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ADOR 10584 (14)
AZ Form 141AZ (2014)
The Arizona fiduciary adjustment is allocated among the beneficiaries and the fiduciary in proportion to their share of the federal distributable net income.
C11 Subtotal:
If more than 10 beneficiaries, include an additional schedule
........................................ C11
C12 Fiduciary ............................................................................................................................. C12
C13 Total:
Add lines C11 and C12.
This should total the federal distributable net income .......... C13
C14 Enter the fiduciary adjustment from Form 141AZ, Schedule B, line B11 here and also on
Form 141AZ Schedule K-1, line 1 or Form 141AZ Schedule K-1(NR), line 3 ................................................................. C14
C15 Multiply the amount on line C14 by the percentage on line C11.
Enter the result here and also on
Form 141AZ, page 1, line 9
.................................................................................................................................................. C15
C16 Multiply the amount on line C14 by the percentage on line C12.
Form 141AZ, page 1, line 10
................................................................................................................................................. C16
Federal Distributable Net Income From Arizona Sources
Complete Schedule D only if the estate or trust has nonresident beneficiaries. Use the information in Schedule D to complete
Form 141AZ, Schedule K-1(NR). Do not complete Schedule D if all of the beneficiaries are Arizona residents.
D1 Dividends .................................................................................................................................. D1
D2 Interest...................................................................................................................................... D2
D3 Partnership/fiduciary income .................................................................................................... D3
D4 Net rents and royalties.............................................................................................................. D4
D5 Net profit (loss) business .......................................................................................................... D5
D6 Other income ............................................................................................................................ D6
D7 Total: Add lines D1 through D6 ................................................................................................ D7
D8 Expenses .................................................................................................................................. D8
D9 Federal distributable income:
Subtract line D8 from line D7 and enter the difference here.
Also, enter the amount from column (c) on Form 141AZ, Schedule K-1(NR), line 1
................................ D9
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E1 Check the box if this return is for a short taxable year .....................................................................................................
E2 Have Arizona income tax returns been filed for the four (4) years preceding date of death? ..........................................
E3 Date of decedent’s death or date the trust was established ............................................
E4 Was a fiduciary return filed the preceding year?..............................................................................................................
E5 Check the box to indicate whether this return was prepared on a cash or accrual basis: ...............................................
E6 Has the federal government made an additional assessment on the income of this estate in the last four (4) years? ...
If “Yes”, submit a detailed report with this return.
E7 If return is for a trust, enter the name and address of the grantor:
• If you are sending a payment with this return, mail to:
Arizona Department of Revenue, PO Box 52016, Phoenix, AZ, 85072-2016.
Include the payment with Form 141AZ.
• If you are expecting a refund or owe no tax, or owe tax but are not sending a payment, mail to:
Arizona Department of Revenue, PO Box 52138, Phoenix, AZ, 85072-2138.
NOTE: If an estate is being probated, the fiduciary may have to obtain a certificate from the department that
shows no income tax is due. See page 3 of the instructions for details. Make requests for an income tax certificate
separately. Do not include requests for the income tax certificate with Form 141AZ.
by me, and to the best of my knowledge and belief is a true, correct and complete return.
SIGNATURE OF FIDUCIARY OR
OFFICER REPRESENTING FIDUCIARY
SIGNATURE OF PERSON OTHER THAN
TAXPAYER OR AGENT
STREET ADDRESS OF FIDUCIARY OR OFFICER
EMPLOYER OR FIRM NAME OF FIDUCIARY/OFFICER, IF ANY
FIRM NAME OF PAID PREPARER (PREPARER’S NAME IF SELF-EMPLOYED)
STREET ADDRESS OF PAID PREPARER
PAID PREPARER’S TIN
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2014 Arizona Fiduciary Income Tax Return
141AZ
An Arizona resident estate is the estate of a decedent who
was a resident of Arizona at the time of death. The starting
point for the Arizona income tax computation for a resident
estate is the estate’s federal taxable income.
A nonresident estate is an estate that is not a resident estate.
The starting point for a nonresident estate is that portion of
the estate’s federal taxable income derived from Arizona
An Arizona resident trust is a trust of which the fiduciary is
a resident of Arizona. If the trust has more than one
fiduciary, the trust is a resident trust if at least one of the
fiduciaries is a resident of Arizona. If a corporate fiduciary
engaged in interstate trust administration is the sole fiduciary
of a trust, or is a co-fiduciary with a nonresident, the trust is
a resident trust only if the corporate fiduciary conducts the
administration of the trust in Arizona. The starting point for
the Arizona income tax computation for a resident trust is
the trust’s federal taxable income.
A nonresident trust is a trust that is not a resident trust.
starting point for a nonresident trust is that portion of the
trust’s federal taxable income derived from Arizona sources.
The fiduciary, or fiduciaries, must file a return for an estate
or trust if of the following apply:
1. The estate or trust has any Arizona taxable income for
2. The estate's or trust's gross income for the tax year is
$5,000 or more, regardless of the amount of the Arizona
The above also applies to bankruptcy estates.
The fiduciary does not have to file a return if the income
does not exceed the amounts shown in items 1 or 2 above.
NOTE: The fiduciary must file a final return for an estate
when the fiduciary is requesting a tax certificate required by
the probate court. In this case, the fiduciary must file a final
return regardless of the estate's income. See instructions for
requesting a certificate on page 3.
Fiduciary Filing Return on Arizona Form 140
A personal representative must file a return on Arizona Form
140 if any of the following apply:
The gross income of a single decedent was $15,000 or
The Arizona adjusted gross income of a single decedent
was $5,500 or more.
The Arizona adjusted gross income of a married
decedent for which the representative will file a separate
return was $5,500 or more.
The gross income of a married decedent for which the
representative will file a separate return was $15,000 or
decedent and his or her surviving spouse for which a
joint return will be filed was $11,000 or more.
The gross income of a married decedent and his or her
surviving spouse for which a joint return will be filed
was $15,000 or more.
For individual filing purposes, gross income is gross income
as defined under the Internal Revenue Code (IRC) less
income included in gross income that is excluded from
Arizona taxation.
A taxpayer died on June 29, 2014. The decedent had wages
of $9,700 and interest income of $920 received through the
date of death. The personal representative files a final
Arizona Form 140 for the period January 1, 2014, through
June 29, 2014. The personal representative notes on the
Form 140 that the taxpayer is deceased as of June 29, 2014.
The personal representative reports the wage and interest
income of $10,620 on the Form 140. The personal
representative reports all income that the estate receives
from June 30, 2014, forward on the Form 141AZ.
A fiduciary who has charge of the income of an individual
must file a return of income on Form 140 if that individual's
income meets the filing requirements. Such fiduciaries
include guardians of minors and guardians or committees of
legally incompetent persons.
Where several fiduciaries exist, a return filed by one of two
or more joint fiduciaries is sufficient.
Filing for a Charitable Remainder Trust
Charitable remainder trusts should file on Arizona Form
141AZ. The fiduciary should indicate that the return is for a
charitable remainder trust by checking the appropriate box
The trustee should not enter any numerical figures on the
face of the return. The trustee should not complete an Arizona
Form 141AZ, Schedule K-1, or Schedule K-1(NR) for any of
Grantor trusts file only an information return since the
income reverts to the grantor. The grantor reports this
income on the individual income tax return (Arizona Form
140). Do not enter any numerical figures on the face of the
return. Go directly to the signature line. The fiduciary
should indicate that the return is for a grantor trust by
checking the appropriate box on line 6.
Where Should You Mail the Return?
If you are expecting a refund, or owe no tax, or owe tax but
are not sending a payment, mail the return to:
If you are sending a payment with this return, mail the return to:
Your 2014 calendar year tax return is due no later than
midnight, April 15, 2015. You must file a return made on a
fiscal year basis by the 15th day of the fourth month
following the close of the fiscal year. Your original filing
date must be the same for Arizona as it is for federal
able to file on time. An extension does not extend the time to
pay the income tax. Failure to pay at least 90% (.90) of the
tax due by the original due date will result in a penalty.
Arizona charges interest on any unpaid tax. The extension
underpayment penalty is ½ of 1% (.005) of the tax not paid
for each 30-day period or fraction of a 30-day period. The
extension underpayment penalty cannot exceed 25% of the
NOTE: Arizona will grant a five-month extension. For
more information, see Fiduciary Tax Ruling FTR 09-1.
1. Apply for a state extension (Form 141AZ EXT). To
apply for an automatic 5-month state extension, file
Form 141 AZ EXT by April 15. See Form 141AZ EXT
for details. You do not have to include a copy of the
that you check extension box 82E on page 1 of the
return. If you must make a payment, use Arizona Form
2. Use your federal extension. File your Arizona return by
the same due date. You do not have to include a copy
of the extension with your return, but make sure that
you check extension box 82E on page 1 of the return.
Does an Estate or Trust Have to Make Estimated
An estate or trust does not have to make estimated payments.
An estate or trust may elect to make Arizona estimated tax
payments on Arizona Form 141AZ ES.
postmarks your 2014 calendar return by April 15, 2015, your
return will not be late. You may also use certain private
(IRS) to meet the “timely mailing as timely filed” rule.
penalty is 4½% (.045) of the tax required to be shown on the
return for each month or fraction of a month the return is
late. This penalty cannot exceed 25% of the tax found to be
penalty. This penalty is ½ of 1% (.005) of the amount shown
penalty cannot exceed a total of 10% of the unpaid tax.
If you file your return under an extension, you must pay
90% of the tax shown on your return by the return's original
due date. If you do not pay this amount, we will charge you
a penalty. This penalty is ½ of 1% (.005) of the tax not paid
for each 30-day period or fraction of a 30-day period. We
charge this penalty from the original due date of the return
until the date you pay the tax. This penalty cannot exceed
25% of the unpaid tax. If we charge you the extension
underpayment penalty, we will not charge you the late
payment penalty under Arizona Revised Statutes (A.R.S.) §
42-1125(D).
will charge you interest even if you have an extension. If
you have an extension, we will charge you interest from the
If you are filing an amended Form 141AZ, check the
amended return box on line 6. Complete the entire return,
correct the appropriate line(s) with the new information, and
recompute your tax liability.
On a separate schedule, explain the reason(s) for the
amendment(s) and identify the line(s) and amount(s) being
changed on the amended return. Also, include a copy of the
amended federal Form 1041.
NOTE: You must plainly mark an amended return
"Amended" by checking the appropriate box on line 6. The
period covered by this return must be the same accounting
period as covered by the original return. If you are amending
a prior year return, use Form 141AZ for that taxable year.
Copy of Will or Trust Instrument
Upon the department's request, the fiduciary must submit a
copy of the will or trust instrument when the estate's or trust's
gross income is $5,000 or more. The fiduciary must swear that
the will or trust instrument is a true and complete copy.
Reporting Payments Made by an Estate or
An estate or trust that paid salaries or wages may have to
report those payments to the department.
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Request for Certificate of Payment of Taxes
IMPORTANT: Make requests for this income tax
certificate separately. Do not include requests for the
income tax certificate with Form 141AZ. The department
can issue certificates only if required by the probate court.
Attention: Fiduciary Unit
1600 West Monroe - Division Code 23
If an estate is in probate, the probate court may require a
certificate from the department that shows no income tax is
due. The probate court may require this before approving
the fiduciary’s final account.
Arizona law requires a certificate only when all of the
1. The estate is subject to probate.
2. The value of the assets of the estate at the decedent's
date of death exceeds $20,000.
3. The estate has a beneficiary that is not an Arizona resident.
In order for the department to issue a certificate, all of the
following must be met.
1. The fiduciary has filed Arizona Form 210 - Notice of
Assumption of Duties in a Fiduciary Capacity.
2. A return was filed by, or on behalf of, the decedent and
for the estate for each taxable year in which the
respective incomes of the decedent or estate exceeded
the requirements for filing returns.
3. A final Arizona fiduciary return is filed when the certificate
is requested. This return must be filed regardless of the
gross or net income for the year. If there is no income,
submit a return with "zero" on all lines.
If filing a final return and you are sending a payment
with this return, mail the return to:
If filing a final return and you are expecting a refund, or
owe no tax, or owe tax but are not sending a payment, mail
4. The request must contain a statement regarding the
status of returns filed by, or on behalf of, the decedent
or for the estate for the four taxable years immediately
preceding the date of the request. The fiduciary must
make the statement under declaration of perjury. The
statement must indicate:
The years for which returns were filed.
The years for which the gross and Arizona taxable
incomes were less than the amount necessary to
require the filing of returns.
If you have any questions, call us at (602) 716-7809.
Additional Arizona Returns or Forms You
Arizona Form 140, 140PY, or 140NR to report a
decedent's income for the period to the date of death
Arizona Form 210 - Notice of Assumption of Duties in a
Fiduciary Capacity - Filed for all estates
Form 141AZ EXT – Application for Filing Extension
for Fiduciary Returns Only
Form 141AZ ES - Estate or Trust Estimated Tax Payment
The accounting period for the return must be the same for
Arizona as it is for federal purposes. If the period is for a
fiscal year, it cannot exceed a 12-month period. A fiscal
year period cannot end on the last day of December.
For each return filed in the future, you must keep the same
accounting period unless you receive written permission
from the department to change it.
If filing for a fiscal year, enter the beginning and ending
Lines 1 through 4 -
Enter the name of the estate or trust. Enter the name, title,
address, and ZIP Code of the fiduciary. Enter the employer
identification number (EIN) of the estate or the trust.
If the estate, trust or fiduciary has a foreign address, enter the
information in the following order: city, province or state,
and country. Follow the country’s practice for entering the
postal code. Do not abbreviate the country’s name.
Lines 5a through 5d – Check Box (only one)
If your are filing this return for a:
Check the box (es) that identify the type of return you are filing.
Line 7 - Federal Taxable Income of Fiduciary
An Arizona resident estate or trust should enter the federal
taxable income shown on page 1 of the federal fiduciary
return, Form 1041.
A nonresident estate or trust must complete Form 141AZ,
Schedule A, before entering an amount on line 7. For a
nonresident estate or trust, the fiduciary should enter the
amount from Form 141AZ, Schedule A, line A6 on line 7.
NOTE: Before completing the rest of page 1 of Form
141AZ, complete Schedules A, B, C, D and E, as necessary.
Schedule A - Nonresident Estate or Trust
Source Income Schedule
Schedule A is used to compute the federal taxable income of
the estate or trust from Arizona sources. All nonresident
estates and nonresident trusts must complete Schedule A.
Resident estates and resident trusts should skip Schedule A.
Enter all items of income and deductions that correspond to
those items listed on the federal fiduciary return. Line A5
should equal the federal taxable income reported on the
federal fiduciary return.
Enter that part of each item of income and deductions
reported in the federal column that is derived from Arizona
sources. Intangible income will not be considered to be from
Arizona sources except where it is part of a business, trade,
or occupation carried on in Arizona.
Schedule B - Fiduciary Adjustment
Fiduciary adjustment increasing federal
Use lines B1 through B4 to figure the amount of fiduciary
adjustment that increases federal taxable income.
Line B1 - Positive Arizona Fiduciary Adjustment
From Another Estate or Trust
Use this adjustment only if the estate’s or trust’s Arizona
Form 141AZ, Schedule K-1, indicates a difference between
federal and state distributable income. If the amount shown
on the Arizona Form 141AZ, Schedule K-1, is a positive
number, enter that amount here.
Line B2 - Non-Arizona Municipal Bond Interest
Arizona taxes interest received from non-Arizona municipal
bonds. Enter the amount of this type of interest income that you
did not include on the federal return.
You may exclude any expenses incurred to purchase or hold the
bond(s). Reduce the interest income by the amount of
expenses that you could not deduct on your federal return.
Line B3 - Other Additions to Federal Taxable
Enter any other additions, including those shown below, to
federal taxable income. Include your own schedule.
A. Total Depreciation Included in Arizona Gross
Enter the amount of depreciation deducted on the federal
return that is included in Arizona gross income. If you make
an entry here, also see the instructions for line B9, “Other
Subtractions From Federal Taxable Income.”
Arizona does not have specific provisions for calculating the net
operating loss of estates or trusts. Generally, the net operating loss
deduction included in the federal taxable income is the amount
allowable for Arizona purposes. There are, however, instances
when the amount allowable for Arizona may be different.
You must adjust the net operating loss deduction included in the
federal taxable income if the estate or trust has already deducted
any amount of the net operating loss included in federal taxable
income for Arizona purposes. Enter on line B3, the amount of
net operating loss included in federal taxable income that was
previously deducted for Arizona purposes.
Usually, Arizona conforms to the federal net operating loss
and the carryback provisions. Arizona, however, did not
conform to the special federal net operating loss rules for
2008 and 2009. Under the special rules for 2008 and 2009, a
taxpayer could have elected to carry the net operating loss
back for 3, 4, or 5 years, instead of the normal 2 years. This
election would have been allowed under IRC § 172(b)(1)(H)
as amended by the American Recovery and Reinvestment
Act of 2009 or the Worker, Homeownership, and Business
Assistance Act of 2009. If a taxpayer deducted a federal net
operating loss carryback under the federal American Recovery
and Reinvestment Act of 2009 or the federal Worker,
Homeownership, and Business Assistance Act of 2009, see
the instructions for line B9, (K).
For information on deducting a net operating loss carryback
in cases where a taxpayer did not make an election under
IRC § 172(b)(1)(H), see the department’s Income Tax
Procedure, ITP 99-1.
C. Annuity Income in Excess of Contributions
Make this adjustment if both of the following apply.
1. The estate or trust received annuity income and the first
payment received from the annuity was before
2. The sum of the proceeds received from the annuity in all
taxable years prior to and including the current tax year
exceeds the total consideration premiums paid.
D. Excess of a Partner's Share of Partnership
Make this adjustment if the Arizona Form 165, Schedule K-
1, shows a difference between federal and state distributable
If the difference reported on the Arizona Form 165,
Schedule K-1, is a positive number, enter that difference as
an addition. Enter the addition on line B3.
Schedule K-1, is a negative number, enter that difference as
a subtraction. Enter the subtraction on line B9.
E. Claim of Right Adjustment for Amounts Repaid
1. During 2014, the estate or trust was required to repay
2. The amount required to be repaid was subject to
Arizona income tax in the year included in income.
3. The amount required to be repaid during 2014 was more
4. The estate or trust took a deduction for the amount
repaid on its 2014 federal income tax return.
5. The deduction taken on the estate’s or trust’s federal
income tax return is reflected in the Arizona taxable
If all of the above apply, enter the amount deducted on the
federal income tax return that is reflected in the Arizona
For more information on the Arizona claim of right
provisions, see the department’s Individual Income Tax
Procedure ITP 95-1.
F. Claim of Right Adjustment for Amounts Repaid
in Prior Taxable Years
1. During a year prior to 2014, the estate or trust was
required to repay amounts held under a claim of right.
2. The estate or trust computed its tax for that prior year
under Arizona's claim of right provisions.
3. A net operating loss or capital loss was established due
to the repayment made in the prior year.
4. The estate or trust is entitled to take that net operating
loss or capital loss carryover into account when
computing its 2014 Arizona taxable income.
5. The amount of the loss carryover included in the
estate’s or trust’s federal income is more than the
amount allowed to be taken into account for Arizona
Enter the amount by which the loss carryover included in the
federal income is more than the amount allowed for the
taxable year under Arizona law.
G. Nonqualified Withdrawals From 529 College
1. The estate or trust received a nonqualified withdrawal
from a 529 college savings plan.
2. The amount of withdrawal was not included in the
The amount that the fiduciary must add is the amount of
withdrawal, but no more than the difference between the
amount of contributions subtracted in prior years and the
amount added in any prior years.
A qualified withdrawal. A qualified withdrawal is a
A withdrawal made as the result of the death or
disability of the designated beneficiary of an account.
A withdrawal that is made on the account of a
IRC § 135(d)(1)(B) or (C), and that is received by the
amount of this scholarship, allowance, or payment.
H. Original Issue Discount (OID) on Reacquisition
of Debt Instrument
For federal purposes, when an estate or trust made the
special election to defer discharge of indebtedness (DOI)
income under IRC § 108(i), the estate or trust was not
allowed to take a deduction with respect to the portion of
any OID that accrued with respect to that DOI income,
during the income deferral period. In this case, the estate or
trust had to deduct the aggregate amount of the OID
deductions disallowed ratably over a 5-year period,
beginning with the period in which the income was
Arizona did not adopt the federal provisions requiring an
estate or trust to defer the OID deduction in cases where the
estate or trust federally deferred the DOI income.
For Arizona purposes, the estate or trust had to report the
DOI income from a debt reacquisition in the year in which it
reacquired the debt, and it was allowed to subtract any OID
related to that DOI income in the year the OID accrued.
(See the instructions for “Other Subtractions From Federal
Taxable Income” line B9, (L).) If the estate’s or trust’s
federal taxable income includes a deduction for any accrued
OID already subtracted for Arizona purposes, make an
addition to Arizona income for the amount of deferred OID
deducted on the federal return. Generally, this addition will
not apply until taxable year 2014 through 2018. On line B3,
enter the amount of any previously deferred OID deducted in
computing the estate’s or trust’s 2014 federal taxable
income, to the extent that the amount was previously
subtracted from Arizona taxable income.
I. Estate Loss of an Arizona Nonprofit Medical
Marijuana Dispensary (NMMD) included in Federal
If the NMMD was registered to an individual as a sole
proprietorship and the NMMD becomes part of the
individual’s estate after the individual died, the estate is
required to add the amount of the loss from the dispensary
that is included in the computation of the estate’s federal
adjusted gross income. Include the amount of the loss on
line B3.
J. Other Adjustments
Other special adjustments may be necessary. You may need
to make an addition for depreciation or amortization. Call
one of the numbers listed on page 1 of these instructions if
1. You sold or disposed of property that was held for the
production of income and your basis was computed
under the Arizona Income Tax Act of 1954.
2. You elected to amortize the basis of a pollution control
device or the cost of a childcare facility under Arizona
law in effect before 1990. You are still deducting
amortization or depreciation for that device or facility
Line B4 - Total Adjustments Increasing Federal
Add lines B1 through B3. Enter the total.
Fiduciary Adjustment Decreasing Federal
Use lines B5 through B10 to figure the amount of fiduciary
adjustment that decreases federal taxable income.
authority exists. Without such authority, you cannot take a
subtraction. If you have any questions concerning
subtractions from income, call one of the numbers listed on
page 1 of these instructions.
NOTE: You cannot subtract any amount that is allocable to
income excluded from Arizona taxable income.
Enter the following other subtractions from federal taxable
income. Include your own schedule.
Line B5 - Negative Arizona Fiduciary Adjustment
Use this adjustment only if the Arizona Form 141AZ,
Schedule K-1, indicates a difference between federal and
state distributable income. If the amount shown on the
Arizona Form 141AZ, Schedule K-1, is a negative number,
enter that amount here.
Line B6 - Interest Received on U.S. Obligations
obligations included on page 1, line 7. U.S. Government
obligations include obligations such as U.S. savings bonds
and treasury bills. You cannot deduct any interest or other
related expenses incurred to purchase or carry the
obligations. If such expenses are included in Arizona gross
income, you must reduce the subtraction by such expenses.
Reduce the subtraction only by the amount of such expenses
included in your Arizona gross income
bonds since this interest is taxable by Arizona. For details, see
the Income Tax Ruling, ITR 06-1.
Do not subtract any amount received from a qualified
pension plan that invests in U.S. Government obligations.
Do not subtract any amount received from an IRA that
invests in U.S. Government obligations. These amounts are
not interest income.
For more information, see Income Tax Rulings ITR 96-2
and ITR 96-3.
Line B7 - Refunds From Other States
Enter any state income tax refunds received from states other than
Arizona. Enter an amount only to the extent it is included on
page 1, line 7 of Arizona Form 141AZ.
Line B8 – Reserved
Do not enter an amount on line B8.
Line B9 - Other Subtractions From Federal Taxable
Enter any other subtractions, including those shown below,
to federal taxable income. Include your own schedule.
A. Exclusion for U.S. Government, Arizona State, or
If the estate or trust received pension income from any of the
sources listed below, subtract the amount received or $2,500,
whichever is less. Only include amounts which the estate or
trust reported as income on the federal return.
The United States Government Service Retirement and
The United States Foreign Service Retirement and
Retired or retainer pay of the uniformed services of the
Any other retirement system or plan established by
NOTE: This applies only to those retirement plans
authorized and enacted into the U.S. Code. This does not
apply to a retirement plan that is only regulated by federal
law (i.e., plans that must meet certain federal criteria to be
The Public Safety Personnel Retirement Plan
A retirement plan established for employees of a county,
city, or town in Arizona
An optional retirement program established by the
Arizona Board of Regents under Arizona Revised Statutes
An optional retirement program established by an
Arizona community college district
This subtraction does not apply to nonresident estates or trusts.
B. Qualified Wood Stove, Wood Fireplace, or Gas
Fired Fireplace
Arizona allows a subtraction for converting an existing fireplace
to one of the following.
a qualified wood fireplace, or
a gas fired fireplace and non-optional equipment
directly related to its operation
You may subtract up to $500 for converting an existing
fireplace on property located in Arizona to a qualified wood
stove, qualified wood fireplace, or gas fired fireplace.
C. Claim of Right Adjustment for Amounts Repaid
5. The amount of the loss carryover allowed to be taken
into account for Arizona purposes is more than the
amount included in your federal income.
Enter the amount by which the loss carryover allowed for
the taxable year under Arizona law is more than the amount
included in your federal income.
D. Certain Expenses Not Allowed For Federal Purposes
The estate or trust may subtract some expenses that it cannot
deduct on its federal return when the estate or trust claims
certain federal tax credits. These federal tax credits are
The credit for employer-paid social security taxes on
If the estate or trust claimed any of these federal tax credits
for 2014, enter the portion of wages or salaries it paid or
incurred during the taxable year equal to the amount of those
federal tax credits it received.
A nonresident estate or trust should enter the amount of
wages or salaries that it paid or incurred during the taxable
year that is related to the income sourced to Arizona. The
subtraction is equal to the amount of the federal credits it
E. Agricultural Crops Given to Charitable Organizations
Arizona allows a subtraction for qualified crop gifts made during
2014 to one or more charitable organizations. To take this
subtraction, all of the following must apply.
The estate or trust must be engaged in the business of
farming or processing agricultural crops.
The gift must be made to a charitable organization
The charitable organization must be exempt from
Arizona income tax.
The subtraction is the greater of the wholesale market price
or the most recent sale price for the crop given. The amount
of the subtraction cannot include any amount deducted under
IRC § 170 with respect to the crop contribution that exceeds
the cost of producing the contributed crop.
To determine if the estate’s or trust’s crop gift qualifies for
this subtraction, see Income Tax Procedure, ITP 12-1.
F. Installment Sale Income From Another State
Taxed by the Other State in a Prior Taxable Year
The estate or trust may subtract any income from an
installment sale that has been properly subjected to income
tax in another state in a prior tax year. Enter the amount of
such income included in Arizona gross income in the current
This subtraction does not apply to nonresident estates or
G. Subtraction for World War II Victims
The estate or trust may subtract distributions made to it for
the decedent’s or settlor’s persecution by Nazi Germany or
any other Axis regime for racial, religious, or political
reasons. The estate or trust may also subtract distributions
made for the persecution of the ancestors of the decedent or
settlor. If the estate or trust is the first recipient of such
distributions, enter the amount of the distributions that it had
to include in the estate’s or trust’s federal taxable income.
The estate or trust may also subtract certain items of income,
if the decedent or settlor was persecuted by Nazi Germany
or any other Axis regime for racial, religious, or political
reasons before, during, or immediately after World War II.
The income must be attributable to, derived from, or related
to assets that were stolen or hidden from the decedent or
income, enter the amount of income that it had to include in
the estate’s or trust’s federal taxable income.
A nonresident estate or trust should enter such payments only
to the extent included in Arizona taxable income.
H. Recalculated Arizona Depreciation
Resident Estate or Trust
For assets placed in service in taxable years beginning
before December 31, 2012, enter the total amount of
depreciation allowable pursuant to IRC § 167(a) for the
taxable year calculated as if the taxpayer had elected not to
claim bonus depreciation for eligible properties for federal
on the method you used to compute the depreciation for
NOTE: For more information, see the department’s
individual income tax procedure, ITP 14-3.
taxable year calculated as if the bonus depreciation is 10%
of the amount of federal bonus depreciation pursuant to IRC
§ 168(k).
Add all amounts together and enter the total on line B9.
depreciation attributable to assets used in an Arizona
business allowable pursuant to IRC § 167(a) for the taxable
year calculated as if the taxpayer had elected not to claim
bonus depreciation for eligible properties for federal
these assets. Enter the total amount of depreciation
attributable to assets used in an Arizona business
year calculated as if the bonus depreciation is 10% of the
amount of federal bonus depreciation pursuant to IRC §
I. Basis Adjustment for Property Sold or Otherwise
Disposed of During the Taxable Year
With respect to property that is sold or otherwise disposed of
during the taxable year by a taxpayer who has complied with
the requirement to add back all depreciation with respect to
that property on tax returns for all taxable years beginning
from and after December 31, 1999; enter the amount of
depreciation that was allowed pursuant to IRC § 167(a), to
the extent that the amount has not already reduced Arizona
taxable income in the current or prior years. (Note: The
practical effect of this is to allow a subtraction for the
difference in basis for any asset for which bonus
depreciation has been claimed on the federal return.) A
nonresident estate or trust may make this adjustment for only
property that was used in an Arizona business.
J. Federal Estate Taxes Paid by an Estate
An estate may subtract the amount of federal estate tax paid
by the estate in the current taxable year. Enter the amount of
federal estate taxes paid in 2014.
K. Net Operating Loss Adjustment
This subtraction applies to only those estates or trusts that
made an election under the special federal net operating loss
rules for 2008 and 2009. Under these federal rules for 2008
and 2009, an estate or trust could have elected to carry the net
operating loss back for 3, 4, or 5 years, instead of the normal 2
This election would have been allowed under IRC §
Arizona did not adopt the special federal net operating loss rules
for losses incurred during 2008 or 2009. For Arizona
purposes, estates or trusts must deduct a net operating loss as
if the loss was computed under IRC § 172 in effect prior to
the enactment of those special rules.
If the estate or trust made an election to deduct a 2008 or
2009 federal net operating loss under IRC § 172(b)(1)(H),
the estate or trust may have to enter an amount here. Figure
how much of the net operating loss carry forward would
have been allowed as a deduction on the estate’s or trust’s
2012 federal income tax return, if the election described in
IRC § 172(b)(1)(H) had not been made in the year of the
loss. On line B9, enter the amount that exceeds the actual
net operating loss carry forward that was deducted in
Figure how much of the net operating loss carry forward
would have been allowed as a deduction on the estate’s or
trust’s 2014 federal income tax return, if the election
described in IRC § 172(b)(1)(H) had not been made in the
year of the loss. Then figure how much of the carry forward
computed under that method was derived from Arizona
source losses. The amount the estate or trust may take as a
subtraction is the difference between the amount of Arizona
source net operating loss carryover allowable as a deduction
for federal purposes under the as if calculation and the
amount of the Arizona source net operating loss deduction
actually taken for federal purposes that the estate or trust
included in its Arizona gross income. On line B9, enter the
amount of allowable Arizona source loss carry forward
deduction that exceeds the actual amount of Arizona source
net operating loss carry forward deduction that was deducted
in arriving at Arizona gross income.
NOTE: As an Arizona nonresident estate or trust, the estate
or trust may have had a loss from prior year Arizona
business operations. However, the loss cannot offset this
year’s income unless the as if calculation results in an
Arizona source net operating loss deduction for federal
purposes. The estate or trust can only take this subtraction
if the as if federal net operating loss deduction for 2014
includes Arizona source losses that have not been absorbed
by non-Arizona income in any intervening years. The estate
or trust cannot subtract any amount of that net operating
loss that has been absorbed by non-Arizona income in any
intervening years. The estate or trust also cannot take a
subtraction for any amount that has already been deducted
for Arizona purposes.
L. Previously Deferred Discharge of Indebtedness
(DOI) Income Adjustment
Generally, when a loan is settled for less than the amount
owed, DOI income is realized by the debtor and usually
must be included in the debtor’s gross income. The amount
of DOI income is generally equal to the amount of loan
forgiveness. DOI income also occurs when a debtor
repurchases its own debt at a discount (a price lower than the
adjusted basis issue price of the debt instrument). In debt
repurchase transactions, the amount of DOI income is
generally equal to the difference between the adjusted issue
price and the price paid for the debt instrument.
For federal purposes, an estate or trust may have made a
special election for taxable years 2009 or 2010 to include
DOI income in connection with the reacquisition of a
business debt instrument, ratably over a 5-year period.
An estate or trust that made this election will generally
include this income in federal taxable income beginning
with the 2014 taxable year. An estate or trust would have
made the federal election under IRC § 108(i) as added by the
Arizona did not adopt the special federal DOI income
deferral provisions for the 2009 or 2010 taxable year.
For Arizona purposes, if a taxpayer made the federal
election to defer the inclusion of DOI income under IRC §
108(i), the estate or trust was required to add the amount of
deferred DOI income to Arizona income for the year for
which the estate or trust made the election. If the estate or
trust made the required addition to Arizona income on the
Arizona return filed for the year in which the estate or trust
reacquired the debt instrument (2009 or 2010), Arizona will
not tax that DOI income twice. In the year in which the
estate or trust includes that deferred DOI income in federal
taxable income, the estate or trust may take a subtraction for
the amount included for that year.
On line B9, enter the amount of previously deferred DOI
income included in federal taxable income for the current
taxable year to the extent that the amount was previously
added to the Arizona income.
On line B9, enter the amount of previously deferred Arizona
source DOI that the estate or trust included in its Arizona
gross income for the current taxable year to the extent that
the amount was previously added to the estate’s or trust’s
Arizona income.
M. Estate Income of an Arizona Nonprofit Medical
individual’s estate after the individual died, the estate may
subtract the amount of the income from the dispensary that
is included in the computation of the estate’s federal
adjusted gross income. Include the amount of the income on
line B9.
N. Other Adjustments
Other special adjustments may be necessary. Call one of the
numbers listed on page 1 of these instructions if any of the
You sold or disposed of property that was held for the
You deferred exploration expenses determined under
IRC § 617 in a taxable year ending before January 1,
1990, and you have not previously taken a subtraction
Line B10 - Total Adjustments Decreasing Federal
Add lines B5 through B9. Enter the total.
Line B11 - Net Fiduciary Adjustment
Subtract the amount on line B10 from the amount on line
B4. If the result is a negative number, enter the result in
brackets. Also, enter the result on Form 141AZ, line 8.
Schedule C - Fiduciary Adjustment Allocation
Use Schedule C to determine the allocation of the shares of
the Arizona fiduciary adjustment. This adjustment is divided
among the beneficiaries and the fiduciary in proportion to
their share of the federal distributable net income. If there is
no federal distributable net income, each beneficiary’s share
of the adjustment is in proportion to each share of the estate or
trust income distributed. Any balance of the adjustment not
allocated to the beneficiaries is allocable to the fiduciary.
Lines C1 through C10 -
In column (a), enter the name of each beneficiary. In
column (b), enter each beneficiary’s share of the federal
distributable net income. In column (c), enter the percentage of
the estate or trust to be distributed to each beneficiary in
accordance with the documents or laws controlling
distribution of the estate or trust. If the estate or trust has
more than 10 beneficiaries, complete an additional schedule.
The schedule should show the same information required on
lines C1 through C10.
Line C11 -
Add the amounts on lines C1 through C10 in column (b).
Add the percents on lines C1 through C10 in column (c). If
the fiduciary completed an additional schedule because there
are more than 10 beneficiaries, include the amounts from the
additional schedule on line C11.
Line C12 -
In column (b), enter the fiduciary’s share of the federal
distributable net income. In column (c), enter the percentage