneficiary's share of the 

taxable interest income minus allocable 

deductions.

Box 2a—Total Ordinary Dividends

Enter the beneficiary's share of ordinary 

dividends minus allocable deductions.

Box 2b—Total Qualified Dividends

Enter the beneficiary's share of qualified 

dividends minus allocable deductions.

Box 3—Net Short-Term Capital 

Gain

Enter the beneficiary's share of the net 

short-term capital gain from Schedule D 

(Form 1041), line 17, column (1), minus 

allocable deductions. Do not enter a 

loss in box 3. If, for the final year of the 

estate or trust, there is a capital loss 

carryover, enter in box 11, code B, the 

beneficiary's share of short-term capital 

loss carryover. However, if the 

beneficiary is a corporation, enter in 

box 11, code B, the beneficiary's share 

of all short- and long-term capital loss 

carryovers as a single item. See section 

642(h) and related regulations for more 

information.

Boxes 4a through 4c—Net 

Long-Term Capital Gain

Enter the beneficiary's share of the net 

long-term capital gain from Schedule D 

(Form 1041), lines 18a through 18c, 

column (1), minus allocable deductions.

Do not enter a loss in boxes 4a 

through 4c. If, for the final year of the 

estate or trust, there is a capital loss 

carryover, enter in box 11, code C, the 

beneficiary's share of the long-term 

capital loss carryover. (If the beneficiary 

is a corporation, see the instructions for 

box 3.) See section 642(h) and related 

regulations for more information.

Gains or losses from the complete or 

partial disposition of a rental, rental real 

estate, or trade or business activity that 

2014 Instructions for Form 1041 -37-
is a passive activity must be shown on 

an attachment to Schedule K-1.

Box 5—Other Portfolio and 

Nonbusiness Income

Enter the beneficiary's share of 

annuities, royalties, or any other 

income, minus allocable deductions 

(other than directly apportionable 

deductions), that is not subject to any 

passive activity loss limitation rules at 

the beneficiary level. Use boxes 6 

through 8 to report income items subject 

to the passive activity rules at the 

beneficiary's level.

Boxes 6 through 8—Ordinary 

Business Income, Rental Real 

Estate, and Other Rental Income

Enter the beneficiary's share of trade or 

business, rental real estate, and other 

rental income, minus allocable 

deductions (other than directly 

apportionable deductions). To assist the 

beneficiary in figuring any applicable 

passive activity loss limitations, also 

attach a separate schedule showing the 

beneficiary's share of income derived 

from each trade or business, rental real 

estate, and other rental activity.

Box 9—Directly Apportioned 

Deductions

The limitations on passive 

activity losses and credits 

under section 469 apply to 

estates and trusts. Estates and trusts 

that distribute income to beneficiaries 

are allowed to apportion depreciation, 

depletion, and amortization deductions 

to the beneficiaries. These deductions 

are referred to as “directly apportionable 

deductions.”

Rules for treating a beneficiary's income 

and directly apportionable deductions 

from an estate or trust and other rules 

for applying the passive loss and credit 

limitations to beneficiaries of estates 

and trusts have not yet been issued.

Any directly apportionable deduction, 

such as depreciation, is treated by the 

beneficiary as having been incurred in 

the same activity as incurred by the 

estate or trust. However, the character 

of such deduction may be determined 

as if the beneficiary incurred the 

deduction directly.

To assist the beneficiary in figuring 

any applicable passive activity loss 

limitations, also attach a separate 

schedule showing the beneficiary's 

share of directly apportionable 

CAUTION

!

deductions derived from each trade or 

business, rental real estate, and other 

rental activity.

Enter the beneficiary's share of 

directly apportioned deductions using 

codes A through C.

Depreciation (code A). Enter the 

beneficiary's share of the depreciation 

deductions directly apportioned to each 

activity reported in boxes 5 through 8. 

See the instructions under Deductions, 

earlier, for a discussion of how the 

depreciation deduction is apportioned 

between the beneficiaries and the 

estate or trust. Report any AMT 

adjustment or tax preference item 

attributable to depreciation separately in 

box 12, using code G.

Note. An estate or trust cannot make 

an election under section 179 to 

expense certain depreciable business 

assets.

Depletion (code B). Enter the 

beneficiary's share of the depletion 

deduction under section 611 directly 

apportioned to each activity reported in 

boxes 5 through 8. See Depreciation, 

Depletion, and Amortization, earlier, for 

a discussion of how the depletion 

deduction is apportioned between the 

beneficiaries and the estate or trust. 

Report any tax preference item 

attributable to depletion separately in 

box 12, using code H.

Amortization (code C). Itemize the 

beneficiary's share of the amortization 

deductions directly apportioned to each 

activity reported in boxes 5 through 8. 

Apportion the amortization deductions 

between the estate or trust and the 

beneficiaries in the same way that the 

depreciation and depletion deductions 

are divided. Report any AMT 

adjustment attributable to amortization 

separately in box 12, using code I.

Box 10—Estate Tax Deduction 

(Including Certain 

Generation-Skipping Transfer 

Taxes)

If the distribution deduction consists of 

any IRD, and the estate or trust was 

allowed a deduction under section 

691(c) for the estate tax paid 

attributable to such income (see the 

line 19 instructions), then the beneficiary 

is allowed an estate tax deduction in 

proportion to his or her share of the 

distribution that consists of such 

income. For an example of the 

computation, see Regulations section 

1.691(c)-2. Figure the computation on a 

separate sheet and attach it to the 

return.

Box 11, Code A—Excess 

Deductions on Termination

If this is the final return of the estate or 

trust, and there are excess deductions 

on termination (see the instructions for 

line 22), enter the beneficiary's share of 

the excess deductions in box 11, using 

code A. Figure the deductions on a 

separate sheet and attach it to the 

return.

Excess deductions on termination 

occur only during the last tax year of the 

trust or decedent's estate when the total 

deductions (excluding the charitable 

deduction and exemption) are greater 

than the gross income during that tax 

year.

Generally, a deduction based on an 

NOL carryover is not available to a 

beneficiary as an excess deduction. 

However, if the last tax year of the 

estate or trust is also the last year in 

which an NOL carryover may be taken 

(see section 172(b)), the NOL carryover 

is considered an excess deduction on 

the termination of the estate or trust to 

the extent it is not absorbed by the 

estate or trust during its final tax year. 

For more information, see Regulations 

section 1.642(h)-4 for a discussion of 

the allocation of the carryover among 

the beneficiaries.

Only the beneficiary of an estate or 

trust that succeeds to its property is 

allowed to deduct that entity's excess 

deductions on termination. A beneficiary 

who does not have enough income in 

that year to absorb the entire deduction 

may not carry the balance over to any 

succeeding year. An individual 

beneficiary must be able to itemize 

deductions in order to claim the excess 

deductions in determining taxable 

income.

Box 11, Codes B and C—Unused 

Capital Loss Carryover

Upon termination of the trust or 

decedent's estate, the beneficiary 

succeeding to the property is allowed as 

a deduction any unused capital loss 

carryover under section 1212. If the 

estate or trust incurs capital losses in 

the final year, use the Capital Loss 

Carryover Worksheet in the Instructions 

for Schedule D (Form 1041) to figure the 

amount of capital loss carryover to be 

allocated to the beneficiary.

-38- 2014 Instructions for Form 1041
Box 11, Codes D and E—NOL 

Carryover

Upon termination of a trust or 

decedent's estate, a beneficiary 

succeeding to its property is allowed to 

deduct any unused NOL (and any 

ATNOL) carryover for regular and AMT 

purposes if the carryover would be 

allowable to the estate or trust in a later 

tax year but for the termination. Enter in 

box 11, using codes D and E, the 

unused carryover amounts.

Box 12—AMT Items

Adjustment for minimum tax purposes (code A). Enter the beneficiary's 

share of the adjustment for minimum tax 

purposes.

To figure the adjustment, subtract the 

beneficiary's share of the income 

distribution deduction figured on 

Schedule B, line 15, from the 

beneficiary's share of the income 

distribution deduction on a minimum tax 

basis figured on Schedule I (Form 

1041), line 44. The difference is the 

beneficiary's share of the adjustment for 

minimum tax purposes.

Note. Schedule B, line 15 equals the 

sum of all Schedules K-1, boxes 1, 2a, 

3, 4a, 5, 6, 7, and 8.

AMT adjustment attributable to 

qualified dividends, net short-term 

capital gains, or net long-term capital gains (codes B through D). If any 

part of the amount reported in box 12, 

code A, is attributable to qualified 

dividends (code B), net short-term 

capital gain (code C), or net long-term 

capital gain (code D), enter that part 

using the applicable code.

AMT adjustment attributable to unrecaptured section 1250 gain or 28% 

rate gain (codes E and F). Enter the 

beneficiary's distributive share of any 

AMT adjustments to the unrecaptured 

section 1250 gain (code E) or 28% rate 

gain (code F), whichever is applicable, 

in box 12.

Accelerated depreciation, depletion, 

and amortization (codes G through 

I). Enter any adjustments or tax 

preference items attributable to 

depreciation, depletion, or amortization 

that were directly apportioned to the 

beneficiary. For property placed in 

service before 1987, report separately 

the accelerated depreciation of real and 

leased personal property.

Exclusion items (code J). Enter the 

beneficiary's share of the adjustment for 

minimum tax purposes from 

Schedule K-1, box 12, code A, that is 

attributable to exclusion items 

(Schedule I (Form 1041), lines 2 through 

6 and 8).

Box 13—Credits and Credit 

Recapture

Enter each beneficiary's share of the 

credits and credit recapture using the 

applicable codes. Listed below are the 

credits that can be allocated to the 

beneficiary(ies). Attach a statement if 

additional information must be provided 

to the beneficiary as explained below.

Credit for estimated taxes (code 

A)—Payment of estimated tax to be 

credited to the beneficiary (section 

643(g)).

See the instructions for line 24b 

before you make an entry to 

allocate any estimated tax 

payments to a beneficiary. If the 

fiduciary does not make a valid election, 

then the IRS will disallow the estimated 

tax payment that is reported on 

Schedule K-1 and claimed on the 

beneficiary's return.

Credit for backup withholding (code 

B).

Income tax withheld on wages 

cannot be distributed to the 

beneficiary.

The low-income housing credit (code 

C). Attach a statement that shows the 

beneficiary's share of the amount, if any, 

entered on line 6 of Form 8586, 

Low-Income Housing Credit, with 

instructions to report that amount on 

Form 8586, line 4 or Form 3800, Part III, 

line 1d, if the beneficiary's only source 

for the credit is a pass-through entity. 

Also, show the beneficiary's share of the 

amount, if any, entered on line 13 of 

Form 8586 with instructions to report 

that amount on Form 8586, line 11 or 

Form 3800, Part III, line 4d, if the 

beneficiary's only source for the credit is 

a pass-through entity.

Rehabilitation credit and energy 

credit (code D). Attach a statement that 

shows the beneficiary's apportioned 

share of basis, expenditures, and other 

information that is necessary for the 

beneficiary to complete Form 3468, 

Investment Credit, for the rehabilitation 

credit and the energy credit. See the 

Instructions for Form 3468 for more 

information.

Other qualifying investment credit 

(code E). Attach a statement that shows 

the beneficiary's apportioned share of 

qualified investment and other 

CAUTION

!

CAUTION

!

information that is necessary for the 

beneficiary to complete Form 3468 for 

the qualifying advanced coal project 

credit, qualifying gasification project 

credit, and qualifying advanced energy 

project credit. See the Instructions for 

Form 3468 for more information.

Work opportunity credit (code F).

Credit for small employer health 

insurance premiums (code G).

Biofuel producer credit (code H).

Credit for increasing research 

activities (code I).

Renewable electricity, refined coal, 

and Indian coal production credit (code 

J). Attach a statement that shows the 

amount of the credit the beneficiary 

must report on line 9 and line 29 of Form 

8835, in case the beneficiary is required 

to file that form in addition to Form 3800.

Empowerment zone employment 

credit (code K).

Indian employment credit (code L).

Orphan drug credit (code M).

Credit for employer provided child 

care and facilities (code N).

Biodiesel and renewable diesel fuels 

credit (code O). If the credit includes the 

small agri-biodiesel credit, attach a 

statement that shows the beneficiary's 

share of the small agri-biodiesel credit, 

the number of gallons claimed for the 

small agri-biodiesel credit, and the 

estate's or trust's productive capacity for 

agri-biodiesel.

Nonconventional source fuel credit 

(code P).

Credit to holders of tax credit bonds 

(code Q).

Agricultural chemicals security credit 

(code R).

Energy efficient appliance credit 

(code S).

Credit for employer differential wage 

payments (code T).

Recapture of credits (code U). On an 

attached statement to Schedule K-1, 

provide any information the beneficiary 

will need to report recapture of credits.

Box 14—Other Information

Enter the dollar amounts and applicable 

codes for the items listed under Other 

Information.

Foreign taxes (code B). Enter the 

beneficiary's allocable share of taxes 

paid or accrued to a foreign country. 

Attach a statement reporting the 

beneficiary's share of foreign tax (paid 

or accrued) and income by category 

including interest, dividends, rents and 

royalties, and other income. See Form 

1116 and Pub. 514 for more 

information.

2014 Instructions for Form 1041 -39-
Domestic production activities information. The estate or trust allocates 

QPAI (whether positive or negative) and 

Form W-2 wages based on the relative 

proportion of the estate's or trust's DNI 

that is distributed or required to be 

distributed to the beneficiary. If the 

estate or trust has no DNI for the tax 

year, QPAI and Form W-2 wages are 

allocated entirely to the estate or trust.

Qualified production activities 

income (code C). Enter the 

beneficiary's share, if any, of the 

estate's or trust's QPAI from all 

activities. The QPAI will be less than 

zero if the cost of goods sold and 

deductions allocated and apportioned to 

domestic production gross receipts 

(DPGR) is more than the estate's or 

trust's DPGR. If any of the QPAI is 

oil-related QPAI, attach a statement that 

shows the amount of oil-related QPAI. 

See Form 8903, Domestic Production 

Activities Deduction, and its instructions 

for more details.

Form W-2 wages (code D). Use 

code D to report the beneficiary's share, 

if any, of Form W-2 wages. Do not enter 

more than 9% of the beneficiary's share, 

if any, of the estate's or trust's QPAI. 

See Form 8903 and its instructions for 

more details.

Foreign trading gross receipts

(code G). Enter the beneficiary's 

share, if any, of foreign trading gross 

receipts. See Form 8873, Extraterritorial 

Income Exclusion, for more information.

Net investment income tax (code H). 

Use code H to identify the amount of the 

beneficiary's adjustment for section 

1411 net investment income or 

deductions. See the Instructions for 

Form 8960. An attachment may be 

provided with the K-1 informing the 

beneficiary of the detailed items to be 

reported on Form 1040. See Net 

Investment Income Tax, earlier, for 

more information on these amounts.

Other information (code I). List on a 

separate sheet the tax information the 

beneficiary will need to complete his or 

her return that is not entered elsewhere 

on Schedule K-1.

For example, if the estate or trust 

participates in a transaction that must 

be disclosed on Form 8886 (see 

earlier), both the estate or trust and its 

beneficiaries may be required to file 

Form 8886. The estate or trust must 

determine if any of its beneficiaries are 

required to disclose the transaction and 

provide those beneficiaries with 

information they will need to file Form 

8886. This determination is based on 

the category(ies) under which a 

transaction qualified for disclosure. See 

the Instructions for Form 8886 for 

details.

In addition, if the beneficiary is a 

“covered person” in connection with a 

foreign tax credit splitter arrangement 

under section 909, attach a statement 

that identifies the arrangement including 

the foreign taxes paid or accrued.

-40- 2014 Instructions for Form 1041
Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws of the 

United States. You are required to give us the information. We need it to ensure that you are complying with these laws and to 

allow us to figure and collect the right amount of tax.

You 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 Form 1041-V

Recordkeeping 38 hr., 58 min. 26 hr., 33 min. 17 hr., 42 min. 11 hr., 00 min. 6 hr., 27 min. 43 min.

Learning about the law 

or the form 16 hr., 11 min. 4 hr., 5 min. 4 hr., 22 min. 1 hr., 27 min. 35 min. - - - -

Preparing the form 30 hr., 34 min. 5 hr., 37 min. 4 hr., 51 min. 2 hr., 37 min. 43 min. - - - -

Copying, assembling, and 

sending the form to the IRS 3 hr., 45 min. 51 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 send your comments to Internal Revenue Service, Tax Forms 

and Publications Division,1111 Constitution Ave. NW, IR-6526, Washington, DC 20224. Do not send the tax form to this 

address. Instead, see Where To File, earlier.

2014 Instructions for Form 1041 -41-
Index

A

Accounting income 3

AGI 24

Alaska Native Settlement Trusts 6

Allowable miscellaneous itemized 

deductions (AMID) 24

Amended return 18

Amounts paid or permanently set 

aside 27

Assembly 12

Attachments 12

B

Bankruptcy estate 7, 14, 17

Bankruptcy information 14

Beneficiary 3

Allocation of estimated tax 

payment 9, 26

Complex trust 36

Estate 36

Simple trust 36

Tax year for inclusion 37

Withholding on foreign 

person 28

Blind trust 19

C

Cemetery perpetual care fund 25

Charitable deduction 27

Charitable remainder trusts 18

Common trust fund 7

D

Decedent's Estate 3

Definitions:

Accumulation distribution 34

Beneficiary 3

Complex trust 17

Decedent's Estate 3

Decedent's estate 17

DNI 3

Fiduciary 4

Grantor trusts 17

IRD 3

Outside income 34

Pooled income fund 17

Revocable Living Trust 4

Simple trust 17

Trust 4

Trusts 4

Distributable net income (See DNI)

DNI 3, 28

E

Electing small business trusts 14, 

32

ESBT (S portion only) 17

S portion 14

Elections:

Section 643(e)(3) 29

Section 643(g) 9, 26

Section 645 4

Special rule for qualified 

revocable trusts 4

Treating contributions as paid 

in prior tax year 27

Electronic deposits 9

ESBTs (See Electing small 

business trusts)

Estate 4, 36

Bankruptcy 7, 17

Exemption for 25

Foreign 4

Who must file 4

Estate tax deduction 25

Estimated tax 9, 26, 27

Allocation of payments to 

beneficiaries 9, 26

Penalty 27

Excess deductions 26

Exemption 25

Extraterritorial income 

exclusion 19

F

Fiduciary 4, 8

Fiduciary accounting income 

(FAI) (See Accounting income)

Final return 18

First tier distributions 29

Foreign tax credit 30

Form 1041-T 9, 26

Form 8855 5

G

General business credit 30

Grantor trusts 3, 4, 12, 17

Backup withholding 14

Nonqualified deferred 

compensation plans 17

Optional filing methods 13

Pre-need funeral trusts 17

Special filing instructions 12

GST tax deduction 25

I

Income distribution deduction 3, 

25, 28

Interest income 19

Inter vivos 3, 4

IRD:

Deduction 25

M

Minimum taxable income 25

N

Net investment income tax 32

Net operating loss 26

Nonexempt charitable 

deduction 18

Nonexempt charitable trust 18, 27

Nonqualified deferred 

compensation plans 17

P

Paid preparer 8

Paid preparer authorization 8

Penalties:

Estimated tax 27

Failure to provide a required 

TIN 36

Failure to provide information 

timely 10

Late filing of return 10

Late payment of tax 10

Other 10

Trust fund recovery 10

Underpaid estimated tax 10

Pooled income funds 14, 17, 27, 

28

Pre-need funeral trusts 17

Q

Qualified disability trust 25

Qualified revocable trust 4, 5

Qualified settlement funds 7

Qualified small business stock 29

Qualified subchapter S trust 

(QSST) 4, 13, 17

R

Returns:

Amended 18

Common trust fund 7

Electronic and magnetic 

media 7

Final 18

Nonexempt charitable trust 18

Qualified settlement funds 7

Split-interest trust 18

When to file 8

Who must file 4

Revocable Living Trusts:

Section 645 Election 19

S

Second tier distributions 29

Separate share rule 28

Special filing instructions:

Bankruptcy estates 16

Electing small business 

trusts 14

Grantor trusts 12

Pooled income funds 14

Split-interest trust 18

Substitute forms 36

T

Taxable income 25

Tax rate schedule 30

Throwback years 34

Trusts 4

Alaska Native Settlement 6

Blind 19

Common trust fund 7

Complex 36

Domestic 4

Exemption for 25

Foreign 33

Grantor 3

Inter vivos 3, 4

Nonexempt charitable 18, 27

Pre-need funeral 17

Qualified disability 25

Qualified revocable 5

Simple 36

Split-interest 18

Testamentary 3, 4

Who must file 4, 36

W

Where to file 8

Who must file:

Decedent's estate 4

Trust 4

Withholding on foreign person 28

-42-