2019 Department of the Treasury

Internal Revenue Service

Instructions for Form 1041

and Schedules A, B, G, J,
and K-1
U.S. Income Tax Return for Estates and Trusts
Section references are to the Internal Revenue Contents Page have been updated to include new
Code unless otherwise noted. questions 11 through 14.
Schedule B—Income Distribution
Contents Page Deduction . . . . . . . . . . . . . . . 28 ESBT Worksheet. An Electing Small
What's New . . . . . . . . . . . . . . . . . . 1 Schedule G—Tax Computation Business Trust (ESBT) Tax Worksheet
and Payments . . . . . . . . . . . . 30
Reminders . . . . . . . . . . . . . . . . . . . 2 has been added to the instructions to
Net Investment Income Tax . . . . . . . 34
Photographs of Missing Children . . . . 2 calculate the ESBT tax.
Other Information . . . . . . . . . . . . . 35
Unresolved Tax Issues . . . . . . . . . . . 3 Qualified Opportunity Investment. If
Schedule J (Form 1041) —
How To Get Forms and Accumulation Distribution for you held a qualified investment in a
Publications . . . . . . . . . . . .... 3 Certain Complex Trusts . . . . . . 37 qualified opportunity fund (QOF) at any
General Instructions . . . . . . . . . .... 3 Schedule K-1 (Form 1041)— time during the year, you must file your
Purpose of Form . . . . . . . . . . . .... 3 Beneficiary's Share of return with Form 8997, Initial and
Income Taxation of Trusts and Income, Deductions, Credits,
Decedents' Estates . . . . . . . . . . 3 etc. . . . . . . . . . . . . . . . . . . . 39 Annual Statement of Qualified
Abusive Trust Arrangements . . . . . . . 3 Index . . . . . . . . . . . . . . . . . . . . . 50 Opportunity Fund Investments, attached
Definitions . . . . . . . . . . . . . . . . . . . 4
to your return. For more information, see
Future Developments Form 8997 and its instructions.
Who Must File . . . . . . . . . . . . . . . . 5
Electronic Filing . . . . . . . . . . . . . . . 8 For the latest information about Capital gains and qualified divi-
When To File . . . . . . . . . . . . . . . . . 8 developments related to Form 1041 and dends. For tax year 2019, the 20%
Period Covered . . . . . . . . . . . . . . . 8 Schedules A, B, G, J, K-1 and its maximum capital gains rate applies to
Where To File . . . . . . . . . . . . . . . . . 9 instructions, such as legislation enacted estates and trusts with income above
Who Must Sign . . . . . . . . . . . . . . . . 8 after they were published, go to $12,950. The 0% and 15% rates apply
Accounting Methods . . . . . . . . . . . . 9 IRS.gov/Form1041. to certain threshold amounts. The 0%
Accounting Periods . . . . . . . . . . . . . 9 rate applies to amounts up to $2,650.
Rounding Off to Whole Dollars . . . . . . 9 What's New The 15% rate applies to amounts over
Estimated Tax . . . . . . . . . . . . . . . 10 $2,650 and up to $12,950.
Line 20–Qualified Business Income
Interest and Penalties . . . . . . . . . . . 10 Bankruptcy estate filing threshold.
Deduction. Line 20, Qualified
Other Forms That May Be Business Income Deduction, has been For tax year 2019, the requirement to
Required . . . . . . . . . . . . . . . . 11 file a return for a bankruptcy estate
added to the Form 1041 to be used
Additional Information . . . . . . . . . . 13 applies only if gross income is at least
when reporting the deduction
Assembly and Attachments . . . . . . . 13 $12,200.
attributable to the entity’s share of
Special Reporting Instructions . . . . . 13
qualified items. Schedule K-1, Box 14, Qualified disability trust. For tax year
Specific Instructions . . . . . . . . . . . . 17
code I, related to the qualified business 2019, a qualified disability trust can
Name of Estate or Trust . . . . . . . . . 17
income deduction, has been changed. claim an exemption of up to $4,200.
Name and Title of Fiduciary . . . . . . . 17 New pass-through entity reporting
Address . . . . . . . . . . . . . . . . . . . 17 This amount is not subject to phaseout.
statements have been included in these
A. Type of Entity . . . . . . . . . . . . . . 17 instructions to assist the trust or estate Extended tax provisions. Recent
B. Number of Schedules K-1 in reporting the proper qualified legislation extended certain tax benefits
Attached . . . . . . . . . . . . . . . . 18 that had expired at the end of 2017.
business income items and other
C. Employer Identification These tax benefits include the following.
Number . . . . . . . . . . . . . . . . . 18 information to its beneficiaries. These
statements, or substantially similar • Deduction for mortgage insurance
D. Date Entity Created . . . . . . . . . . 18 premiums.
statements, must be attached to each
E. Nonexempt Charitable and • Biofuel producer credit.
Split-Interest Trusts . . . . . . . . . 18 beneficiary’s Schedule K-1 reporting
their allocable share of each item and • Biodiesel and renewable diesel fuels
F. Initial Return, Amended Return, credit.
etc. . . . . . . . . . . . . . . . . . . . 19 other information as applicable.
If you are eligible for one or more of
G. Section 645 Election . . . . . . . . . 20 Schedule G. Schedule G of Form 1041 these benefits in 2019, you can claim
Income . . . . . . . . . . . . . . . . . . . . 20 has been revised. It now has two parts: them on your 2019 return. If you are
Deductions . . . . . . . . . . . . . . . . . 21 Part I — Tax Computation and Part II — eligible for one or more of these benefits
Limitations on Deductions . . . . . . . . 22 Payments. for tax year 2018, you will need to file an
Tax and Payments . . . . . . . . . . . . . 27 amended Form 1041 return to claim
Schedule A—Charitable Other Information. The Other
Information questions on Form 1041 them.
Deduction . . . . . . . . . . . . . . . 27

Jan 24, 2020 Cat. No. 11372D

Reminders business interest is required to file Form Note. Form 8879-F can only be
8990, Limitation on Business Interest associated with a single Form 1041.
• Review a copy of the will or trust
instrument, including any amendments Expense Under Section 163(j), unless Form 8879-F can no longer be used
or codicils, before preparing an estate's an exception for filing is met. For more with multiple Forms 1041.
or trust's return. information, see Form 8990 and its For more information about e-filing
instructions.
• We encourage you to use Form returns through MeF, see Pub. 4164,
1041-V, Payment Voucher, to Inclusion of global intangible Modernized e-File (MeF) Guide for
accompany your payment of a balance low-taxed income (GILTI). P.L. Software Developers and Transmitters.
of tax due on Form 1041, particularly if 115-97 enacted section 951A, which Form 8975. Certain United States
your payment is made by check or requires U.S. shareholders of controlled persons that are the ultimate parent
money order. foreign corporations to determine and entity of a United States multinational
Deductions allowable under section include their GILTI in taxable income enterprise group with annual revenue
67(e). Miscellaneous itemized every year. Section 951A is effective for for the preceding reporting period of
deductions subject to the 2% floor aren’t tax years of foreign corporations $850 million or more are required to file
deductible for tax years 2018 through beginning after 2017, and to tax years of Form 8975. Form 8975 and its
2025. However, deductions under U.S. shareholders in which or with Schedules A (Form 8975) must be filed
section 67(e)(1) continue to be which such tax years of foreign with the income tax return of the
deductible if they are costs that are corporations end. Use Form 8992 to ultimate parent entity of a U.S.
incurred in connection with the figure the U.S. shareholder's GILTI and multinational enterprise group for the tax
administration of an estate or a attach it to Form 1041. See section year in or within which the reporting
non-grantor trust that would not have 951A for more information. period covered by Form 8975 ends. For
been incurred if the property were not Credit for paid family and medical more information, see Form 8975,
held in such estate or trust. See Notice leave. Eligible employers may qualify Schedule A (Form 8975) and the
2018-61 for more information. Also see for a credit for wages paid in tax years Instructions for Form 8975 and
Regulations section 1.67-4 for costs that beginning after 2017 to qualifying Schedule A (Form 8975).
are commonly or customarily incurred employees on family and medical leave. Information reporting by specified
by an individual. See section 45S. Also see Form 8994 domestic entities. Certain domestic
Section 965 deferred foreign in- and its instructions. trusts that hold specified foreign
come. If you own (directly or indirectly) Extension of time to file. The financial assets ("specified domestic
certain foreign corporations, you may extension of time to file an estate (other entities") must file Form 8938,
have to include on your return certain than a bankruptcy estate) or trust return Statement of Specified Foreign
deferred foreign income. You may pay is 51/2 months. Financial Assets, along with their Form
the entire amount of tax due with 1041. See Other Information, Question
Item A. Type of Entity. On page 1 of 10, later.
respect to this deferred foreign income
Form 1041, Item A, taxpayers should
this year or elect to make payment in Form 8971. Form 8971, Information
select more than one box, when
eight installments or in the case of Regarding Beneficiaries Acquiring
appropriate, to reflect the type of entity.
certain stock owned through an S Property From a Decedent, along with
corporation, elect to defer payment until Item F. Net operating loss (NOL) car- Schedule A, is used to comply with the
occurrence of a triggering event. See ryback. If an amended return is filed for filing requirements regarding consistent
the instructions for Line 25 and an NOL carryback, check the box in basis reporting between an estate and a
Schedule G, Part II, line 15; Form 965; Item F Net operating loss carryback. person acquiring property from an
and Form 965-A. See Amended Return, later, for estate.
complete information.
Net operating loss. The Tax Cuts and For more information, see the
Jobs Act of 2017 (P.L. 115-97) Item G. Section 645 election. If the Instructions for Form 8971 and
eliminated the option to carry back a net estate has made a section 645 election Schedule A and Column (e)—Cost or
operating loss (NOL) for most the executor must check Item G and Other Basis in the Instructions for Form
taxpayers. Generally, an NOL provide the taxpayer identification 8949.
generated in a tax year ending after number (TIN) of the electing trust with
2017 can only be carried forward to the highest total asset value in the box Photographs of Missing
subsequent years. The 2-year provided.
carryback rule no longer applies. See
Children
The executor must also attach a The Internal Revenue Service is a proud
Pub. 536, Net Operating Loss for statement to Form 1041 providing the
Individuals, Estates, and Trusts, for partner with the National Center for
following information for each electing Missing & Exploited Children®
additional information. Exceptions apply trust (including the electing trust
to certain farming losses. See Pub. 225, (NCMEC). Photographs of missing
provided in Item G): (a) the name of the children selected by the Center may
Farmer's Tax Guide for more electing trust, (b) the TIN of the electing
information. appear in instructions on pages that
trust, and (c) the name and address of would otherwise be blank. You can help
Deduction of taxes. The deduction for the trustee of the electing trust. bring these children home by looking at
state and local taxes is limited to Form 1041 E-filing. When e-filing the photographs and calling
$10,000. The deduction for foreign real Form 1041 use either Form 8453-FE, 1-800-THE-LOST (1-800-843-5678) if
property taxes is no longer allowed. See U.S. Estate or Trust Declaration for an you recognize a child.
Line 11—Taxes, later. IRS e-File Return, or Form 8879-F, IRS
Business interest expense limita- e-file Signature Authorization for Form
tion. Every taxpayer who deducts 1041.

-2- Instructions for Form 1041 (2019)

Unresolved Tax Issues How To Get Forms and deduction for distributions to
beneficiaries. To figure this deduction,
If you have attempted to deal with an Publications the fiduciary must complete Schedule B.
IRS problem unsuccessfully, you should
contact the Taxpayer Advocate Service Internet. You can access the The income distribution deduction
(TAS). The Taxpayer Advocate IRS website 24 hours a day, 7 determines the amount of any
independently represents the estate's or days a week, at IRS.gov to: distributions taxed to the beneficiaries.
trust's interests and concerns within the • Download forms, including talking tax For this reason, a trust or decedent's
IRS by protecting its rights and resolving forms, instructions, and publications; estate sometimes is referred to as a
problems that have not been fixed • Order IRS products; “pass-through” entity. The beneficiary,
through normal channels. • Use the online Internal Revenue and not the trust or decedent's estate,
Code, regulations, and other official pays income tax on his or her
While Taxpayer Advocates can't guidance; distributive share of income.
change the tax law or make a technical • Research your tax questions; Schedule K-1 (Form 1041) is used to
tax decision, they can clear up problems • Search publications by topic or notify the beneficiaries of the amounts
that resulted from previous contacts and keyword; to be included on their income tax
ensure that the estate's or trust's case is • Apply for an Employer Identification returns.
given a complete and impartial review. Number (EIN); and
The estate's or trust's assigned
• Sign up to receive local and national Before preparing Form 1041, the
tax news by email. fiduciary must figure the accounting
personal advocate will listen to its point income of the estate or trust under the
of view and will work with the estate or will or trust instrument and applicable
trust to address its concerns. The estate
or trust can expect the advocate to
General Instructions local law to determine the amount, if
any, of income that is required to be
provide:
• An impartial and independent look at
Purpose of Form distributed, because the income
The fiduciary of a domestic decedent's distribution deduction is based, in part,
your problem, on that amount.
• Timely acknowledgment, estate, trust, or bankruptcy estate uses
• The name and phone number of the Form 1041 to report:
individual assigned to its case, • The income, deductions, gains, Abusive Trust
• Updates on progress, losses, etc. of the estate or trust; Arrangements
• Timeframes for action, • The income that is either Certain trust arrangements claim to
• Speedy resolution, and accumulated or held for future reduce or eliminate federal taxes in
• Courteous service. distribution or distributed currently to the ways that are not permitted under the
beneficiaries; law. Abusive trust arrangements
When contacting the Taxpayer • Any income tax liability of the estate typically are promoted by the promise of
Advocate, you should provide the or trust; tax benefits with no meaningful change
following information. • Employment taxes on wages paid to in the taxpayer's control over or benefit
• The estate's or trust's name, address, household employees; and from the taxpayer's income or assets.
and employer identification number • Net Investment Income Tax. See The promised benefits may include
(EIN). Schedule G, Part I, line 5, and the reduction or elimination of income
• The name and telephone number of Instructions for Form 8960. subject to tax; deductions for personal
an authorized contact person and the expenses paid by the trust; depreciation
hours he or she can be reached. Income Taxation of Trusts deductions of an owner's personal
• The type of tax return and year(s) and Decedents' Estates residence and furnishings; a stepped-up
involved. A trust or a decedent's estate is a basis for property transferred to the
• A detailed description of the problem. separate legal entity for federal tax trust; the reduction or elimination of
• Previous attempts to solve the purposes. A decedent's estate comes self-employment taxes; and the
problem and the office that had been into existence at the time of death of an reduction or elimination of gift and
contacted. individual. A trust may be created during estate taxes. These promised benefits
• A description of the hardship the an individual's life (inter vivos) or at the are inconsistent with the tax rules
estate or trust is facing and supporting time of his or her death under a will applicable to trust arrangements.
documentation (if applicable). (testamentary). If the trust instrument
Abusive trust arrangements often use
contains certain provisions, then the
You can contact a Taxpayer trusts to hide the true ownership of
person creating the trust (the grantor) is
Advocate as follows. assets and income or to disguise the
treated as the owner of the trust's
• Call the Taxpayer Advocate's toll-free assets. Such a trust is a grantor type
substance of transactions. These
number: 877-777-4778. arrangements frequently involve more
trust. See Grantor Type Trusts, later,
• Call, write, or fax the Taxpayer under Special Reporting Instructions.
than one trust, each holding different
Advocate office in its area (see Pub. assets of the taxpayer (for example, the
1546, Taxpayer Advocate Service, Your A trust or decedent's estate figures taxpayer's business, business
Voice At The IRS, for addresses and its gross income in much the same equipment, home, automobile, etc.).
phone numbers). manner as an individual. Most Some trusts may hold interests in other
• TTY/TDD help is available by calling deductions and credits allowed to trusts, purport to involve charities, or are
800-829-4059. individuals are also allowed to estates foreign trusts. Funds may flow from one
• Visit the website at IRS.gov/ and trusts. However, there is one major trust to another trust by way of rental
advocate. distinction. A trust or decedent's estate agreements, fees for services, purchase
is allowed an income distribution agreements, and distributions.

Instructions for Form 1041 (2019) -3-

 Some of the abusive trust 4. The net operating loss deduction • Uncollected interest on U.S. savings
arrangements that have been identified (NOLD) claimed on line 15b. bonds,
include unincorporated business trusts
Electing small business trust
• Proceeds from the completed sale of
(or organizations), equipment or service farm produce, and
(ESBT). Compute the AGI of the S
trusts, family residence trusts, charitable
portion of an ESBT in the same manner
• The portion of a lump-sum
trusts, and final trusts. In each of these distribution to the beneficiary of a
trusts, the original owner of the assets as an individual taxpayer, except that decedent's IRA that equals the balance
nominally subject to the trust effectively administration costs allocable to the S in the IRA at the time of the owner's
retains the authority to cause financial portion (to the extent they are costs death. This includes unrealized
benefits of the trust to be directly or incurred in the administration of the trust appreciation and income accrued to that
indirectly returned or made available to that wouldn't have been incurred if the date, less the aggregate amount of the
the owner. For example, the trustee may property were not held by the estate or owner's nondeductible contributions to
be the promoter, a relative, or a friend of trust) shall be deducted in arriving at the IRA. Such amounts are included in
the owner who simply carries out the AGI. the beneficiary's gross income in the tax
directions of the owner whether or not Beneficiary. A beneficiary includes an year that the distribution is received.
permitted by the terms of the trust. heir, a legatee, or a devisee. The IRD has the same character it
Decedent's estate. The decedent's would have had if the decedent had
When trusts are used for legitimate
estate is an entity that is formed at the lived and received such amount.
business, family, or estate planning
purposes, either the trust, the time of an individual's death and Deductions and credits in respect
beneficiary, or the transferor of assets to generally is charged with gathering the of a decedent. The following
the trust will pay the tax on income decedent's assets, paying the deductions and credits, when paid by
generated by the trust property. Trusts decedent's debts and expenses, and the decedent's estate, are allowed on
can't be used to transform a taxpayer's distributing the remaining assets. Form 1041 even though they were not
personal, living, or educational Generally, the estate consists of all the allowable on the decedent's final
expenses into deductible items, and property, real or personal, tangible or income tax return.
can't seek to avoid tax liability by intangible, wherever situated, that the • Business expenses deductible under
ignoring either the true ownership of decedent owned an interest in at death. section 162.
income and assets or the true Distributable net income (DNI). The • Interest deductible under section 163.
substance of transactions. Therefore, income distribution deduction allowable • Taxes deductible under section 164.
the tax results promised by the to estates and trusts for amounts paid, • Percentage depletion allowed under
promoters of abusive trust credited, or required to be distributed to section 611.
arrangements are not allowable under beneficiaries is limited to DNI. This • Foreign tax credit.
the law, and the participants in and amount, which is figured on Schedule B, For more information on IRD, see
promoters of these arrangements may line 7, is also used to determine how section 691 and Pub. 559, Survivors,
be subject to civil or criminal penalties in much of an amount paid, credited, or Executors, and Administrators.
appropriate cases. required to be distributed to a
beneficiary will be includible in his or her Income required to be distributed
For more details, including the legal gross income. currently. Income required to be
principles that control the proper tax distributed currently is income that is
treatment of these abusive trust Income in respect of a decedent. required under the terms of the
arrangements, see Notice 97-24, When completing Form 1041, you must governing instrument and applicable
1997-1 C.B. 409. take into account any items that are local law to be distributed in the year it is
income in respect of a decedent (IRD). received. The fiduciary must be under a
For additional information about In general, IRD is income that a duty to distribute the income currently,
abusive tax arrangements, visit the IRS decedent was entitled to receive but even if the actual distribution is not
website at IRS.gov and type “Abusive that was not properly includible in the made until after the close of the trust's
Trusts” in the search box. decedent's final income tax return under tax year. See Regulations section
the decedent's method of accounting. 1.651(a)-2.
Definitions IRD includes: Fiduciary. A fiduciary is a trustee of a
Adjusted gross income (AGI). • All accrued income of a decedent trust, or an executor, executrix,
Compute the AGI of an estate or who reported his or her income on the administrator, administratrix, personal
non-grantor trust by subtracting the cash method of accounting, representative, or person in possession
following from total income on line 9 of • Income accrued solely because of of property of a decedent's estate.
page 1: the decedent's death in the case of a
1. The administration costs of the decedent who reported his or her Note. Any reference in these
estate or trust (the total of lines 12, 14, income on the accrual method of instructions to “you” means the fiduciary
and 15a to the extent they are costs accounting, and of the estate or trust.
incurred in the administration of the • Income to which the decedent had a Trust. A trust is an arrangement
estate or trust) that wouldn't have been contingent claim at the time of his or her created either by a will or by an inter
incurred if the property were not held by death. vivos declaration by which trustees take
the estate or trust; Some examples of IRD for a title to property for the purpose of
2. The income distribution decedent who kept his or her books on protecting or conserving it for the
deduction (line 18); the cash method are: beneficiaries under the ordinary rules
3. The amount of the exemption
• Deferred salary payments that are applied in chancery or probate courts.
payable to the decedent's estate,
(line 21);

-4- Instructions for Form 1041 (2019)

Revocable living trust. A revocable 4. If you held a qualified investment Qualified subchapter S trusts
living trust is an arrangement created by in a qualified opportunity fund (QOF) at (QSSTs). QSSTs must follow the
a written agreement or declaration any time during the year, you must file special reporting requirements for these
during the life of an individual and can your return with Form 8997 attached. trusts discussed later, under Special
be changed or ended at any time during See the Form 8997 instructions. Reporting Instructions.
the individual's life. A revocable living Two or more trusts are treated as
trust is generally created to manage and one trust if the trusts have substantially Special Rule for Certain Revocable
distribute property. Many people use the same grantor(s) and substantially Trusts
this type of trust instead of (or in the same primary beneficiary(ies) and a
addition to) a will. Section 645 provides that if both the
principal purpose of such trusts is
executor (if any) of an estate (the
Because this type of trust is avoidance of tax. This provision applies
related estate) and the trustee of a
revocable, it is treated as a grantor type only to that portion of the trust that is
qualified revocable trust (QRT) elect the
trust for tax purposes. See Grantor Type attributable to contributions to corpus
treatment in section 645, the trust must
Trusts under Special Reporting made after March 1, 1984.
be treated and taxed as part of the
Instructions, later, for special filing
A trust is a domestic trust if: related estate during the election period.
instructions that apply to grantor trusts.
• A U.S. court is able to exercise This election may be made by a QRT
Be sure to read Optional Filing primary supervision over the even if no executor is appointed for the
TIP Methods for Certain Grantor administration of the trust (court test), related estate.
Type Trusts. Generally, most and
people that have revocable living trusts • One or more U.S. persons have the In general, Form 8855, Election To
will be able to use Optional Method 1. authority to control all substantial Treat a Qualified Revocable Trust as
This method is the easiest and least decisions of the trust (control test). Part of an Estate, must be filed by the
burdensome way to meet your due date for Form 1041 for the first tax
obligations. See Regulations section 301.7701-7 year of the related estate. This applies
for more information on the court and even if the combined related estate and
control tests.
Who Must File electing trust don't have sufficient
income to be required to file Form 1041.
Also treated as a domestic trust is a
Decedent's Estate trust (other than a trust treated as wholly
However, if the estate is granted an
The fiduciary (or one of the joint extension of time to file Form 1041 for
owned by the grantor) that:
fiduciaries) must file Form 1041 for a its first tax year, the due date for Form
• Was in existence on August 20, 1996, 8855 is the extended due date.
domestic estate that has: • Was treated as a domestic trust on
1. Gross income for the tax year of August 19, 1996, and
$600 or more, or • Elected to continue to be treated as a Once made, the election is
domestic trust. irrevocable.
2. A beneficiary who is a
nonresident alien. Qualified revocable trusts (QRT). In
A trust that isn't a domestic trust is general, a QRT is any trust (or part of a
3. If you held a qualified investment treated as a foreign trust. If you are the trust) that, on the day the decedent
in a qualified opportunity fund (QOF) at trustee of a foreign trust, file Form died, was treated as owned by the
any time during the year, you must file 1040NR instead of Form 1041. Also, a decedent because the decedent held
your return with Form 8997 attached. foreign trust with a U.S. owner generally the power to revoke the trust as
See the Form 8997 instructions. must file Form 3520-A, Annual described in section 676. An electing
Information Return of Foreign Trust With trust is a QRT for which a section 645
An estate is a domestic estate if it
a U.S. Owner. election has been made.
isn't a foreign estate. A foreign estate is
one the income of which is from sources If a domestic trust becomes a foreign Election period. The election period is
outside the United States that isn't trust, it is treated under section 684 as the period of time during which an
effectively connected with the conduct having transferred all of its assets to a electing trust is treated as part of its
of a U.S. trade or business and isn't foreign trust, except to the extent a related estate.
includible in gross income. If you are the grantor or another person is treated as
fiduciary of a foreign estate, file Form The election period begins on the
the owner of the trust when the trust date of the decedent's death and
1040NR, U.S. Nonresident Alien becomes a foreign trust.
Income Tax Return, instead of Form terminates on the earlier of:
1041. Grantor Type Trusts • The day on which the electing trust
If all or any portion of a trust is a grantor and related estate, if any, distribute all of
Trust their assets, or
type trust, then that trust or portion of a
The fiduciary (or one of the joint trust must follow the special reporting • The day before the applicable date.
fiduciaries) must file Form 1041 for a requirements discussed later, under To determine the applicable date, first
domestic trust taxable under section Special Reporting Instructions. See determine whether a Form 706, United
641 that has: Grantor Type Trust under Specific States Estate (and Generation-Skipping
1. Any taxable income for the tax Instructions for more details on what Transfer) Tax Return, is required to be
year, makes a trust a grantor type trust. filed as a result of the decedent's death.
If no Form 706 is required to be filed, the
2. Gross income of $600 or more applicable date is 2 years after the date
Note. A trust may be part grantor trust
(regardless of taxable income), or of the decedent's death. If Form 706 is
and part “other” type of trust, for
3. A beneficiary who is a example, simple or complex, or electing required, the applicable date is the later
nonresident alien. small business trust (ESBT). of 2 years after the date of the

Instructions for Form 1041 (2019) -5-

decedent's death or 6 months after the • The related estate and the electing the trustee of an electing trust is
final determination of liability for estate trust are treated as separate shares for responsible for the following during the
tax. For additional information, see purposes of computing DNI and election period.
Regulations section 1.645-1(f). applying distribution provisions. Also, • To timely provide the executor with all
each of those shares can contain two or the trust information necessary to allow
Taxpayer identification number
more separate shares. For more the executor to file a complete,
(TIN). All QRTs must obtain a new TIN
information, see Separate share rule, accurate, and timely Form 1041.
following the death of the decedent
whether or not a section 645 election is
later, and Regulations section • To ensure that the electing trust's
1.645-1(e)(2)(iii). share of the combined tax liability is
made. (Use Form W-9, Request for
Taxpayer Identification Number and • The executor is responsible for paid.
insuring that the estate's share of the The trustee does not file a Form 1041
Certification, to notify payers of the new
combined tax obligation is paid. during the election period (except for a
TIN.)
For additional information, including final return if the trust terminates during
An electing trust that continues after
treatment of transfers between shares the election period as explained later).
the termination of the election period
and charitable contribution deductions,
doesn't need to obtain a new TIN Procedure for completing Form 1041
see Regulations section 1.645-1(e).
following the termination unless: for the year in which the election ter-
• An executor was appointed and If there isn't an executor. If no minates.
agreed to the election after the electing executor has been appointed for the If there is an executor. If there is an
trust made a valid section 645 election, related estate, the trustee of the electing executor, the Form 1041 filed under the
and the electing trust filed a return as an trust files Form 1041 as if it was an name and TIN of the related estate for
estate under the trust's TIN, or estate. File using the TIN that the QRT the tax year in which the election
• No executor was appointed and the obtained after the death of the terminates includes (a) the items of
QRT was the filing trust (as explained decedent. The trustee can choose a income, deduction, and credit for the
later). fiscal year as the trust's tax year during related estate for its entire tax year, and
A related estate that continues after the election period. Be sure to check the (b) the income, deductions, and credits
the termination of the election period Decedent's estate box at the top of for the electing trust for the period that
doesn't need to obtain a new TIN. Form 1041 and Item G if the filing trust ends with the last day of the election
For more information about TINs, has made a section 645 election. For period. If the estate won't continue after
including trusts with multiple owners, Item G, the filing trustee must provide the close of the tax year, indicate that
see Regulations sections 1.645-1 and the TIN of the electing trust with the this Form 1041 is a final return.
301.6109-1(a). highest total asset value. The electing At the end of the last day of the
trust is entitled to a single $600 personal election period, the combined entity is
General procedures for completing exemption on returns filed for the deemed to distribute the share
Form 1041 during the election peri- election period. comprising the electing trust to a new
od.
If there is more than one electing trust. All items of income, including net
If there is an executor. The trust, the trusts must appoint one trustee capital gains, that are attributable to the
following rules apply to filing Form 1041 as the filing trustee. Form 1041 is filed share comprising the electing trust are
while the election is in effect. under the name and TIN of the filing included in the calculation of DNI of the
• The executor of the related estate is trustee's trust. A statement providing the electing trust and treated as distributed.
responsible for filing Form 1041 for the same information about the electing The distribution rules of sections 661
estate and all electing trusts. The return trusts (except the filing trust) that is and 662 apply to this deemed
is filed under the name and TIN of the listed under, If there is an executor, distribution. The combined entity is
related estate. Be sure to check the above must be attached to these Forms entitled to an income distribution
Decedent's estate box at the top of 1041. All electing trusts must choose deduction for this deemed distribution,
Form 1041 and Item G if the estate has the same tax year. and the "new" trust must include its
made a section 645 election. The share of the distribution in its income.
executor continues to file Form 1041 If there is more than one electing
trust, the filing trustee is responsible for See Regulations sections 1.645-1(e)(2)
during the election period even if the (iii) and 1.645-1(h) for more information.
estate distributes all of its assets before ensuring that the filing trust's share of
the combined tax liability is paid. If the electing trust continues in
the end of the election period.
existence after the termination of the
• The Form 1041 includes all items of For additional information on filing
election period, the trustee must file
income, deduction, and credit for the requirements when there is no executor,
including application of the separate Form 1041 under the name and TIN of
estate and all electing trusts.
the trust, using the calendar year as its
• For Item G, the executor must provide share rule, see Regulations section
accounting period, if it is otherwise
the TIN of the electing trust with the 1.645-1(e). For information on the
requirements when an executor is required to file.
highest total asset value.
• The executor must attach a statement appointed after an election is made and If there isn't an executor. If there
to Form 1041 providing the following the executor doesn't agree to the isn't an executor, the following rules
information for each electing trust election, see below. apply to filing Form 1041 for the tax year
(including the electing trust provided in in which the election period ends.
Responsibilities of the trustee
Item G): (a) the name of the electing
when there is an executor (or there • The tax year of the electing trust
trust, (b) the TIN of the electing trust, closes on the last day of the election
isn't an executor and the trustee
and (c) the name and address of the period, and the Form 1041 filed for that
isn't the filing trustee). When there is
trustee of the electing trust. tax year includes all items of income,
an executor (or there isn't an executor
and the trustee isn't the filing trustee), deduction, and credit for the electing

-6- Instructions for Form 1041 (2019)

trust for the period beginning with the then included on the first Form 1041 Alaska Native Settlement
first day of the tax year and ending with filed by the executor for the related Trusts
the last day of the election period. estate (or the filing trustee for the
• The deemed distribution rules electing trust filing as an estate). The trustee of an Alaska Native
discussed above apply. Settlement Trust may elect the special
Later appointed executor. If an tax treatment for the trust and its
• Check the box to indicate that this executor for the related estate isn't
Form 1041 is a final return. beneficiaries provided for in section
appointed until after the trustee has 646. The election must be made by the
• If the filing trust continues after the made a valid section 645 election, the
termination of the election period, the due date (including extensions) for filing
trustee must obtain a new TIN. If the executor must agree to the trustee's the trust's tax return for its first tax year
trust meets the filing requirements, the election and they must file a revised ending after June 7, 2001. Don't use
trustee must file a Form 1041 under the Form 8855 within 90 days of the Form 1041. Use Form 1041-N, U.S.
new TIN for the period beginning with appointment of the executor. If the Income Tax Return for Electing Alaska
the day after the close of the election executor doesn't agree to the election, Native Settlement Trusts, to make the
period and, in general, ending the election terminates as of the date of election. Additionally, Form 1041-N is
December 31 of that year. appointment of the executor. the trust's income tax return and
If the executor agrees to the election, satisfies the section 6039H information
Responsibilities of the trustee the trustee must amend any Form 1041 reporting requirement for the trust.
when there is an executor (or there filed under the name and TIN of the
isn't an executor and the trustee Bankruptcy Estate
electing trust for the period beginning
isn't the filing trustee). In addition to with the decedent's death. The The bankruptcy trustee or debtor-in-
the requirements listed above under this amended returns are still filed under the possession must file Form 1041 for the
same heading, the trustee is name and TIN of the electing trust, and estate of an individual involved in
responsible for the following. they must include the items of income, bankruptcy proceedings under
• If the trust will not continue after the deduction, and credit for the related chapter 7 or 11 of title 11 of the United
close of the election period, the trustee estate for the periods covered by the States Code if the estate has gross
must file a Form 1041 under the name returns. Also, attach a statement to the income for the tax year of $12,200 or
and TIN of the trust. Complete the entity amended Forms 1041 identifying the more. See Bankruptcy Estates, later, for
information and items A, C, D, and F. name and TIN of the related estate, and details.
Indicate in item F that this is a final the name and address of the executor.
return. Don't report any items of income,
Charitable Remainder Trusts
Check the Final return box on the
deduction, or credit. A section 664 charitable remainder trust
amended return for the tax year that
• If the trust will continue after the close (CRT) doesn’t file Form 1041. Instead, a
ends with the appointment of the
of the election period, the trustee must CRT files Form 5227, Split-Interest Trust
executor. Except for this amended
file a Form 1041 for the trust for the tax Information Return. If the CRT has any
return, all returns filed for the combined
year beginning the day after the close of unrelated business taxable income, it
entity after the appointment of the
the election period and, in general, also must file Form 4720, Return of
executor must be filed under the name
ending December 31 of that year. Use Certain Excise Taxes Under Chapters
and TIN of the related estate.
the TIN obtained after the decedent's 41 and 42 of the Internal Revenue
death. Follow the general rules for If the election terminates as the result Code.
completing the return. of a later appointed executor, the
executor of the related estate must file Common Trust Funds
Special filing instructions. Forms 1041 under the name and TIN of Don't file Form 1041 for a common trust
the related estate for all tax years of the fund maintained by a bank. Instead, the
When the election isn't made by
related estate beginning with the fund may use Form 1065, U.S. Return
the due date of the QRT's Form
decedent's death. The electing trust's of Partnership Income, for its return. For
1041. If the section 645 election hasn't
election period and tax year terminate more details, see section 584 and
been made by the time the QRT's first
the day before the appointment of the Regulations section 1.6032-1.
income tax return would be due for the
executor. The trustee isn't required to
tax year beginning with the decedent's
amend any of the returns filed by the Electing Small Business Trusts
death, but the trustee and executor (if Electing small business trusts file Form
electing trust for the period prior to the
any) have decided to make a section 1041. However, see Electing Small
appointment of the executor. The trust
645 election, then the QRT isn't required Business Trusts (ESBTs), later, for a
must file a final Form 1041 following the
to file a Form 1041 for the short tax year discussion of the special reporting
instructions above for completing Form
beginning with the decedent's death requirements for these trusts.
1041 in the year in which the election
and ending on December 31 of that
terminates and there is no executor.
year. However, if a valid election isn't Pooled Income Funds
subsequently made, the QRT may be Termination of the trust during Pooled income funds file Form 1041.
subject to penalties and interest for the election period. If an electing See Pooled Income Funds, later, for the
failure to file and failure to pay. trust terminates during the election special reporting requirements for these
If the QRT files a Form 1041 for this period, the trustee of that trust must file trusts. Additionally, pooled income
short period, and a valid section 645 a final Form 1041 by completing the funds must file Form 5227, Split-Interest
election is subsequently made, then the entity information (using the trust's EIN), Trust Information Return.
trustee must file an amended Form checking the Final return box, and
1041 for the electing trust, excluding all signing and dating the form. Don't report Qualified Funeral Trusts
items of income, deduction, and credit items of income, deduction, and credit. Trustees of pre-need funeral trusts who
of the electing trust. These amounts are These items are reported on the related elect treatment under section 685 file
estate's return. Form 1041-QFT, U.S. Income Tax

Instructions for Form 1041 (2019) -7-

Return for Qualified Funeral Trusts. All 1. Create an IRS e-Services When To File
other pre-need funeral trusts, see account. For calendar year estates and trusts, file
Grantor Type Trusts, later, for Form 2. Submit your e-file provider Form 1041 and Schedule(s) K-1 by
1041 reporting requirements. application online. April 15, 2020.
Qualified Settlement Funds 3. Pass a suitability check.
For fiscal year estates and trusts, file
The trustee of a designated or qualified The online application process takes Form 1041 by the 15th day of the 4th
settlement fund (QSF) generally must 4-6 weeks to complete. month following the close of the tax
file Form 1120-SF, U.S. Income Tax year. For example, an estate that has a
Return for Settlement Funds, instead of Note. Existing e-file providers must tax year that ends on June 30, 2020,
Form 1041. now use e-Services to make account must file Form 1041 by October 15,
Special election. If a QSF has only updates. 2020. If the due date falls on a Saturday,
one transferor, the transferor may elect Help is available online at e-services Sunday, or legal holiday, file on the next
to treat the QSF as a grantor type trust. or through the e-Help Desk at business day.
866-255-0654 (512-416-7750 for
To make the grantor trust election, Extension of Time To File
the transferor must attach an election international calls), Monday through
Friday, 6:30 a.m.- 6:00 p.m. (Central If more time is needed to file the estate
statement to a timely filed Form 1041, or trust return, use Form 7004,
including extensions, that the time). Frequently asked questions and
On-line Tutorials are available to answer Application for Automatic Extension of
administrator files for the QSF for the Time To File Certain Business Income
tax year in which the settlement fund is questions or to guide users through the
application process. Tax, Information, and Other Returns, to
established. If Form 1041 isn't filed apply for an automatic 51/2-month
because Optional Method 1 or 2 If you file Form 1041 electronically, extension of time to file.
(described later) was chosen, attach the you may sign the return electronically by
election statement to a timely filed
income tax return, including extensions,
using a personal identification number Period Covered
(PIN). See Form 8879-F, IRS e-file File the 2019 return for calendar year
of the transferor for the tax year in which Signature Authorization for Form 1041,
the settlement fund is established. 2019 and fiscal years beginning in 2019
for details. and ending in 2020. If the return is for a
Election statement. The election Form 8879-F can only be fiscal year or a short tax year (less than
statement may be made separately or, if associated with a single Form 12 months), fill in the tax year space at
filed with Form 1041, on the attachment
!
CAUTION 1041. Form 8879-F can't be the top of the form.
described under Grantor Type Trusts, used with multiple Forms 1041.
later. At the top of the election The 2019 Form 1041 may also be
statement, write “Section 1.468B-1(k) used for a tax year beginning in 2020 if:
Form 1041 may also be e-Filed using
Election” and include the transferor's: Form 8453-FE, U.S. Estate or Trust 1. The estate or trust has a tax year
• Name, Declaration for an IRS e-file return. of less than 12 months that begins and
• Address, ends in 2020, and
• TIN, and For more information about e-filing 2. The 2020 Form 1041 isn't
• A statement that he or she will treat returns through MeF, see Publication available by the time the estate or trust
the qualified settlement fund as a 4164, Modernized e-File (MeF) Guide is required to file its tax return. However,
grantor type trust. for Software Developers and the estate or trust must show its 2020
Transmitters. tax year on the 2019 Form 1041 and
Widely Held Fixed Investment
Trust (WHFITs) If Form 1041 is e-filed and there is a incorporate any tax law changes that
balance due, the fiduciary may are effective for tax years beginning
Trustees and middlemen of WHFITs after 2019.
authorize an electronic funds withdrawal
don't file Form 1041. Instead, they
with the return.
report all items of gross income and
proceeds on the appropriate Form Private Delivery Services Who Must Sign
1099. For the definition of a WHFIT, see You can use certain private delivery
Regulations section 1.671-5(b)(22). A Fiduciary
services (PDS) designated by the IRS to
tax information statement that includes The fiduciary, or an authorized
meet the “timely mailing as timely filing/
the information given to the IRS on representative, must sign Form 1041. If
paying” rule for tax returns and
Forms 1099, as well as additional there are joint fiduciaries, only one is
payments. Go to IRS.gov/PDS for the
information identified in Regulations required to sign the return.
current list of designated services.
section 1.671-5(e) must be given to trust
interest holders. See the General The PDS can tell you how to get A financial institution that submitted
Instructions for Certain Information written proof of the mailing date. estimated tax payments for trusts for
Returns for more information. which it is the trustee must enter its EIN
For the IRS mailing address to use if in the space provided for the EIN of the
fiduciary. Don't enter the EIN of the
Electronic Filing you’re using PDS, go to IRS.gov/
trust. For this purpose, a financial
PDSstreetAddresses.
Qualified fiduciaries or transmitters may institution is one that maintains a
be able to file Form 1041 and related Private delivery services can't Treasury Tax and Loan (TT&L) account.
schedules electronically. To become an ! deliver items to P.O. boxes. You
If you are an attorney or other individual
e-file provider complete the following CAUTION must use the U.S. Postal
functioning in a fiduciary capacity, leave
steps. Service to mail any item to an IRS P.O.
this space blank. Don't enter your
box address. individual social security number (SSN).

-8- Instructions for Form 1041 (2019)

 estate's or trust's 2020 tax return. If the
Where To File fiduciary wants to expand the paid
For all estates and trusts, including charitable and split-interest trusts (other than preparer's authorization or revoke the
Charitable Remainder Trusts). authorization before it ends, see Pub.
947, Practice Before the IRS and Power
THEN use this address if you: of Attorney.
IF you are located in ... Are not enclosing a check or Are enclosing a check or money
money order ... order ... Accounting Methods
Connecticut, Delaware, Figure taxable income using the method
District of Columbia, of accounting regularly used in keeping
Georgia, Illinois, Indiana, the estate's or trust's books and
Kentucky, Maine, records. Generally, permissible
Maryland, Massachusetts,
Michigan, New Hampshire, Department of the Treasury Department of the Treasury
methods include the cash method, the
New Jersey, New York, Internal Revenue Service Internal Revenue Service accrual method, or any other method
North Carolina, Ohio, Kansas City, MO 64999–0048 Kansas City, MO 64999–0148 authorized by the Internal Revenue
Pennsylvania, Rhode Code. In all cases, the method used
Island, South Carolina, must clearly reflect income.
Tennessee, Vermont,
Virginia, West Virginia,
Wisconsin
Generally, the estate or trust may
change its accounting method (for
Alabama, Alaska, Arizona, income as a whole or for any material
Arkansas, California,
Colorado, Florida, Hawaii,
item) only by getting consent on Form
Idaho, Iowa, Kansas, 3115, Application for Change in
Louisiana, Minnesota, Accounting Method. For more
Department of the Treasury Department of the Treasury
Mississippi, Missouri,
Internal Revenue Service Internal Revenue Service information, see Pub. 538, Accounting
Montana, Nebraska,
Ogden, Utah 84201-0048 Ogden, Utah 84201-0148 Periods and Methods.
Nevada, New Mexico,

Accounting Periods
North Dakota, Oklahoma,
Oregon, South Dakota,
Texas, Utah, Washington, For a decedent's estate, the moment of
Wyoming death determines the end of the
A foreign country or United Internal Revenue Service Internal Revenue Service decedent's tax year and the beginning
States possession P.O. Box 409101 P.O. Box 409101 of the estate's tax year. As executor or
Ogden, Utah 84409 Ogden, Utah 84409
administrator, you choose the estate's
tax period when you file its first income
tax return. The estate's first tax year
Paid Preparer return. It doesn't apply to the firm, if any, may be any period of 12 months or less
Generally, anyone who is paid to shown in that section. that ends on the last day of a month. If
prepare a tax return must sign the return If the “Yes,” box is checked, the you select the last day of any month
and fill in the other blanks in the “Paid fiduciary is authorizing the IRS to call other than December, you are adopting
Preparer Use Only” area of the return. the paid preparer to answer any a fiscal tax year.
The person required to sign the questions that may arise during the
To change the accounting period of
return must: processing of the estate's or trust's
an estate, use Form 1128, Application
• Complete the required preparer return. The fiduciary is also authorizing
To Adopt, Change, or Retain a Tax
information, the paid preparer to:
Year.
• Sign it in the space provided for the • Give the IRS any information that is
preparer's signature (a facsimile missing from the estate's or trust's Generally, a trust must adopt a
signature is acceptable), and return, calendar year. The following trusts are
• Give you a copy of the return for your • Call the IRS for information about the exempt from this requirement.
records. processing of the estate's or trust's • A trust that is exempt from tax under
return or the status of its refund or section 501(a).
If you, as fiduciary, fill in Form 1041, payment(s), and
leave the “Paid Preparer Use Only” • A charitable trust described in section
• Respond to certain IRS notices that 4947(a)(1).
space blank. the fiduciary has shared with the • A trust that is treated as wholly owned
If someone prepares this return and preparer about math errors, offsets, and by a grantor under the rules of sections
doesn't charge you, that person should return preparation. The notices won't be 671 through 679.
not sign the return. sent to the preparer.

Paid Preparer Authorization The fiduciary isn't authorizing the Rounding Off to Whole
If the fiduciary wants to allow the IRS to
paid preparer to receive any refund Dollars
check, bind the estate or trust to You may round off cents to whole
discuss the estate's or trust's 2019 tax anything (including any additional tax
return with the paid preparer who signed dollars on the estate's or trust's return
liability), or otherwise represent the and schedules. If you do round to whole
it, check the “Yes,” box in the signature estate or trust before the IRS.
area of the return. This authorization dollars, you must round all amounts. To
applies only to the individual whose The authorization will automatically round, drop amounts under 50 cents
signature appears in the Paid Preparer end no later than the due date (without and increase amounts from 50 to 99
Use Only area of the estate's or trust's regard to extensions) for filing the cents to the next dollar. For example,

Instructions for Form 1041 (2019) -9-

$1.39 becomes $1 and $2.50 becomes ending before the date that is 2 years See the instructions for line
$3. after the decedent's death. Schedule G, Part II, line 11 for more
details.
If you have to add two or more For more information, see Form
1041-ES, Estimated Income Tax for
amounts to figure the amount to enter
Estates and Trusts.
Interest and Penalties
on a line, include cents when adding the
amounts and round off only the total. Electronic Deposits Interest
A financial institution that has been Interest is charged on taxes not paid by
If you are entering amounts that the due date, even if an extension of
include cents, make sure to include the designated as an authorized federal tax
depository, and acts as a fiduciary for at time to file is granted.
decimal point. There is no cents column
on the form. least 200 taxable trusts that are required Interest is also charged on penalties
to pay estimated tax, is required to imposed for failure to file, negligence,
Estimated Tax deposit the estimated tax payments fraud, substantial valuation
electronically using the Electronic misstatements, substantial
Generally, an estate or trust must pay
Federal Tax Payment System (EFTPS). understatements of tax, and reportable
estimated income tax for 2020 if it
expects to owe, after subtracting any A fiduciary that isn't required to make transaction understatements. Interest is
withholding and credits, at least $1,000 electronic deposits of estimated tax on charged on the penalty from the due
in tax, and it expects the withholding behalf of a trust or an estate may date of the return (including extensions).
and credits to be less than the smaller voluntarily participate in EFTPS. To The interest charge is figured at a rate
of: enroll in or get more information about determined under section 6621.
1. 90% of the tax shown on the EFTPS, visit the EFTPS website at Late Filing of Return
2020 tax return, or eftps.gov or call 1-800-555-4477. Also,
The law provides a penalty of 5% of the
2. 100% of the tax shown on the see Pub. 966, Electronic Federal Tax
tax due for each month, or part of a
2019 tax return (110% of that amount if Payment System: A Guide to Getting
month, for which a return isn't filed up to
the estate's or trust's adjusted gross Started.
a maximum of 25% of the tax due (15%
income on that return is more than Depositing on time. For a deposit for each month, or part of a month, up to
$150,000, and less than 2/3 of gross using EFTPS to be on time, the deposit a maximum of 75% if the failure to file is
income for 2019 or 2020 is from farming must be submitted by 8:00 p.m. Eastern fraudulent). If the return is more than 60
or fishing). time the day before the due date of the days late, the minimum penalty is the
However, if a return was not filed for deposit. smaller of $435 or the tax due.
2019 or that return didn't cover a full 12 Section 643(g) Election The penalty won't be imposed if you
months, item 2 doesn't apply.
Fiduciaries of trusts that pay estimated can show that the failure to file on time
For this purpose, include household tax may elect under section 643(g) to was due to reasonable cause. If you
employment taxes in the tax shown on have any portion of their estimated tax receive a notice about penalty and
the tax return, but only if either of the payments allocated to any of the interest after you file this return, send us
following is true: beneficiaries. an explanation and we will determine if
• The estate or trust will have federal you meet reasonable-cause criteria.
The fiduciary of a decedent's estate Don't attach an explanation when you
income tax withheld for 2020 (see the
may make a section 643(g) election only file Form 1041.
instructions for Schedule G, Part II,
for the final year of the estate.
line 14), or Late Payment of Tax
• The estate or trust would be required Make the election by filing Form Generally, the penalty for not paying tax
to make estimated tax payments for 1041-T, Allocation of Estimated Tax when due is 1/2 of 1% of the unpaid
2020 even if it didn't include household Payments to Beneficiaries, by the 65th amount for each month or part of a
employment taxes when figuring day after the close of the estate's or month it remains unpaid. The maximum
estimated tax. trust's tax year. Then, include that penalty is 25% of the unpaid amount.
Exceptions amount on Schedule K-1 (Form 1041), The penalty applies to any unpaid tax on
box 13, code A, for any beneficiaries for the return. Any penalty is in addition to
Estimated tax payments aren't required
whom it was elected. interest charges on late payments.
from:
1. An estate of a domestic decedent If Form 1041-T was timely filed, the If you include interest on either
or a domestic trust that had no tax payments are treated as paid or TIP of these penalties with your
liability for the full 12-month 2019 tax credited to the beneficiary on the last payment, identify and enter
year; day of the tax year and must be these amounts in the bottom margin of
included as an other amount paid, Form 1041, page 1. Don't include the
2. A decedent's estate for any tax
credited, or required to be distributed on interest or penalty amount in the
year ending before the date that is 2
Form 1041, Schedule B, line 10. See balance of tax due on line 28.
years after the decedent's death; or
the instructions for Schedule B, line 10,
3. A trust that was treated as owned later. Failure To Provide Information
by the decedent if the trust will receive
the residue of the decedent's estate
Timely
Failure to make a timely election will
under the will (or if no will is admitted to You must provide Schedule K-1 (Form
result in the estimated tax payments not
probate, the trust primarily responsible 1041), on or before the day you are
being transferred to the beneficiary(ies)
for paying debts, taxes, and expenses required to file Form 1041, to each
even if you entered the amount on
of administration) for any tax year beneficiary who receives a distribution
Schedule K-1.

-10- Instructions for Form 1041 (2019)

of property or an allocation of an item of Form 56, Notice Concerning Form 944, Employer's ANNUAL Federal
the estate. Fiduciary Relationship. You must notify Tax Return, instead of Form 941. For
For each failure to provide the IRS of the creation or termination of more information, see the Instructions
Schedule K-1 to a beneficiary when due a fiduciary relationship. You may use for Form 944. Agricultural employers
and each failure to include on Form 56 to provide this notice to the must file Form 943, Employer's Annual
Schedule K-1 all the information IRS. Federal Tax Return for Agricultural
required to be shown (or the inclusion of Employees, instead of Form 941, to
Form 461, Limitation on Business report income tax withheld and
incorrect information), a $270 penalty Losses.
may be imposed with regard to each employer and employee social security
Schedule K-1 for which a failure occurs. Form 706, United States Estate (and and Medicare taxes on farmworkers.
The maximum penalty is $3,339,000 for Generation-Skipping Transfer) Tax
Return, or Form 706-NA, United States Caution. See Trust Fund Recovery
all such failures during a calendar year.
Estate (and Generation-Skipping Penalty earlier.
If the requirement to report information
is intentionally disregarded, each $270 Transfer) Tax Return, Estate of Form 945, Annual Return of Withheld
penalty is increased to $550 or, if nonresident not a citizen of the United Federal Income Tax. Use this form to
greater, 10% of the aggregate amount States. report income tax withheld from
of items required to be reported, and the Form 706-GS(D), nonpayroll payments, including
$3,339,000 maximum doesn't apply. Generation-Skipping Transfer Tax pensions, annuities, IRAs, gambling
The penalty won't be imposed if the Return for Distributions. winnings, and backup withholding.
fiduciary can show that not providing
Form 706-GS(D-1), Notification of Caution. See Trust Fund Recovery
information timely was due to
Distribution From a Generation-Skipping Penalty earlier.
reasonable cause and not due to willful
neglect. Trust. Form 965, Inclusion of Deferred
Form 706-GS(T), Foreign Income Upon Transition to
Underpaid Estimated Tax Participation Exemption System.
Generation-Skipping Transfer Tax
If the fiduciary underpaid estimated tax, Return for Terminations.
use Form 2210, Underpayment of Form 965-A, Individual Report of Net
Estimated Tax by Individuals, Estates, Form 709, United States Gift (and 965 Tax Liability.
and Trusts, to figure any penalty. Enter Generation-Skipping Transfer) Tax Form 1040, U.S. Individual Income
the amount of any penalty on Form Return. Tax Return.
1041, line 27.
Form 720, Quarterly Federal Excise Form 1040-NR, U.S. Nonresident
Trust Fund Recovery Penalty Tax Return. Use Form 720 to report Alien Income Tax Return.
This penalty may apply if certain excise, environmental excise taxes,
income, social security, and Medicare communications and air transportation Form 1040-SR, U.S. Tax Return for
taxes that must be collected or withheld taxes, fuel taxes, luxury tax on Seniors.
aren't collected or withheld, or these passenger vehicles, manufacturers'
Form 1041-A, U.S. Information
taxes aren't paid. These taxes are taxes, ship passenger tax, and certain
Return Trust Accumulation of Charitable
generally reported on Forms 720, 941, other excise taxes.
Amounts.
943, 944, or 945. The trust fund
recovery penalty may be imposed on all Caution. See Trust Fund Recovery Form 1042, Annual Withholding Tax
persons who are determined by the IRS Penalty earlier. Return for U.S. Source Income of
to have been responsible for collecting, Form 926, Return by a U.S. Foreign Persons, and Form 1042-S,
accounting for, or paying over these Transferor of Property to a Foreign Foreign Person's U.S. Source Income
taxes, and who acted willfully in not Corporation. Use this form to report Subject to Withholding. Use these forms
doing so. The penalty is equal to the certain information required under to report and transmit withheld tax on
unpaid trust fund tax. See the section 6038B. payments or distributions made to
Instructions for Form 720, Pub. 15 nonresident alien individuals, foreign
(Circular E), Employer's Tax Guide, or Form 940, Employer's Annual partnerships, or foreign corporations to
Pub. 51 (Circular A), Agricultural Federal Unemployment (FUTA) Tax the extent such payments or
Employer's Tax Guide, for more details, Return. The estate or trust may be liable distributions constitute gross income
including the definition of responsible for FUTA tax and may have to file Form from sources within the United States
persons. 940 if it paid wages of $1,500 or more in that isn't effectively connected with a
any calendar quarter during the U.S. trade or business. For more
Other Penalties calendar year (or the preceding information, see sections 1441 and
Other penalties can be imposed for calendar year) or one or more 1442, and Pub. 515, Withholding of Tax
negligence, substantial understatement employees worked for the estate or trust on Nonresident Aliens and Foreign
of tax, and fraud. See Pub. 17, Your for some part of a day in any 20 different Entities.
Federal Income Tax, for details on these weeks during the calendar year (or the
preceding calendar year). Forms 1099-A, B, INT, LTC, MISC,
penalties.
OID, Q, R, S, and SA. You may have to
Form 941, Employer's QUARTERLY file these information returns to report
Other Forms That May Be Federal Tax Return. Employers must file acquisitions or abandonments of
Required this form quarterly to report income tax secured property; proceeds from broker
Form W-2, Wage and Tax Statement, withheld on wages and employer and and barter exchange transactions;
and Form W-3, Transmittal of Wage and employee social security and Medicare interest payments; payments of
Tax Statements. taxes. Certain small employers must file long-term care and accelerated death

Instructions for Form 1041 (2019) -11-

benefits; miscellaneous income Form 8865, Return of U.S. Persons • Any transaction offered under
payments; original issue discount; With Respect to Certain Foreign conditions of confidentiality and for
distributions from Coverdell ESAs; Partnerships. The estate or trust may which the estate or trust paid a minimum
distributions from pensions, annuities, have to file Form 8865 if it: fee (confidential transaction).
retirement or profit-sharing plans, IRAs 1. Controlled a foreign partnership • Any transaction for which the estate
(including SEPs, SIMPLEs, Roth IRAs, (that is, owned more than a 50% direct or trust or a related party has
Roth Conversions, and IRA or indirect interest in a foreign contractual protection against
recharacterizations), insurance partnership); disallowance of the tax benefits
contracts, etc.; proceeds from real (transaction with contractual protection).
2. Owned at least a 10% direct or
estate transactions; and distributions
indirect interest in a foreign partnership
• Any transaction resulting in a loss of
from an HSA, Archer MSA, or Medicare at least $2 million in any single year or
Advantage MSA. while U.S. persons controlled that $4 million in any combination of years
partnership; ($50,000 in any single year if the loss is
Also, use certain of these returns to 3. Had an acquisition, disposition, or generated by a section 988 transaction)
report amounts received as a nominee change in proportional interest in a (loss transactions).
on behalf of another person, except
amounts reported to beneficiaries on
foreign partnership that: • Any transaction substantially similar
a. Increased its direct interest to at to one of the types of transactions
Schedule K-1 (Form 1041).
least 10%; identified by the IRS as a transaction of
Form 8275, Disclosure Statement. interest.
b. Reduced its direct interest of at
File Form 8275 to disclose items or
least 10% to less than 10%; or See the Instructions for Form 8886
positions, except those contrary to a
regulation, that are not otherwise c. Changed its direct interest by at for more details and exceptions.
adequately disclosed on a tax return. least a 10% interest.
Form 8918, Material Advisor
The disclosure is made to avoid parts of 4. Contributed property to a foreign Disclosure Statement. Material advisors
the accuracy-related penalty imposed partnership in exchange for a who provide material aid, assistance, or
for disregard of rules or substantial partnership interest if: advice on organizing, managing,
understatement of tax. Form 8275 is a. Immediately after the promoting, selling, implementing,
also used for disclosures relating to contribution, the estate or trust owned, insuring, or carrying out any reportable
preparer penalties for understatements directly or indirectly, at least a 10% transaction, and who directly or
due to unrealistic positions or disregard interest in the foreign partnership or indirectly receive or expect to receive a
of rules. minimum fee, must use Form 8918 to
b. The fair market value (FMV) of
Form 8275-R, Regulation Disclosure the property the estate or trust disclose any reportable transaction
Statement, is used to disclose any item contributed to the foreign partnership, under Regulations section 301.6111-3.
on a tax return for which a position has for a partnership interest, when added For more information, see Form 8918
been taken that is contrary to Treasury to other contributions of property made and its instructions.
regulations. to the foreign partnership during the Form 8938, Statement of Specified
Form 8288, U.S. Withholding Tax preceding 12-month period, exceeds Foreign Financial Assets.
Return for Dispositions by Foreign $100,000.
Persons of U.S. Real Property Interests, Form 8939, Allocation of Increase in
Also, the estate or trust may have to Basis for Property Acquired From a
and Form 8288-A, Statement of file Form 8865 to report certain
Withholding on Dispositions by Foreign Decedent. This form is used to allocate
dispositions by a foreign partnership of any additional basis when an executor
Persons of U.S. Real Property Interests. property it previously contributed to that
Use these forms to report and transmit makes the special section 1022 election
foreign partnership if it was a partner at for property acquired from a decedent
withheld tax on the sale of U.S. real the time of the disposition.
property by a foreign person. Also, use who died in 2010.
these forms to report and transmit tax For more details, including penalties Form 8960, Net Investment Income
withheld from amounts distributed to a for failing to file Form 8865, see Form Tax—Individuals, Estates, and Trusts.
foreign beneficiary from a “U.S. real 8865 and its separate instructions.
property interest account” that a Form 8971, Information Regarding
domestic estate or trust is required to Form 8886, Reportable Transaction Beneficiaries Acquiring Property From a
establish under Regulations section Disclosure Statement. Use Form 8886 Decedent.
1.1445-5(c)(1)(iii). to disclose information for each
reportable transaction in which the trust Form 8978, Partner's Additional
Form 8300, Report of Cash participated, directly or indirectly. Form Reporting Year Tax.
Payments Over $10,000 Received in a 8886 must be filed for each tax year that
Trade or Business. Generally, this form Form 8990, Limitation on Business
the federal income tax liability of the Interest Expense Under Section 163(j).
is used to report the receipt of more estate or trust is affected by its
than $10,000 in cash or foreign currency participation in the transaction. The Form 8992, U.S. Shareholder
in one transaction (or a series of related estate or trust may have to pay a Calculation of Global Intangible
transactions). penalty if it has a requirement to file Low-Taxed Income (GILTI).
Form 8855, Election To Treat a Form 8886 but you fail to file it. The Form 8995, Qualified Business
Qualified Revocable Trust as Part of an following are reportable transactions. Income Deduction - Simplified
Estate. This election allows a qualified • Any transaction that is the same as or Computation.
revocable trust to be treated and taxed substantially similar to tax avoidance
(for income tax purposes) as part of its transactions identified by the IRS as Form 8995-A, Qualified Business
related estate during the election period. listed transactions. Income Deduction.

-12- Instructions for Form 1041 (2019)

 Form 8997, Initial Annual Statement estates. Additionally, grantor type trusts • The income of the trust that is taxable
of Qualified Opportunity Fund (QOF) have optional filing methods available. to the grantor or another person under
Investments. Pooled income funds have many similar sections 671 through 678. Report the
reporting requirements that other income in the same detail as it would be
Additional Information Subchapter J trusts (other than grantor reported on the grantor's return had it
The following publications may assist type trusts and electing small business been received directly by the grantor;
you in preparing Form 1041: trusts) have but there are some very and
• Pub. 550, Investment Income and important differences. These reporting • Any deductions or credits that apply
Expenses, differences and optional filing methods to this income. Report these deductions
• Pub. 559, Survivors, Executors, and are discussed below by entity. and credits in the same detail as they
Administrators, would be reported on the grantor's
Grantor Type Trusts return had they been received directly
• Pub. 590-A, Contributions to
Individual Retirement Arrangements A trust is a grantor trust if the grantor by the grantor.
(IRAs), retains certain powers or ownership The income taxable to the grantor or
• Pub. 590-B, Distributions from benefits. This can also apply to only a another person under sections 671
Individual Retirement Arrangements portion of a trust. See Grantor Type through 678 and the deductions and
(IRAs), and Trust, later, for details on what makes a credits that apply to that income must
• Pub 4895, Tax Treatment of Property trust a grantor trust. be reported by that person on their own
Acquired From a Decedent Dying in In general, a grantor trust is ignored income tax return.
2010. for income tax purposes and all of the Example. The John Doe Trust is a
income, deductions, etc., are treated as grantor type trust. During the year, the
Assembly and belonging directly to the grantor. This trust sold 100 shares of ABC stock for
Attachments also applies to any portion of a trust that $1,010 in which it had a basis of $10
Assemble any schedules, forms, and is treated as a grantor trust. and 200 shares of XYZ stock for $10 in
attachments behind Form 1041 in the which it had a $1,020 basis.
Note. If only a portion of the trust is a
following order: The trust doesn't report these
grantor type trust, indicate both grantor
1. Schedule I (Form 1041); trust and the other type of trust, for transactions on Form 1041. Instead, a
2. Schedule D (Form 1041); example, simple or complex trust, as the schedule is attached to the Form 1041
type of entities checked in Section A on showing each stock transaction
3. Form 4952; separately and in the same detail as
page 1 of Form 1041.
4. Schedule H (Form 1040 or John Doe (grantor and owner) will need
1040-SR); The following instructions apply to report these transactions on his Form
5. Form 3800; ! only to grantor type trusts that 8949, Sales and Other Dispositions of
CAUTION are not using an optional filing Capital Assets and Schedule D (Form
6. Form 4136; method. 1040 or 1040-SR). The trust doesn't net
7. Form 8855; the capital gains and losses, nor does it
8. Form 8960; How to report. If the entire trust is a issue John Doe a Schedule K-1 (Form
grantor trust, fill in only the entity 1041) showing a $10 long-term capital
9. All other schedules and information of Form 1041. Don't show
forms; and loss.
any dollar amounts on the form itself;
10. All attachments. show dollar amounts only on an QSSTs. Income allocated to S
attachment to the form. Don't use corporation stock held by the trust is
Attachments Schedule K-1 (Form 1041) as the treated as owned by the income
If you need more space on the forms or attachment. beneficiary of the portion of the trust that
schedules, attach separate sheets. Use owns the stock. Report this income
If only part of the trust is a grantor following the rules discussed above for
the same size and format as on the type trust, the portion of the income,
printed forms. But show the totals on the grantor type trusts. A QSST can't elect
deductions, etc., that is allocable to the any of the optional filing methods
printed forms. non-grantor part of the trust is reported discussed below.
Attach these separate sheets after all on Form 1041, under normal reporting
rules. The amounts that are allocable However, the trust, and not the
the schedules and forms. Enter the income beneficiary, is treated as the
estate's or trust's EIN on each sheet. directly to the grantor are shown only on
an attachment to the form. Don't use owner of the S corporation stock for
Don't file a copy of the decedent's will Schedule K-1 (Form 1041) as the figuring and attributing the tax results of
or the trust instrument unless the IRS attachment. However, Schedule K-1 is a disposition of the stock. For example,
requests it. used to reflect any income distributed if the disposition is a sale, the QSST
from the portion of the trust that isn't election ends as to the stock sold and
taxable directly to the grantor or owner. any gain or loss recognized on the sale
Special Reporting The fiduciary must give the grantor
will be that of the trust. For more
information on QSSTs, see Regulations
Instructions (owner) of the trust a copy of the section 1.1361-1(j).
attachment.
Grantor type trusts, the S portion of
electing small business trusts (ESBTs), Attachment. On the attachment, Optional Filing Methods for Certain
and bankruptcy estates all have show: Grantor Type Trusts
reporting requirements that are • The name, identifying number, and
significantly different than other address of the person(s) to whom the Generally, if a trust is treated as owned
Subchapter J trusts and decedent's income is taxable; by one grantor or other person, the

Instructions for Form 1041 (2019) -13-

trustee may choose Optional Method 1 • Shows all items of income, deduction, name, address, and TIN of the trust.
or Optional Method 2 as the trust's and credit of the trust; The trustee also must file with the IRS
method of reporting instead of filing • Identifies the payer of each item of the appropriate Forms 1099 to report
Form 1041. A husband and wife will be income; the income or gross proceeds paid to
treated as one grantor for purposes of • Explains how the grantor or other the trust by all payers during the tax
these two optional methods if: person treated as owner of the trust year attributable to the part of the trust
• All of the trust is treated as owned by takes those items into account when treated as owned by each grantor, or
the husband and wife, and figuring the grantor's or other person's other person, showing the trust as the
• The husband and wife file their taxable income or tax; and payer and each grantor, or other person
income tax return jointly for that tax • Informs the grantor or other person treated as owner of the trust, as the
year. treated as the owner of the trust that payee. The trustee must report each
those items must be included when type of income in the aggregate and
Generally, if a trust is treated as figuring taxable income and credits on each item of gross proceeds separately.
owned by two or more grantors or other his or her income tax return. The due date for any Forms 1099
persons, the trustee may choose required to be filed with the IRS by a
Grantor trusts that haven't
Optional Method 3 as the trust's method trustee under this method is February
of reporting instead of filing Form 1041. TIP applied for an EIN and are going 28, 2020 (March 31, 2020, if filed
to file under Optional Method 1
electronically).
Once you choose the trust's filing don't need an EIN for the trust as long
as they continue to report under that In addition, the trustee must give
method, you must follow the rules under each grantor or other person treated as
Changing filing methods if you want to method.
owner of the trust a statement that:
change to another method. • Shows all items of income, deduction,
Optional Method 2. For a trust treated
Exceptions. The following trusts can't as owned by one grantor or by one and credit of the trust attributable to the
report using the optional filing methods. other person, the trustee must give all part of the trust treated as owned by the
• A common trust fund (as defined in payers of income during the tax year the grantor or other person;
section 584(a)). name, address, and TIN of the trust. • Explains how the grantor or other
• A foreign trust or a trust that has any The trustee also must file with the IRS person treated as owner of the trust
of its assets located outside the United the appropriate Forms 1099 to report takes those items into account when
States. the income or gross proceeds paid to figuring the grantor's or other person's
• A qualified subchapter S trust (as the trust during the tax year that shows taxable income or tax; and
defined in section 1361(d)(3)). the trust as the payer and the grantor, or • Informs the grantor or other person
• A trust all of which is treated as other person treated as owner, as the treated as the owner of the trust that
owned by one grantor or one other payee. The trustee must report each those items must be included when
person whose tax year is other than a type of income in the aggregate and figuring taxable income and credits on
calendar year. each item of gross proceeds separately. his or her income tax return. This
• A trust all of which is treated as The due date for any Forms 1099 statement satisfies the requirement to
owned by one or more grantors or other required to be filed with the IRS by a give the recipient copies of the Forms
persons, one of which isn't a U.S. trustee under this method is February 1099 filed by the trustee.
person. 28, 2020 (March 31, 2020, if filed Changing filing methods. A trustee
• A trust all of which is treated as electronically). who previously had filed Form 1041 can
owned by one or more grantors or other In addition, unless the grantor, or change to one of the optional methods
persons if at least one grantor or other other person treated as owner of the by filing a final Form 1041 for the tax
person is an exempt recipient for trust, is the trustee or a co-trustee of the year that immediately precedes the first
information reporting purposes, unless trust, the trustee must give the grantor tax year for which the trustee elects to
at least one grantor or other person isn't or other person treated as owner of the report under one of the optional
an exempt recipient and the trustee trust a statement that: methods. On the front of the final Form
reports without treating any of the • Shows all items of income, deduction, 1041, the trustee must write “Pursuant
grantors or other persons as exempt and credit of the trust; to section 1.671-4(g), this is the final
recipients. • Explains how the grantor or other Form 1041 for this grantor trust,” and
Optional Method 1. For a trust treated person treated as owner of the trust check the Final return box in item F.
as owned by one grantor or by one takes those items into account when For more details on changing
other person, the trustee must give all figuring the grantor's or other person's reporting methods, including changes
payers of income during the tax year the taxable income or tax; and from one optional method to another,
name and TIN of the grantor or other • Informs the grantor or other person see Regulations section 1.671-4(g).
person treated as the owner of the trust treated as the owner of the trust that
and the address of the trust. This those items must be included when Backup withholding. The following
method may be used only if the owner figuring taxable income and credits on grantor trusts are treated as payors for
of the trust provides the trustee with a his or her income tax return. This purposes of backup withholding.
signed Form W-9, Request for Taxpayer statement satisfies the requirement to 1. A trust established after 1995, all
Identification Number and Certification. give the recipient copies of the Forms of which is owned by two or more
In addition, unless the grantor or other 1099 filed by the trustee. grantors (treating spouses filing a joint
person treated as owner of the trust is Optional Method 3. For a trust treated return as one grantor).
the trustee or a co-trustee of the trust, as owned by two or more grantors or 2. A trust with 10 or more grantors
the trustee must give the grantor or other persons, the trustee must give all established after 1983 but before 1996.
other person treated as owner of the payers of income during the tax year the
trust a statement that:

-14- Instructions for Form 1041 (2019)

 The trustee must withhold a certain • Include only the income, losses, • Complete the rest of the return.
percentage of reportable payments deductions, and credits allocated to the The grantor portion (if any) of an
made to any grantor who is subject to ESBT as an S corporation shareholder ESBT will follow the rules discussed
backup withholding. and gain or loss from the disposition of under Grantor Type Trusts, earlier.
For more information, see section S corporation stock;
3406 and its regulations. • Aggregate items of income, losses, Bankruptcy Estates
deductions, and credits allocated to the The bankruptcy estate that is created
Pooled Income Funds ESBT as an S corporation shareholder if when an individual debtor files a petition
If you are filing for a pooled income the S portion of the ESBT has stock in under either chapter 7 or 11 of title 11 of
fund, attach a statement to support the more than one S corporation; the U.S. Code is treated as a separate
following: • Deduct state and local income taxes taxable entity. The bankruptcy estate is
• The calculation of the yearly rate of directly related to the S portion or administered by a trustee or a
return, allocated to the S portion if the debtor-in-possession. If the case is later
• The computation of the deduction for allocation is reasonable in light of all the dismissed by the bankruptcy court, the
distributions to the beneficiaries, and circumstances and administrative individual debtor is treated as if the
• The computation of any charitable expenses that wouldn't have been bankruptcy petition had never been
deduction. incurred if the S corporation shares filed.
See section 642 and the regulations were not held by the trust;
thereunder for more information. • Deduct interest expense paid or A separate taxable entity isn't
accrued on indebtedness incurred to created if a partnership or corporation
You don't have to complete acquire stock in an S corporation; files a petition under any chapter of title
Schedules A or B of Form 1041. • Deduct charitable contributions 11 of the U.S. Code.
attributable to the S portion. See Pub.
Also, you must file Form 5227, 526 to figure the amount of the For additional information about
Split-Interest Trust Information Return, deduction if either of the following apply. bankruptcy estates, see Pub. 908,
for the pooled income fund. However, if Bankruptcy Tax Guide.
1. Cash contributions or
all amounts were transferred in trust
before May 27, 1969, or if an amount
contributions of ordinary income Who Must File
property are more than 30% of the AGI Every trustee (or debtor-in-possession)
was transferred to the trust after May
of the S portion. for an individual's bankruptcy estate
26, 1969, for which no deduction was
allowed under any of the sections listed 2. Gifts of capital gain property are under chapter 7 or 11 of title 11 of the
under section 4947(a)(2), then Form more than 20% of the AGI of the S U.S. Code must file a return if the
5227 does not have to be filed. portion. bankruptcy estate has gross income of
• Don't claim a deduction for capital $12,200 or more for tax years beginning
Note. Form 1041-A is no longer filed by losses in excess of capital gains; in 2019.
pooled income funds. • Don't claim an income distribution
deduction or an exemption amount; Failure to do so may result in an
Electing Small Business Trusts • Don't claim an exemption amount in estimated Request for Administrative
(ESBTs) figuring the AMT; and Expenses being filed by the IRS in the
Special rules apply when figuring the tax • Don't use the tax rate schedule to bankruptcy proceeding or a motion to
on the S portion of an ESBT. The S figure the tax. The tax is 37% of the S compel filing of the return.
portion of an ESBT is the portion of the portion's taxable income except in The filing of a tax return for the
trust that consists of stock in one or figuring the maximum tax on qualified bankruptcy estate doesn't
more S corporations and isn't treated as dividends and capital gains. !
CAUTION relieve the individual debtor(s)
a grantor type trust. The tax on the S For additional information, see of his, her, or their individual tax
portion: Regulations section 1.641(c)-1. obligations.
• Must be figured separately from the
tax on the remainder of the ESBT (if Other information. When figuring the
tax and DNI on the remaining (non-S) EIN
any) and attached to the return, and
portion of the trust, disregard the S Every bankruptcy estate of an individual
• Is entered on Schedule G, Part I, required to file a return must have its
line 4. corporation items.
Don't apportion to the beneficiaries own EIN. The SSN of the individual
The tax on the remainder (non-S any of the S corporation items. debtor can't be used as the EIN for the
portion) of the ESBT is figured in the bankruptcy estate.
If the ESBT consists entirely of stock
normal manner on Form 1041. in one or more S corporations, don't
make any entries on lines 1–23 Accounting Period
Tax computation attachment. Attach
to the return the tax computation for the of page 1. Instead: A bankruptcy estate is allowed to have a
S portion of the ESBT. • Complete the entity portion; fiscal year. However, this period can't
If you need to complete and attach a • Follow the instructions above for be longer than 12 months.
tax form or worksheet for the S portion figuring the tax on the S corporation
of the trust, write “ESBT” in the top items; When To File
margin of the tax form, worksheet, or • Enter the ESBT tax on Schedule G,
Part I, line 4; File Form 1041 on or before the 15th
attachment. day of the 4th month following the close
• Carry the Total tax from line 9 of
To compute the tax on the S portion: Schedule G, Part I, to line 24 on page 1; of the tax year. Use Form 7004 to apply
• Treat that portion of the ESBT as if it and for an automatic 6-month extension of
were a separate trust; time to file.

Instructions for Form 1041 (2019) -15-

Disclosure of Return Information chapter and (b) property described in be carried to any tax year of the
section 541 of title 11 and income individual debtor.
Under section 6103(e)(5), tax returns of
earned therefrom that the debtor
individual debtors who have filed for Carryback of NOLs and credits.
acquires after the beginning of the case
bankruptcy under chapters 7 or 11 of For tax years ending after 2017,
and before the case is closed,
title 11 are, upon written request, open only NOLs generated from
dismissed, or converted. If section 1115 !
to inspection by or disclosure to the CAUTION certain farming losses can be
of title 11 applies, the bankruptcy
trustee. carried back. See Pubs. 536 and 225 for
estate's gross income includes, as
described above, (a) the debtor's more information.
The returns subject to disclosure to
earnings from services performed after
the trustee are those for the year the If the bankruptcy estate itself incurs
the beginning of the case and (b) the
bankruptcy begins and prior years. Use an NOL (apart from losses carried
income from property acquired after the
Form 4506, Request for Copy of Tax forward to the estate from the individual
beginning of the case.
Return, to request copies of the debtor), it can carry back its NOLs not
individual debtor's tax returns. only to previous tax years of the
The income from property owned by
the debtor when the case began is also bankruptcy estate, but also to tax years
If the bankruptcy case wasn't of the individual debtor prior to the year
included in the bankruptcy estate's
voluntary, disclosure can't be made in which the bankruptcy proceedings
gross income. However, if this property
before the bankruptcy court has entered began.
is exempted from the bankruptcy estate
an order for relief, unless the court rules
or is abandoned by the trustee or Excess credits, such as the foreign
that the disclosure is needed for
debtor-in-possession, the income from tax credit, also may be carried back to
determining whether relief should be
the property isn't included in the pre-bankruptcy years of the individual
ordered.
bankruptcy estate's gross income. Also debtor.
included in income is gain from the sale
Transfer of Tax Attributes From Standard deduction. A bankruptcy
of the bankruptcy estate's property. To
estate that doesn't itemize deductions is
the Individual Debtor to the figure gain, the trustee or
allowed a standard deduction of
Bankruptcy Estate debtor-in-possession must determine
$12,200 for tax year 2019.
the correct basis of the property.
The bankruptcy estate succeeds to the Discharge of indebtedness. In a title
following tax attributes of the individual To determine whether any amount 11 case, gross income doesn't include
debtor: paid or incurred by the bankruptcy amounts that normally would be
1. Net operating loss (NOL) estate is allowable as a deduction or included in gross income resulting from
carryovers; credit, or is treated as wages for the discharge of indebtedness.
2. Charitable contribution employment tax purposes, treat the However, any amounts excluded from
carryovers; amount as if it were paid or incurred by gross income must be applied to reduce
3. Recovery of tax benefit items; the individual debtor in the same trade certain tax attributes in a certain order.
or business or other activity the debtor Attach Form 982, Reduction of Tax
4. Credit carryovers; engaged in before the bankruptcy Attributes Due to Discharge of
5. Capital loss carryovers; proceedings began. Indebtedness (and Section 1082 Basis
6. Basis, holding period, and Adjustment), to show the reduction of
Administrative expenses. The
character of assets; tax attributes.
bankruptcy estate is allowed a
7. Method of accounting; deduction for any administrative
expense allowed under section 503 of Tax Rate Schedule
8. Unused passive activity losses;
title 11 of the U.S. Code, and any fee or Figure the tax for the bankruptcy estate
9. Unused passive activity credits; charge assessed under chapter 123 of using the tax rate schedule below. Enter
and title 28 of the U.S. Code, to the extent the tax on Form 1040 or 1040-SR,
10. Unused section 465 losses. not disallowed under an Internal line 12a.
Revenue Code provision (for example,
Income, Deductions, and Credits section 263, 265, or 275). If taxable income is:
Of the
Under section 1398(c), the taxable Administrative expense loss. When Over—
But not
The tax is: amount
income of the bankruptcy estate figuring an NOL, nonbusiness over—
over—
generally is figured in the same manner deductions (including administrative $0 $9,700 10% $0
as that of an individual. The gross expenses) are limited under section 9,700 39,475 $970.00 + 12% 9,700
172(d)(4) to the bankruptcy estate's 39,475 84,200 4,543.00 + 22% 39,475
income of the bankruptcy estate
84,200 160,725 14,382.50 + 24% 84,200
includes any income included in nonbusiness income. The excess 160,725 204,100 32,748.50 + 32% 160,725
property of the estate as defined in U.S. nonbusiness deductions are an 204,100 306,175 46,628.50 + 35% 204,100
Code, title 11, sections 541 and 1115. administrative expense loss that may be 306,175 ...... 82,354.75 + 37% 306,175
carried back to each of the 3 preceding
Under section 1115 of title 11, tax years and forward to each of the 7
property of the bankruptcy estate succeeding tax years of the bankruptcy
includes (a) earnings from services estate. The amount of an administrative Prompt Determination of Tax
performed by the debtor after the expense loss that may be carried to any Liability
beginning of the case (both wages and tax year is determined after the NOL
To request a prompt determination of
self-employment income) and before deductions allowed for that year. An
the tax liability of the bankruptcy estate,
the case is closed, dismissed, or administrative expense loss is allowed
the trustee or debtor-in-possession
converted to a case under a different only to the bankruptcy estate and can't

-16- Instructions for Form 1041 (2019)

must file a written request for the estate's gross income may be affected name on the prior year's return, see
determination with the IRS. The request by section 1115 of title 11 of the U.S. Change in Fiduciary's Name and
must be submitted in duplicate and Code. See Income, Deductions, and Change in Fiduciary, later.
executed under penalties of perjury. Credits earlier. The debtor may receive
The request must include a statement a Form W-2, 1099-INT, 1099-DIV, or Address
indicating that it is a request for prompt 1099-MISC or other information return Include the suite, room, or other unit
determination of tax liability and: (a) the reporting wages or other income to the number after the street address. If the
return type, and all the tax periods for debtor for the entire year, even though post office doesn't deliver mail to the
which prompt determination is sought; some or all of this income is includible in street address and the fiduciary has a
(b) the name and location of the office the bankruptcy estate's gross income P.O. box, show the box number instead.
where the return was filed; (c) the under section 1115 of title 11 of the U.S.
debtor's name; (d) the debtor's SSN, Code. If this happens, the income If you want a third party (such as an
TIN, or EIN; (e) the type of bankruptcy reported to the debtor on the Form W-2 accountant or an attorney) to receive
estate; (f) the bankruptcy case number; or 1099, or other information return (and mail for the estate or trust, enter on the
and (g) the court where the bankruptcy the withheld income tax shown on these street address line “C/O” followed by the
is pending. Send the request to the forms) must be reasonably allocated third party's name and street address or
Centralized Insolvency Operation, P.O. between the debtor and the bankruptcy P.O. box.
Box 7346, Philadelphia, PA 19101-7346 estate. The debtor-in-possession (or the
(marked “Request for Prompt chapter 11 trustee, if one was If the estate or trust has had a
Determination”). appointed) must attach a schedule that change of address (including a change
shows (a) all the income reported on the to an “in care of” name and address)
The IRS will notify the trustee or Form W-2, Form 1099, or other and did not file Form 8822-B, Change of
debtor-in-possession within 60 days information return, (b) the portion of this Address or Responsible Party —
from receipt of the request if the return income includible in the bankruptcy Business, check the Change in
filed by the trustee or estate's gross income, and (c) all the fiduciary's address box in item F.
debtor-in-possession has been selected withheld income tax, if any, and the
for examination or has been accepted portion of withheld tax reasonably If the estate or trust has a change of
as filed. If the return is selected for allocated to the bankruptcy estate. Also, mailing address (including a new "in
examination, it will be examined as soon the debtor-in-possesion (or the care of" name and address) or
as possible. The IRS will notify the chapter 11 trustee, if one was responsible party after filing its return,
trustee or debtor-in-possession of any appointed) must attach a copy of the file Form 8822-B to notify the IRS of the
tax due within 180 days from receipt of Form W-2, if any, issued to the debtor change.
the request or within any additional time for the tax year if the Form W-2 reports
permitted by the bankruptcy court. wages to the debtor and some or all of A. Type of Entity
the wages are includible in the Check the appropriate box(es) that
See Rev. Proc. 2006-24, 2006-22 bankruptcy estate's gross income describes the entity for which you are
I.R.B. 943, available at IRS.gov/irb/ because of section 1115 of title 11 of filing the return.
2006-22_IRB/ar12.html, modified by the U.S. Code. For more details,
Announcement 2011–77, available at including acceptable allocation In some cases, more than one box is
IRS.gov/irb/2011-51_IRB/ar13. methods, see Notice 2006-83, 2006-40 checked. Check all boxes that apply to
I.R.B. 596, available at IRS.gov/irb/ your trust. For example, if only a portion
Special Filing Instructions for 2006-40_IRB/ar12.html. of a trust is a grantor type trust or if only
a portion of an electing small business
Bankruptcy Estates
Use Form 1041 only as a transmittal for Specific Instructions trust is the S portion, then more than
one box is checked.
Form 1040 or 1040-SR. In the top
margin of Form 1040 or 1040-SR write Name of Estate or Trust Note. Determination of entity status is
“Attachment to Form 1041. DO NOT Copy the exact name of the estate or made on an annual basis.
DETACH.” Attach Form 1040 or trust from the Form SS-4, Application for There are special reporting
1040-SR to Form 1041. Complete only Employer Identification Number, that requirements for grantor type
the identification area at the top of Form you used to apply for the EIN. If the !
CAUTION trusts, pooled income funds,
1041. Enter the name of the individual name of the trust was changed during electing small business trusts, and
debtor in the following format: “John Q. the tax year for which you are filing, bankruptcy estates. See Special
Public Bankruptcy Estate.” Beneath, enter the trust's new name and check Reporting Instructions, earlier.
enter the name of the trustee in the the Change in trust's name box in item
following format: “Avery Snow, Trustee.” F. Decedent's Estate
In item D, enter the date the petition was
If a grantor type trust (discussed An estate of a deceased person is a
filed or the date of conversion to a
later), write the name, identification taxable entity separate from the
chapter 7 or 11 case.
number, and address of the grantor(s) decedent. It generally continues to exist
or other owner(s) in parentheses after until the final distribution of the assets of
Enter on Form 1041, line 24, the total
the name of the trust. the estate is made to the heirs and other
tax from line 16 of Form 1040 or
1040-SR. Complete lines 25 through 30 beneficiaries. The income earned from
of Form 1041, and sign and date it.
Name and Title of the property of the estate during the
Fiduciary period of administration or settlement
In a chapter 11 case filed after Enter the name and title of the fiduciary. must be accounted for and reported by
October 16, 2005, the bankruptcy If the name entered is different than the the estate.

-17-
Simple Trust the time that the power or interest was deduction on page 1, line 18, must enter
A trust may qualify as a simple trust if: created or who became the grantor's the number of Schedules K-1 (Form
spouse after the creation of that power 1041) that are attached to Form 1041.
1. The trust instrument requires that or interest. See Grantor Type Trusts,
all income must be distributed currently; earlier, for more information. C. Employer Identification
2. The trust instrument doesn't Number
Pre-need funeral trusts. The
provide that any amounts are to be paid,
purchasers of pre-need funeral services Every estate or trust that is required to
permanently set aside, or used for
are the grantors and the owners of file Form 1041 must have an EIN. An
charitable purposes; and
pre-need funeral trusts established EIN may be applied for:
3. The trust doesn't distribute under state laws. See Rev. Rul. 87-127, • Online at IRS.gov/EIN. The EIN is
amounts allocated to the corpus of the 1987-2 C.B. 156. However, the trustees issued immediately once the application
trust. of pre-need funeral trusts can elect to information is validated.
Complex Trust file the return and pay the tax for • By mailing or faxing Form SS-4,
qualified funeral trusts. For more Application for Employer Identification
A complex trust is any trust that doesn't information, see Form 1041-QFT, U.S. Number.
qualify as a simple trust as explained Income Tax Return for Qualified Funeral
above. Trusts. If the estate or trust hasn't received
its EIN by the time the return is due,
Qualified Disability Trust Nonqualified deferred compensation write “Applied for” and the date you
A qualified disability trust is any plans. Taxpayers may adopt and applied in the space for the EIN. For
nongrantor trust: maintain grantor trusts in connection more details, see Pub. 583, Starting a
1. Described in 42 U.S.C. 1396p(c) with nonqualified deferred Business and Keeping Records.
(2)(B)(iv) and established solely for the compensation plans (sometimes
benefit of an individual under 65 years referred to as “rabbi trusts”). Rev. Proc. D. Date Entity Created
of age who is disabled, and 92-64, 1992-2 C.B. 422, provides a Enter the date the trust was created, or,
“model grantor trust” for use in rabbi if a decedent's estate, the date of the
2. All the beneficiaries of which are trust arrangements. The procedure also
determined by the Commissioner of decedent's death.
provides guidance for requesting rulings
Social Security to have been disabled on the plans that use these trusts.
for some part of the tax year within the E. Nonexempt Charitable
meaning of 42 U.S.C. 1382c(a)(3). QSSTs. The beneficiary of a qualified and Split-Interest Trusts
subchapter S trust is treated as the
A trust will not fail to meet item 2 substantial owner of that portion of the Section 4947(a)(1) Trust
above just because the trust's corpus trust which consists of stock in an S Check this box if the trust is a
may revert to a person who isn't corporation for which an election under nonexempt charitable trust within the
disabled after the trust ceases to have section 1361(d)(2) has been made. See meaning of section 4947(a)(1).
any disabled beneficiaries. QSSTs, earlier.
A nonexempt charitable trust is a
ESBT (S Portion Only) Bankruptcy Estate trust:
The S portion of an ESBT is the portion A chapter 7 or 11 bankruptcy estate is a • That isn't exempt from tax under
of the trust that consists of S corporation separate and distinct taxable entity from section 501(a);
stock and that isn't treated as owned by the individual debtor for federal income • In which all of the unexpired interests
the grantor or another person. See tax purposes. See Bankruptcy Estates, are devoted to one or more charitable
Electing Small Business Trusts earlier. purposes described in section 170(c)(2)
(ESBTs), earlier, for more information (B); and
about an ESBT. For more information, see section • For which a deduction was allowed
1398 and Pub. 908, Bankruptcy Tax under section 170 (for individual
Grantor Type Trust Guide. taxpayers) or similar Code section for
A grantor type trust is a legal trust under personal holding companies, foreign
applicable state law that isn't
Pooled Income Fund
personal holding companies, or estates
recognized as a separate taxable entity A pooled income fund is a split-interest or trusts (including a deduction for
for income tax purposes because the trust with a remainder interest for a estate or gift tax purposes).
grantor or other substantial owners have public charity and a life income interest
not relinquished complete dominion and retained by the donor or for another Nonexempt charitable trust treated
control over the trust. person. The property is held in a pool as a private foundation. If a
with other pooled income fund property nonexempt charitable trust is treated as
Generally, for transfers made in trust and doesn't include any tax-exempt though it were a private foundation
after March 1, 1986, the grantor is securities. The income for a retained life under section 509, then the fiduciary
treated as the owner of any portion of a interest is figured using the yearly rate must file Form 990-PF, Return of Private
trust in which he or she has a of return earned by the trust. See Foundation, in addition to Form 1041.
reversionary interest in either the section 642(c) and the related If a nonexempt charitable trust is
income or corpus therefrom, if, as of the regulations for more information. treated as though it were a private
inception of that portion of the trust, the foundation, and it has no taxable
value of the reversionary interest is B. Number of Schedules income under Subtitle A, it may check
more than 5% of the value of that K-1 Attached the box on Form 990-PF, Part VII-A,
portion. Also, the grantor is treated as line 15 and enter the tax-exempt interest
Every trust or decedent's estate
holding any power or interest that was received or accrued during the year on
claiming an income distribution
held by either the grantor's spouse at that line, instead of filing Form 1041 to

-18- Instructions for Form 1041 (2019)

meet its section 6012 filing requirement sections for personal holding Amended Schedule K-1 (Form 1041).
for that tax year. companies, foreign personal holding If the amended return results in a
companies, or estates or trusts change to income, or a change in
Excise taxes. If a nonexempt (including a deduction for estate or gift
charitable trust is treated as a private distribution of any income or other
tax purposes). information provided to a beneficiary, an
foundation, then it is subject to the same
excise taxes under chapters 41 and 42 Other returns that must be filed. The amended Schedule K-1 (Form 1041)
that a private foundation is subject to. If fiduciary of a split-interest trust must file must also be filed with the amended
the nonexempt charitable trust is liable Form 5227. However, see the Form 1041 and given to each
for any of these taxes (except the Instructions for Form 5227 for the beneficiary. Check the “Amended K-1”
section 4940 tax), then it reports these exception that applies to split-interest box at the top of the amended
taxes on Form 4720, Return of Certain trusts other than section 664 charitable Schedule K-1.
Excise Taxes Under Chapters 41 and remainder trusts. Final Return
42 of the Internal Revenue Code. Taxes
paid by the trust on Form 4720 or on F. Initial Return, Amended Check this box if this is a final return
because the estate or trust has
Form 990-PF (the section 4940 tax) Return, etc. terminated. Also, check the “Final K-1”
can't be taken as a deduction on Form
1041. Amended Return box at the top of Schedule K-1.
If you are filing an amended Form 1041: If, on the final return, there are
Not a Private Foundation
• Check the “Amended return” box in excess deductions, an unused capital
Check this box if the nonexempt Item F, loss carryover, or an NOL carryover,
charitable trust (section 4947(a)(1)) isn't • Complete the entire return, see the instructions for Schedule K-1,
treated as a private foundation under • Correct the appropriate lines with the box 11, later.
section 509. For more information, see new information, and
Regulations section 53.4947-1. Change in Trust's Name
• Refigure the estate's or trust's tax
Other returns that must be filed. If a liability. If the name of the trust has changed
nonexempt charitable trust isn't treated from the name shown on the prior year's
as though it were a private foundation, Note. If you are amending the return return (or Form SS-4 if this is the first
the fiduciary must file Form 990, Return for an NOL carryback, also check the return being filed), be sure to check this
of Organization Exempt From Income “Net operating loss carryback” box in box.
Tax, or Form 990-EZ, Short Form Item F.
Change in Fiduciary
Return of Organization Exempt From If the total tax on line 24 is larger on If a different fiduciary enters his or her
Income Tax, in addition to Form 1041, if the amended return than on the original name on the line for Name and title of
the trust meets the filing requirements return, you generally should pay the fiduciary than was shown on the prior
for either of those forms. difference with the amended return. year's return (or Form SS-4 if this is the
If a nonexempt charitable trust isn't However, you should adjust this amount first return being filed) and you didn't file
treated as though it were a private if there is any increase or decrease in a Form 8822-B, be sure to check this
foundation, and it has no taxable the total payments shown on line 26. box. If there is a change in the fiduciary
income under Subtitle A, it may answer whose address is used as the mailing
“Yes” on Form 990, Part V, line 12a and Attach a sheet that explains the address for the estate or trust after the
enter the tax-exempt interest received reason for the amendments and return is filed, use Form 8822-B to notify
or accrued during the year on Form 990, identifies the lines and amounts being the IRS.
Part V, line 12b instead of filing Form changed on the amended return.
1041 to meet its section 6012 filing Change in Fiduciary's Name
Amended Schedule H (Form 1040 or
requirement for that tax year (or if Form 1040-SR). If you discover an error on a If the fiduciary changed his or her name
990-EZ is filed instead of Form 990, you Schedule H that you previously filed from the name that he or she entered on
may check the box on Form 990-EZ, with Form 1041, file an “Amended” the prior year's return (or Form SS-4 if
line 43 and enter the tax-exempt interest Form 1041 and attach a corrected this is the first return being filed), be
received or accrued during the year on Schedule H. sure to check this box.
that line).
In the top margin of your corrected Change in Fiduciary's Address
Section 4947(a)(2) Trust Schedule H, write “CORRECTED” and If the same fiduciary who filed the prior
Check this box if the trust is a the date you discovered the error. Also, year's return (or Form SS-4 if this is the
split-interest trust described in section on an attachment explain the reason for first return being filed) files the current
4947(a)(2). your correction. If you owe tax, pay the year's return and changed the address
tax in full with your amended Form on the return (including a change to an
A split-interest trust is a trust that: 1041. If you overpaid tax on a previously "in care of" name and address), and
• Isn't exempt from tax under section filed Schedule H, depending on whether didn't report the change on Form
501(a); you choose the adjustment or claim for 8822-B, check this box.
• Has some unexpired interests that refund process to correct the error, you
are devoted to purposes other than must either repay or reimburse the If the address shown on Form 1041
religious, charitable, or similar purposes employee's share of social security and changes after you file the form
described in section 170(c)(2)(B); and Medicare tax or get the employee's (including a change to an "in care of"
• Has amounts transferred in trust after consent to the filing of a refund claim for name and address), file Form 8822-B to
May 26, 1969, for which a deduction their share. See Pub. 926, Household notify the IRS of the change.
was allowed under section 170 (for Employer's Tax Guide, for more
individual taxpayers) or similar Code information.

Instructions for Form 1041 (2019) -19-

G. Section 645 Election • U.S. Treasury bills, notes, and bonds; you must reduce the amount on
If a section 645 election was made by • U.S. savings bonds; line 2b(2) by the portion of the estate tax
filing Form 8855, check the box in item • Original issue discount; and deduction claimed on Form 1041,
G. See Special Rule for Certain • Income received as a regular interest page 1, line 19, that is attributable to
Revocable Trusts under Who Must File holder of a real estate mortgage those qualified dividends. Don't reduce
and Form 8855 for more information investment conduit (REMIC). the amounts on line 2b by any other
about this election. allocable expenses.
For taxable bonds acquired after
1987, amortizable bond premium is Note. The beneficiary's share (as
Income treated as an offset to the interest figured above) may differ from the
income instead of as a separate interest amount entered on line 2b of
Determining Qualified Business deduction. See Pub. 550. Schedule K-1 (Form 1041).
Income
For the year of the decedent's death, Qualified dividends. Qualified
The estate's or trust's qualified business Forms 1099-INT issued in the
income includes items of income, gain, dividends are eligible for a lower tax rate
decedent's name may include interest than other ordinary income. Generally,
deduction, and loss that are effectively income earned after the date of death
connected with the conduct of a trade or these dividends are reported to the
that should be reported on the income estate or trust in box 1b of Form(s)
business within the United States and tax return of the decedent's estate.
included or allowed in determining 1099-DIV. See Pub. 550 for the
When preparing the decedent's final definition of qualified dividends if the
taxable income for the year. This income tax return, report on Schedule B
includes the estate's or trust's share of estate or trust received dividends not
(Form 1040 or 1040-SR), line 1 the total reported on Form 1099-DIV.
items of income, gain, deduction, and interest shown on Form 1099-INT.
loss from trades or business conducted Under the last entry on line 1, subtotal Exception. Some dividends may be
by partnerships (other than PTPs), S all the interest reported on line 1. Below reported to the estate or trust as in
corporations, and other estates or the subtotal, write “Form 1041” and the box 1b of Form 1099-DIV but aren't
trusts. For more information see section name and address shown on Form qualified dividends. These include:
199A, Form 8995 Instructions, and 1041 for the decedent's estate. Also, • Dividends received on any share of
Form 8995-A Instructions. show the part of the interest reported on stock that the estate or trust held for
Special Rule for Blind Trust Form 1041 and subtract it from the less than 61 days during the 121-day
subtotal. period that began 60 days before the
If you are reporting income from a ex-dividend date. The ex-dividend date
qualified blind trust (under the Ethics in Line 2a—Total Ordinary is the first date following the declaration
Government Act of 1978), don't identify Dividends of a dividend on which the purchaser of
the payer of any income to the trust but a stock isn't entitled to receive the next
complete the rest of the return as Report the estate's or trust's share of all
ordinary dividends received during the dividend payment. When counting the
provided in the instructions. Also write number of days the stock was held,
“Blind Trust” at the top of page 1. tax year.
include the day the estate or trust
For the year of the decedent's death, disposed of the stock but not the day it
Extraterritorial Income
Forms 1099-DIV issued in the acquired the stock. However, you can't
Exclusion decedent's name may include dividends count certain days during which the
The extraterritorial income exclusion earned after the date of death that estate's or trust's risk of loss was
isn't allowed for transactions after 2006. should be reported on the income tax diminished. See Pub. 550 for more
However, income from certain long-term return of the decedent's estate. When details.
sales and leases may still qualify for the preparing the decedent's final income • Dividends attributable to periods
exclusion. For details and to figure the tax return, report on Schedule B (Form totaling more than 366 days that the
amount of the exclusion, see Form 1040 or 1040-SR), line 5 the ordinary estate or trust received on any share of
8873, Extraterritorial Income Exclusion, dividends shown on Form 1099-DIV. preferred stock held for less than 91
and its separate instructions. The estate Under the last entry on line 5, subtotal days during the 181-day period that
or trust must report the extraterritorial all the dividends reported on line 5. began 90 days before the ex-dividend
income exclusion on line 15a of Form Below the subtotal, write “Form 1041” date. When counting the number of
1041, page 1. and the name and address shown on days the stock was held, include the day
Although the extraterritorial income Form 1041 for the decedent's estate. the estate or trust disposed of the stock
exclusion is entered on line 15a, it is an Also, show the part of the ordinary but not the day it acquired the stock.
exclusion from income and should be dividends reported on Form 1041 and However, you can't count certain days
treated as tax-exempt income when subtract it from the subtotal. during which the estate's or trust's risk
completing other parts of the return. Report capital gain distributions of loss was diminished. See Pub. 550
TIP on Schedule D (Form 1041), for more details. Preferred dividends
Line 1—Interest Income Line 13. attributable to periods totaling less than
Report the estate's or trust's share of all 367 days are subject to the 61-day
taxable interest income that was Line 2b—Qualified Dividends holding period rule above.
received during the tax year. Examples
Enter the beneficiary's allocable share • Dividends on any share of stock to
of taxable interest include interest from: the extent that the estate or trust is
of qualified dividends on line 2b(1) and
• Accounts (including certificates of enter the estate's or trust's allocable
under an obligation (including a short
deposit and money market accounts) sale) to make related payments with
share on line 2b(2).
with banks, credit unions, and thrift respect to positions in substantially
institutions; If the estate or trust received qualified similar or related property.
• Notes, loans, and mortgages; dividends that were derived from IRD,

-20- Instructions for Form 1041 (2019)

• Payments in lieu of dividends, but Line 6—Farm Income or (Loss) space and enter the net inclusion
only if you know or have reason to know If the estate or trust operated a farm, amount on line 8. The net 965(a)
that the payments are not qualified use Schedule F (Form 1040 or inclusion is figured by subtracting the
dividends. 1040-SR), Profit or Loss From Farming, 965(c) deduction (Form 965, Part II,
to report farm income and expenses. line 17) from the 965(a) inclusion (Form
If you have an entry on
Enter the net profit or (loss) from 965, Part I, line 3). You must also
TIP line 2b(2), be sure you use complete and attach Form 965 and
Schedule D (Form 1041), the Schedule F on line 6.
Form 965-A to your return. See the
Schedule D Tax Worksheet, or the If an estate or trust has farm Instructions for Form 965 for more
Qualified Dividends Tax Worksheet, rental income and expenses
! information.
whichever applies, to figure the estate's CAUTION based on crops or livestock
or trust's tax. Figuring the estate's or
trust's tax liability in this manner will
produced by a tenant, report the income Deductions
and expenses on Schedule E (Form
usually result in a lower tax. 1040 or 1040-SR). Don't use Form Depreciation, Depletion, and
4835, Farm Rental Income and Amortization
Line 3—Business Income or Expenses, or Schedule F (Form 1040 or A trust or decedent's estate is allowed a
(Loss) 1040-SR) to report such income and deduction for depreciation, depletion,
If the estate operated a business, report expenses and don't include the net and amortization only to the extent the
the income and expenses on profit or (loss) from such income and deductions aren't apportioned to the
Schedule C (Form 1040 or 1040-SR), expenses on line 6. beneficiaries. An estate or trust isn't
Profit or Loss From Business. Enter the allowed to make an election under
net profit or (loss) from Schedule C on Line 7—Ordinary Gain or (Loss) section 179 to expense depreciable
line 3. Enter from line 17, Form 4797, Sales of business assets.
Line 4—Capital Gain or (Loss) Business Property, the ordinary gain or
loss from the sale or exchange of The estate's or trust's share of
Enter the gain from Schedule D (Form property other than capital assets and depreciation, depletion, and
1041), Part III, line 19, column (3) or the also from involuntary conversions (other amortization is generally reported on the
loss from Part IV, line 20. than casualty or theft). appropriate lines of Schedule C, E, or F
If you deferred a capital gain in to a (Form 1040 or 1040-SR), the net
Line 8—Other Income income or loss from which is shown on
qualified opportunity fund (QOF), you
must file your return with Schedule D, Enter other items of income not included lines 3, 5, or 6 of Form 1041. If the
Form 8949 and Form 8997 attached. on lines 1, 2a, and 3 through 7. List the deduction isn't related to a specific
You will need to file Form 8997 annually type and amount on an attached business or activity, then report it on
until you dispose of the investment. See schedule if the estate or trust has more line 15a.
the Form 8997 instructions. than one item.
Depreciation. For a decedent's estate,
Don't substitute Schedule D Items to be reported on line 8 include the depreciation deduction is
(Form 1040 or 1040-SR) for the following. apportioned between the estate and the
!
CAUTION Schedule D (Form 1041). • Section 461(I) excess business loss heirs, legatees, and devisees on the
adjustments. Write "ELA" and the basis of the estate's income allocable to
Line 5—Rents, Royalties, amount from Form 461, line 16 as a each.
positive number on the entry space on For a trust, the depreciation
Partnerships, Other Estates line 8. Include this amount in the total of deduction is apportioned between the
and Trusts, etc. all Other Income on line 8. See Form income beneficiaries and the trust on
Use Schedule E (Form 1040 or 461 and its instructions for more the basis of the trust income allocable to
1040-SR), Supplemental Income and information. each, unless the governing instrument
Loss, to report the estate's or trust's Note. “ELA” and its dollar amount are (or local law) requires or permits the
share of income or (losses) from rents, the first entry to make on line 8. trustee to maintain a depreciation
royalties, partnerships, S corporations, • Unpaid compensation received by reserve. If the trustee is required to
other estates and trusts, and REMICs. the decedent's estate that is IRD. maintain a reserve, the deduction is first
Also use Schedule E (Form 1040 or • Any part of a total distribution shown allocated to the trust, up to the amount
1040-SR) to report farm rental income on Form 1099-R, Distributions From of the reserve. Any excess is allocated
and expenses based on crops or Pensions, Annuities, Retirement or among the income beneficiaries and the
livestock produced by a tenant. Enter Profit-Sharing Plans, IRAs, Insurance trust in the same manner as the trust's
the net profit or (loss) from Schedule E Contracts, etc., that is treated as accounting income. See Regulations
on line 5. See the Instructions for ordinary income. For more information, section 1.167(h)-1(b).
Schedule E (Form 1040 or 1040-SR) for see Form 4972, Tax on Lump-Sum
reporting requirements. Depletion. For mineral or timber
Distributions, and its instructions. property held by a decedent's estate,
If the estate or trust received a • Taxable contributions received during the depletion deduction is apportioned
Schedule K-1 from a partnership, S the tax year by an Alaska Native between the estate and the heirs,
corporation, or other flow-through entity, Settlement Trust from an Alaska Native legatees, and devisees on the basis of
use the corresponding lines on Form Corporation. Report gain from taxable the estate's income from such property
1041 to report the interest, dividends, contributions of non-cash property on allocable to each.
capital gains, etc., from the flow-through Schedule D (Form 1041).
• Net section 965(a) inclusion. If you For mineral or timber property held in
entity. trust, the depletion deduction is
have a net section 965(a) inclusion for
2019, write “SEC 965” in the entry apportioned between the income

Instructions for Form 1041 (2019) -21-

beneficiaries and the trust based on the Deductions That May Be For a grantor trust, material
trust income from such property Allowable for Estate Tax participation is determined at the
allocable to each, unless the governing grantor level.
instrument (or local law) requires or Purposes
If the estate or trust distributes an
permits the trustee to maintain a reserve Administration expenses and casualty
interest in a passive activity, the basis of
for depletion. If the trustee is required to and theft losses deductible on Form 706
the property immediately before the
maintain a reserve, the deduction is first may be deducted, to the extent
distribution is increased by the passive
allocated to the trust, up to the amount otherwise deductible for income tax
activity losses allocable to the interest,
of the reserve. Any excess is allocated purposes, on Form 1041 if the fiduciary
and such losses can't be deducted. See
among the beneficiaries and the trust in files a statement waiving the right to
section 469(j)(12).
the same manner as the trust's deduct the expenses and losses on
accounting income. See Regulations Form 706. The statement must be filed Losses from passive activities
section 1.611-1(c)(4). before the expiration of the statutory TIP are first subject to the at-risk
period of limitations for the tax year the rules. When the losses are
Amortization. The deduction for deduction is claimed. See Pub. 559 for deductible under the at-risk rules, the
amortization is apportioned between an more information. passive activity rules then apply.
estate or trust and its beneficiaries
under the same principles used to Accrued Expenses Rental activities. Generally, rental
apportion the deductions for Generally, an accrual basis taxpayer activities are passive activities, whether
depreciation and depletion. can deduct accrued expenses in the tax or not the taxpayer materially
The deduction for the amortization of year that: (a) all events have occurred participates. However, certain taxpayers
reforestation expenditures under that determine the liability; and (b) the who materially participate in real
section 194 is allowed only to an estate. amount of the liability can be figured property trades or businesses aren't
with reasonable accuracy. However, all subject to the passive activity limitations
Allocable share from a pass-through on losses from rental real estate
the events that establish liability are
entity. Depreciation, depletion, and activities in which they materially
treated as occurring only when
amortization received from a participate. For more details, see
economic performance takes place.
pass-through entity on a Schedule K-1 section 469(c)(7).
There are exceptions for recurring
is apportioned and reported in the same
items. See section 461(h). For tax years of an estate ending less
manner as discussed above. A section
179 expense received from a than 2 years after the decedent's date of
pass-through entity on a Schedule K-1
Limitations on Deductions death, up to $25,000 of deductions and
isn't deductible by the estate or trust. deduction equivalents of credits from
At-Risk Loss Limitations
rental real estate activities in which the
Allocation of Deductions for Generally, the amount the estate or trust decedent actively participated are
Tax-Exempt Income has “at-risk” limits the loss it can deduct allowed. Any excess losses or credits
for any tax year. Use Form 6198, are suspended for the year and carried
Generally, no deduction that would At-Risk Limitations, to figure the
otherwise be allowable is allowed for forward.
deductible loss for the year and file it
any expense (whether for business or with Form 1041. For more information, Portfolio income. Portfolio income
for the production of income) that is see Pub. 925, Passive Activity and isn't treated as income from a passive
allocable to tax-exempt income. At-Risk Rules. activity, and passive losses and credits
Examples of tax-exempt income generally may not be applied to offset it.
include: Passive Activity Loss and Portfolio income generally includes
• Certain death benefits (section 101), Credit Limitations interest, dividends, royalties, and
• Interest on state or local bonds income from annuities. Portfolio income
(section 103), In general. Section 469 and the of an estate or trust must be accounted
• Compensation for injuries or sickness regulations thereunder generally limit for separately.
(section 104), and losses from passive activities to the
amount of income derived from all Forms to file. See Form 8582, Passive
• Income from discharge of
indebtedness in a title 11 case (section passive activities. Similarly, credits from Activity Loss Limitations, to figure the
108). passive activities are generally limited to amount of losses allowed from passive
the tax attributable to such activities. activities. See Form 8582-CR, Passive
Exception. State income taxes and These limitations are first applied at the Activity Credit Limitations, to figure the
business expenses that are allocable to estate or trust level. amount of credit allowed for the current
tax-exempt interest are deductible. year.
Generally, an activity is a passive
Expenses that are directly allocable activity if it involves the conduct of any Business Interest
to tax-exempt income are allocated only trade or business, and the taxpayer
to tax-exempt income. A reasonable Business interest expense could be
does not materially participate in the limited. For more information about
proportion of expenses indirectly activity. Passive activities don't include
allocable to both tax-exempt income limitations on deductions for business
working interests in oil and gas interest, see section 163(j) and
and other income must be allocated to properties. See section 469(c)(3).
each class of income. Line 10-Interest, later.
Note. Material participation standards Transactions Between Related
for estates and trusts haven't been Taxpayers
established by regulations.
Under section 267, a trust that uses the
accrual method of accounting may only
deduct business expenses and interest

-22- Instructions for Form 1041 (2019)

owed to a related party in the year the should be deducted on the appropriate The amount of the investment
payment is included in the income of the line of Schedule C, E, or F (Form 1040 interest deduction may be limited. Use
related party. For this purpose, a related or 1040-SR), the net income or loss Form 4952, Investment Interest
party includes: from which is shown on line 3, 5, or 6 of Expense Deduction, to figure the
1. A grantor and a fiduciary of any Form 1041. allowable investment interest deduction.
trust; Types of interest to include on line 10 If you must complete Form 4952,
2. A fiduciary of a trust and a are: check the box on line 10 of Form 1041
fiduciary of another trust, if the same and attach Form 4952. Then, add the
1. Any investment interest (subject deductible investment interest to the
person is a grantor of both trusts; to limitations—see below); other types of deductible interest and
3. A fiduciary of a trust and a 2. Any qualified residence interest enter the total on line 10.
beneficiary of such trust; (see later); and
4. A fiduciary of a trust and a Qualified residence interest. Interest
3. Any interest payable under paid or incurred by an estate or trust on
beneficiary of another trust, if the same section 6601 on any unpaid portion of
person is a grantor of both trusts; indebtedness secured by a qualified
the estate tax attributable to the value of residence of a beneficiary of an estate
5. A fiduciary of a trust and a a reversionary or remainder interest in or trust is treated as qualified residence
corporation more than 50% in value of property for the period during which an interest if the residence would be a
the outstanding stock of which is extension of time for payment of such qualified residence (that is, the principal
owned, directly or indirectly, by or for tax is in effect. residence or the secondary residence
the trust or by or for a person who is a selected by the beneficiary) if owned by
grantor of the trust; and Limitation on deduction of business
the beneficiary. The beneficiary must
6. An executor of an estate and a interest. Business interest expense is
have a present interest in the estate or
beneficiary of that estate, except for a limited to the sum of business interest
trust or an interest in the residuary of the
sale or exchange to satisfy a pecuniary income, 30% of the adjusted taxable
estate or trust. See Pub. 936, Home
bequest (that is, a bequest of a sum of income and floor plan financing interest.
Mortgage Interest Deduction, for an
money). Business interest expense includes any
explanation of the general rules for
interest paid or accrued on
deducting home mortgage interest.
Line 10—Interest indebtedness properly allocable to a
trade or business. A taxpayer, other See section 163(h)(3) for a definition
Enter the amount of interest (subject to of qualified residence interest and for
limitations) paid or incurred by the than a tax shelter, that meets the gross
receipts test is not required to limit limitations on indebtedness.
estate or trust on amounts borrowed by
the estate or trust, or on debt acquired business interest expense under section Qualified mortgage insurance premi-
by the estate or trust (for example, 163(j). A taxpayer meets the gross ums. Enter (on the worksheet later) the
outstanding obligations from the receipts test if the taxpayer has average qualified mortgage insurance premiums
decedent) that isn't claimed elsewhere annual gross receipts of $26 million or paid under a mortgage insurance
on the return. less for the 3 prior tax years. Gross contract issued after December 31,
receipts include the aggregate gross 2006, in connection with qualified
If the proceeds of a loan were used receipts from all persons treated as a residence acquisition debt that was
for more than one purpose (for example, single employer such as a controlled secured by a principal or secondary
to purchase a portfolio investment and group of corporations, commonly residence. See Prepaid mortgage
to acquire an interest in a passive controlled partnerships or insurance below if the estate or trust
activity), the fiduciary must make an proprietorships, and affiliated service paid any premiums allocable after 2019.
interest allocation according to the rules groups. If the taxpayer fails to meet the If at least one other person was liable for
in Temporary Regulations section gross receipts test, Form 8990, and paid the premiums in connection
1.163-8T. Limitation on Business Interest Expense with the loan, and the premiums were
Under Section 163(j), is generally reported on Form 1098, Mortgage
Don't include interest paid on
required. Interest Statement, include the estate's
indebtedness incurred or continued to
purchase or carry obligations on which Investment interest. Generally, or trust's share of the 2019 premiums on
the interest is wholly exempt from investment interest is interest (including the worksheet later.
income tax. amortizable bond premium on taxable Qualified mortgage insurance is
bonds acquired after October 22, 1986, mortgage insurance provided by the
Personal interest isn't deductible. but before January 1, 1988) that is paid Department of Veterans Affairs, the
Examples of personal interest include or incurred on indebtedness that is Federal Housing Administration, or the
interest paid on: properly allocable to property held for Rural Housing Service (or their
• Revolving charge accounts used to investment. Investment interest doesn't successor organizations), and private
purchase personal use property; include any qualified residence interest, mortgage insurance (as defined in
• Personal notes for money borrowed or interest that is taken into account section 2 of the Homeowners Protection
from a bank, credit union, or other under section 469 in figuring income or Act of 1998 as in effect on December
person; loss from a passive activity. 20, 2006).
• Installment loans on personal use
property; and Generally, net investment income is Mortgage insurance provided by the
• Underpayments of federal, state, or the excess of investment income over Department of Veterans Affairs and the
local income taxes. investment expenses. Investment Rural Housing Service is commonly
expenses (other than interest) are known as a funding fee and guarantee
Interest that is paid or incurred on deductible only to the extent they are fee, respectively. These fees can be
indebtedness allocable to a trade or allowable under section 67(e). deducted fully in 2019 if the mortgage
business (including a rental activity)

Instructions for Form 1041 (2019) -23-

Qualified Mortgage Insurance Premiums Deduction Worksheet Keep for Your Records

1. Enter the total premiums the estate or trust paid in 2019 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. Don’t 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.

insurance contract was issued in 2019. income taxes), real estate taxes, and sales taxes paid for a leased motor
Contact the mortgage insurance issuer personal property taxes. The limitation vehicle.
to determine the deductible amount if it does not apply to foreign income taxes, Do not include sales taxes paid on
is not included in box 5 of Form 1098. and state and local taxes paid or items used in a trade or business. An
accrued in carrying on a trade or estate or trust cannot use the Optional
Prepaid mortgage insurance. If business or for the production of
the estate or trust paid mortgage Sales Tax Tables for individuals in the
income. Instructions for Schedule A (Form 1040
insurance premiums allocable to
periods after 2019, such premiums must Enter any deductible taxes paid or or 1040-SR), Itemized Deductions, to
be allocated over the shorter of: incurred during the tax year that aren't figure its deduction.
• The stated term of the mortgage, or deductible elsewhere on Form 1041. • State and local real property taxes.
• 84 months, beginning with the month Deductible taxes include the following:
Note. The deduction for foreign real
the insurance was obtained. • State and local income taxes. You property taxes is no longer allowed.
The premiums are treated as paid in can deduct state and local income taxes
unless you elect to deduct state and
• State and local personal property
the year to which they are allocated. If taxes.
the mortgage is satisfied before its term, local general sales taxes. You can't
deduct both.
• Foreign or U.S. possession income
no deduction is allowed for the taxes. You may want to take a credit for
unamortized balance. See Pub. 936 for • State and local general sales taxes. the tax instead of a deduction. See the
details. These allocation rules do not You can elect to deduct state and local
instructions for Schedule G, Part I,
apply to qualified mortgage insurance general sales taxes instead of state and
line 2a, later, for more details.
provided by the Department of Veterans local income taxes. Generally, you can
elect to deduct the actual state and local
• The generation-skipping transfer
Affairs or the Rural Housing Service (or (GST) tax imposed on income
their successor organizations). general sales taxes (including
distributions.
compensating use taxes) you paid in
Limit on the amount that is 2019 if the tax rate was the same as the Don't deduct:
deductible. The estate or trust cannot general sales tax rate. However, sales
deduct mortgage insurance premiums if
• Federal income taxes;
taxes on food, clothing, medical • Estate, inheritance, legacy,
the estate's or trust's AGI is more than supplies, and motor vehicles are succession, and gift taxes;
$109,000. If the estate's or trust's AGI is deductible as a general sales tax even if
more than $100,000, its deduction is
• Federal duties and excise taxes; or
the tax rate was less than the general • Foreign real property taxes.
limited and you must use the Qualified sales tax rate. Sales taxes on motor
Mortgage Insurance Premiums vehicles are also deductible as a Line 12—Fiduciary Fees
Deduction Worksheet, above, to figure general sales tax if the tax rate was Enter the deductible fees paid or
the deduction. See Adjusted gross more than the general sales tax rate, but incurred to the fiduciary for
income (AGI), earlier, for information on the tax is deductible only up to the administering the estate or trust during
figuring AGI. amount of tax that would have been the tax year.
Line 11—Taxes imposed at the general sales tax rate.
Motor vehicles include cars, Fiduciary expenses include probate
The deduction for state and motorcycles, motor homes, recreational court fees and costs, fiduciary bond
! local taxes is limited to $10,000. vehicles, sport utility vehicles, trucks, premiums, legal publication costs of
CAUTION The limitation applies to the total vans, and off-road vehicles. Also notices to creditors or heirs, the cost of
of your state and local income taxes (or include any state and local general certified copies of the decedent's death
general sales taxes, if elected instead of certificate, and costs related to fiduciary
accounts.

-24- Instructions for Form 1041 (2019)

 Fiduciary fees deducted on an estate or non-grantor trust in Investment advisory fees. Fees for
TIP Form 706 can't be deducted on connection with the administration of the investment advice, including any related
Form 1041. estate or trust and would not have been services that would be provided to any
incurred if the property were not held in individual investor as part of an
Note. Fiduciary fees are allowable such trust or estate. investment advisory fee, are incurred
under section 67(e) if they are costs that In determining whether a cost is commonly or customarily by a
are paid or incurred in connection with deductible by an estate or non-grantor hypothetical individual investor and are
the administration of an estate or a trust it must be determined whether the not deductible. However, certain
non-grantor trust that would not have cost would be “commonly or incremental costs of investment advice
been incurred if the property were not customarily” incurred by a hypothetical beyond the amount that normally would
held in such estate or trust. See Notice individual owning the same property. If be charged to an individual investor are
2018-61 and Regulations section 1.67-4 the cost would be deductible by a deductible.
available at IRS.gov/irb/ 2014-22_IRB/ hypothetical individual, it is not
ar05.html, amended at IRS.gov/irb/ An incremental cost is a special,
deductible by the estate or non-grantor additional charge that is added solely
2014–32_IRB/ar06.html for more trust.
information. because the investment advice is
It is the type of product or service rendered to a trust or estate rather than
Line 14—Attorney, Accountant, rendered to the estate or non-grantor to an individual, including balancing
and Return Preparer Fees trust in exchange for the cost, rather beyond the usual varying interests of
Expenses for preparation of fiduciary than the description of the cost of that current beneficiaries and
income tax returns, the decedent's final product or service that is determinative. remaindermen. The deductible portion
individual income tax returns, and all Costs that are incurred commonly or of the investment advisory fees is
estate and generation-skipping transfer customarily by individuals include costs limited to the amount of those fees, if
tax returns, are fully deductible. incurred in defense of a claim against any, that exceeds the fees normally
However, expenses for preparing all the estate, the decedent, or the charged to an individual investor. See
other tax returns, including gift tax non-grantor trust that are unrelated to Regulations section 1.67-4(b)(4).
returns, are considered costs commonly the existence, validity, or administration Bundled fees. If an estate or
and customarily incurred by individuals of the estate or trust. These amounts non-grantor trust pays a single fee,
and are not deductible. For more are not allowable deductions. commission, or other expense, such as
information, see Notice 2018-61 and Ownership costs. Ownership costs a fiduciary's commission, attorney's fee,
Regulations section 1.67-4. are costs that are chargeable to or or accountant's fee for both costs that
incurred by an owner of property simply are incurred commonly or customarily
Line 15a—Other Deductions by individuals and costs (other than a de
by reason of being the owner of the
Attach your own statement, listing by minimis amount) that are not incurred
property. These costs are commonly or
type and amount all allowable commonly or customarily by individuals,
customarily incurred by a hypothetical
deductions that aren't deductible then (except to the extent provided
individual owner of such property and
elsewhere on Form 1041. otherwise by guidance published in the
are not deductible by an estate or
Allowable deductions include all non-grantor trust. Under section 67(b), Internal Revenue Bulletin) the single
deductions listed in section 67(b) they include, but are not limited to, fee, commission, or other expense
(including estate taxes attributable to condominium fees, insurance (bundled fee) must be allocated,
IRD under section 691(c)), and other premiums, maintenance and lawn between the costs that are incurred
costs allowable under section 67(e) services, automobile registration and commonly or customarily by individuals,
paid or incurred in connection with the insurance costs, and partnership costs such costs not being deductible, and
administration of the estate or trust that deemed to be passed through to and costs that are not incurred commonly or
would not have been incurred if the reportable by a partner. Other expenses customarily by individuals, such costs
property were not held in the estate or incurred merely by reason of the being deductible.
trust. ownership of property may be fully There is an exception to the
deductible under other provisions of the allocation rule if a bundled fee is not
Don't include any losses on
Code. computed on an hourly basis. In this
worthless bonds and similar obligations
situation, only the portion of that fee that
and nonbusiness bad debts. Report Appraisal fees. Appraisal fees
is attributable to investment advice is
these losses as applicable on Form incurred to determine the fair market
not deductible. The remaining portion is
8949, Sales and Other Dispositions of value of assets as of the decedent's
deductible.
Capital Assets. date of death (or the alternate valuation
date), to determine value for purposes Out-of-pocket expenses billed to the
Don't deduct medical or funeral of making distributions, or as otherwise estate or non-grantor trust are treated
expenses on Form 1041. Medical required to properly prepare the estate's as separate from the bundled fee and
expenses of the decedent paid by the or trust's tax returns, or a are not subject to allocation.
estate may be deductible on the generation-skipping transfer tax return, Estates and non-grantor trusts
decedent's income tax return for the are not incurred commonly or cannot deduct payments made from the
year incurred. See section 213(c). customarily by an individual and are bundled fee to third parties if such
Funeral expenses are deductible only deductible. The cost of appraisals for payments would not have been
on Form 706. other purposes (for example, insurance) deductible if they had been paid directly
Other costs paid or incurred by es- is commonly or customarily incurred by by the estate or non-grantor trust.
tates and non-grantor trusts. Under individuals and is not an allowable Any reasonable method may be used
section 67(e), deductions are allowable deduction. to allocate a bundled fee, including
for costs which are paid or incurred by

Instructions for Form 1041 (2019) -25-

without limitation the allocation of a Report the beneficiary's apportioned tax year that the income is included that
portion of a fiduciary commission that is share of deductions on Schedule K-1 portion of the estate tax imposed on the
a bundled fee to investment advice. For (Form 1041), box 9. decedent's estate that is attributable to
more information, see Regulations Itemize each beneficiary's the inclusion of the IRD in the
section 1.67-4(c)(4). apportioned share of the deductions decedent's estate. For an example of
Note. The reasonable method and report them in the appropriate box the computation, see Regulations
standard does not apply to determine of Schedule K-1 (Form 1041). section 1.691(c)-1 and Pub. 559.
the portion of the bundled fee If any amount properly paid, credited,
attributable to payments made to third Line15b—Net Operating Loss
or required to be distributed by an
parties for commonly or customarily Deduction estate or trust to a beneficiary consists
incurred by an individual or to any other An estate or trust is allowed a net of IRD received by the estate or trust,
separately assessed expense operating loss deduction (NOLD) under don't include such amounts in
commonly or customarily incurred by an section 172. determining the estate tax deduction for
individual, because those payments and the estate or trust. Figure the deduction
expenses are readily identifiable without If you claim a NOLD for the estate or
trust, figure the deduction on a separate on a separate sheet. Attach the sheet to
any discretion on the part of the your return.
fiduciary or return preparer. sheet and attach it to the return.
If you claim a deduction for
For more information, see Line 18—Income Distribution estate tax attributable to
Regulations 1.67-4. Deduction !
CAUTION qualified dividends or capital

If the estate or trust was required to gains, you may have to adjust the
Other deductions reported on distribute income currently or if it paid, amount on Form 1041, page 1,
line 15a. credited, or was required to distribute line 2b(2), or Schedule D (Form 1041),
any other amounts to beneficiaries line 22.
Bond premium(s). For taxable bonds during the tax year, complete
acquired before October 23, 1986, if the Schedule B to determine the estate's or Also, a deduction is allowed for the
fiduciary elected to amortize the trust's income distribution deduction. GST tax imposed as a result of a
premium, report the amortization on this However, if you are filing for a pooled taxable termination or a direct skip
line. If you made the election to amortize income fund, don't complete occurring as a result of the death of the
the premium, the basis in the taxable Schedule B. Instead, attach a statement transferor. See section 691(c)(3). Enter
bond must be reduced by the amount of to support the computation of the the estate's or trust's share of these
amortization. income distribution deduction. For more deductions on line 19.
For tax-exempt bonds, you can't information, see Pooled Income Funds,
deduct the premium that is amortized. earlier.
Line 20—Qualified Business
Although the premium can't be Income Deduction
deducted, you must amortize the If the estate or trust claims an income To figure your Qualified Business
tax-exempt bond by the amount of distribution deduction, complete and Income Deduction, use Form 8995,
premium amortized. attach: Qualified Business Income Deduction
• Part I (through line 24) and Part II of Simplified Computation, or Form
For more information, see section Schedule I (Form 1041) to refigure the
171 and Pub. 550. 8995-A, Qualified Business Income
deduction on a minimum tax basis, and Deduction, as applicable.
If you claim a bond premium • Schedule K-1 (Form 1041) for each
deduction for the estate or trust, figure beneficiary to which a distribution was Use Form 8995 if:
the deduction on a separate sheet and made or required to be made.
attach it to Form 1041.
• You have qualified business income
Cemetery perpetual care fund. On (loss), REIT dividends, or PTP income
Casualty and theft losses. Use Form line 18, deduct the amount, not more (loss),
4684, Casualties and Thefts, to figure than $5 per gravesite, paid for • Your 2019 taxable income before the
any deductible casualty and theft maintenance of cemetery property. To qualified business income deduction is
losses. the right of the entry space for line 18, less than or equal to $160,700, and
Estate's or trust's share of amortiza- enter the number of gravesites. Also • You aren’t a patron in a specified
write “Section 642(i) trust” in agricultural or horticultural cooperative.
tion, depreciation, and depletion not
claimed elsewhere. If you can't parentheses after the trust's name at the
top of Form 1041. You don't have to If you don’t meet these requirements,
deduct the estate's or trust's
complete Schedules B of Form 1041 use Form 8995-A. See instructions for
apportioned share of amortization,
and K-1 (Form 1041). Forms 8995 and 8995-A for more
depreciation, and depletion as rent or
Don't enter less than zero on line 18. information for figuring and reporting
royalty expenses on Schedule E (Form
your QBI deduction.
1040 or 1040-SR), or as business or
Line 19—Estate Tax Deduction
farm expenses on Schedule C, or F Note. Report the beneficiary’s
(Form 1040 or 1040-SR), itemize the (Including Certain
apportioned share of items of qualified
estate's or trust's apportioned share of Generation-Skipping Transfer business income (loss) subject to
the deductions on an attached sheet Taxes) beneficiary specific determinations, W-2
and include them on line 15a. If the estate or trust includes IRD in its wages, unadjusted basis immediately
gross income, and such amount was after acquisition (UBIA) of qualified
Note. Don't report the beneficiary's
included in the decedent's gross estate property, qualified REIT dividends, and
apportioned share of depreciation,
for estate tax purposes, the estate or qualified publicly traded partnership
depletion, and amortization on line 15a.
trust is allowed to deduct in the same income on a statement attached to

-26- Instructions for Form 1041 (2019)

Schedule K-1 (Form 1041). See the carryback period only applies to the Note. The penalty may be waived or
Instructions for Schedule K-1 (Form portion of an NOL attributable to a reduced under certain conditions. See
1041), box 14, code I, later. farming loss. For more information, see Pub. 505, Tax Withholding and
Pub. 536, Net Operating Losses (NOLs) Estimated Tax, and the Instructions for
Line 21—Exemption for Individuals, Estates, and Trusts. Form 2210 for details.
Decedents' estates. A decedent's Complete Schedule A of Form 1045 Line 28—Tax Due
estate is allowed a $600 exemption. to figure the amount of the NOL that is
available for carryback or carryover. You must pay the tax in full when the
Trusts required to distribute all in- return is filed. You may pay by EFTPS.
come currently. A trust whose Use Form 1045 or file an amended
return to apply for a refund based on an For more information about EFTPS, see
governing instrument requires that all Electronic Deposits, earlier. Also, you
income be distributed currently is NOL carryback. For more information,
see the Instructions for Form 1045, may pay by check or money order or by
allowed a $300 exemption, even if it credit or debit card.
distributed amounts other than income Application for Tentative Refund.
during the tax year. On the termination of the estate or To pay by check or money order.
trust, any unused NOL carryover that If you pay by check or money order:
Qualified disability trusts. A qualified • Make it payable to “United States
would be allowable to the estate or trust
disability trust is allowed a $4,200 Treasury”,
in a later tax year, but for the
exemption. This amount is not subject to • Make sure the name of the estate or
termination, is allowed to the
phaseout. trust appears on the payment,
beneficiaries succeeding to the property
A qualified disability trust is any trust: of the estate or trust. See the • Write the estate’s or trust’s EIN and
1. Described in 42 U.S.C. 1396p(c) instructions for Schedule K-1 (Form “2019 Form 1041” on the payment,
(2)(B)(iv) and established solely for the 1041), box 11, codes D and E, later. • Consider completing the 2019 Form
benefit of an individual under 65 years 1041-V, and
Excess deductions on termination. If • Enclose, but don't attach, the
of age who is disabled, and the estate or trust has for its final year payment (and Form 1041-V, if
2. All of the beneficiaries of which deductions (excluding the charitable completed) with Form 1041.
are determined by the Commissioner of deduction and exemption) in excess of
Social Security to have been disabled its gross income, the excess is allowed Note. The IRS can't accept a single
for some part of the tax year within the as an itemized deduction to the check (including a cashier's check) for
meaning of 42 U.S.C. 1382c(a)(3). beneficiaries succeeding to the property amounts of $100,000,000 ($100 million)
of the estate or trust. In general, an or more. If you're sending $100 million
A trust will not fail to meet item 2 or more by check, you'll need to spread
above just because the trust's corpus unused NOL carryover that is allowed to
beneficiaries (as explained above) can't the payments over two or more checks
may revert to a person who isn't with each check made out for an
disabled after the trust ceases to have also be treated as an excess deduction.
However, if the final year of the estate or amount less than $100 million. The
any disabled beneficiaries. $100 million or more amount limit
trust is also the last year of the NOL
All other trusts. A trust not described carryover period, the NOL carryover not doesn't apply to other methods of
above is allowed a $100 exemption. absorbed in that tax year by the estate payment (such as electronic payments),
or trust is included as an excess so please consider paying by means
Tax and Payments deduction. See the instructions for other than checks.
Schedule K-1 (Form 1041), box 11, To pay by credit or debit card.
Line 23—Taxable Income code A, later. For information on paying your taxes
Minimum taxable income. Line 23 Line 25—2019 Net 965 Tax electronically, including by credit or
can't be less than the larger of: debit card, go to IRS.gov/E-pay.
• The inversion gain of the estate or Liability Paid
trust, as figured under section 7874, if If you made a payment with respect to a Line 30a—Credited to 2020
the estate or trust is an expatriated 2019 net 965 tax liability, enter the Estimated Tax
entity or a partner in an expatriated amount of the payment from Form Enter the amount from line 29 that you
entity, or 965-A, Part II, column (k), line 3. want applied to the estate's or trust's
• The sum of the excess inclusions of 2020 estimated tax.
the estate or trust from Schedule Q Note. Include on line 25 amounts paid
(Form 1066), Quarterly Notice to related to the net 965 tax liability
Residual Interest Holder of REMIC attributable to the S portion of an ESBT. Schedule A—Charitable
See Schedule G, Part I, Line 4 -Tax on
Taxable Income or Net Loss Allocation,
ESBTs, later, for more information.
Deduction
line 2c.
Line 27—Estimated Tax Penalty General Instructions
Net operating loss (NOL). If line 23
(figured without regard to the minimum If line 27 is at least $1,000 and more Generally, any part of the gross income
taxable income rule stated above) is a than 10% of the tax shown on Form of an estate or trust (other than a simple
loss, the estate or trust may have an 1041, or the estate or trust underpaid its trust) that, under the terms of the will or
NOL. Don't include the deductions 2019 estimated tax liability for any governing instrument, is paid (or treated
claimed on lines 13, 18, and 21 when payment period, it may owe a penalty. as paid) during the tax year for a
figuring the amount of the NOL. See Form 2210 to determine whether charitable purpose specified in section
the estate or trust owes a penalty and to 170(c) is allowed as a deduction to the
Generally, an NOL can only be estate or trust. It isn't necessary that the
carried forward to subsequent years figure the amount of the penalty.
charitable organization be created or
and cannot be carried back. The 2-year organized in the United States.

Instructions for Form 1041 (2019) -27-

 A pooled income fund or a section amended return and file it at the same Line 2—Tax-Exempt Income
4947(a)(1) nonexempt charitable trust address you used for your original Allocable to Charitable
treated as a private foundation must return.
attach a separate sheet to Form 1041
Contributions
For more information about the
instead of using Schedule A of Form charitable deduction, see section 642(c) Any estate or trust that pays or sets
1041 to figure the charitable deduction. and related regulations. aside any part of its income for a
charitable purpose must reduce the
Additional return to be filed by Specific Instructions deduction by the portion allocable to
trusts. Trusts, other than split-interest
Line 1—Amounts Paid or any tax-exempt income. If the governing
trusts or nonexempt charitable trusts,
instrument specifically provides as to
that claim a charitable deduction also Permanently Set Aside for the source from which amounts are
file Form 1041-A unless the trust is Charitable Purposes From Gross paid, permanently set aside, or to be
required to distribute currently to the
Income used for charitable purposes, the
beneficiaries all the income for the year
Enter amounts that were paid for a specific provisions control. In all other
determined under section 643(b) and
charitable purpose out of the estate's or cases, determine the amount of
related regulations.
trust's gross income, including any tax-exempt income allocable to
Pooled income funds and charitable charitable contributions by multiplying
lead trusts also file Form 5227. See capital gains that are attributable to
income under the governing instrument line 1 by a fraction, the numerator of
Form 5227 for information about any which is the total tax-exempt income of
exceptions. or local law. Include amounts paid
during the tax year from gross income the estate or trust, and the denominator
Election to treat contributions as received in a prior tax year, but only if no of which is the gross income of the
paid in the prior tax year. The deduction was allowed for any prior tax estate or trust. Don't include in the
fiduciary of an estate or trust may elect year for these amounts. denominator any losses allocated to
to treat as paid during the tax year any corpus.
amount of gross income received during Estates, and certain trusts, may claim
that tax year or any prior tax year that a deduction for amounts permanently Line 4—Capital Gains for the Tax
was paid in the next tax year for a set aside for a charitable purpose from Year Allocated to Corpus and Paid
charitable purpose. gross income. Such amounts must be or Permanently Set Aside for
For example, if a calendar year permanently set aside during the tax Charitable Purposes
estate or trust makes a qualified year to be used exclusively for religious,
charitable contribution on February 7, charitable, scientific, literary, or Enter the total of all capital gains for the
2020, from income earned in 2019 or educational purposes, or for the tax year that are:
prior, then the fiduciary can elect to treat prevention of cruelty to children or • Allocated to corpus, and
the contribution as paid in 2019. animals, or for the establishment, • Paid or permanently set aside for
acquisition, maintenance, or operation charitable purposes.
To make the election, the fiduciary
must file a statement with Form 1041 for of a public cemetery not operated for
the tax year in which the contribution is profit. Line 6—Section 1202 Exclusion
treated as paid. This statement must Allocable to Capital Gains Paid or
include: For a trust to qualify, the trust may Permanently Set Aside for
not be a simple trust, and the set aside
1. The name and address of the Charitable Purposes
amounts must be required by the terms
fiduciary; If the exclusion of gain from the sale or
of a trust instrument that was created on
2. The name of the estate or trust; or before October 9, 1969. exchange of qualified small business
3. An indication that the fiduciary is (QSB) stock was claimed, enter the part
making an election under section 642(c) Further, the trust instrument must of the gain included on Schedule A,
(1) for contributions treated as paid provide for an irrevocable remainder lines 1 and 4, that was excluded under
during such tax year; interest to be transferred to or for the section 1202.
4. The name and address of each use of an organization described in
section 170(c); or the trust must have
organization to which any such
been created by a grantor who was at
Schedule B—Income
contribution is paid; and
all times after October 9, 1969, under a Distribution Deduction
5. The amount of each contribution
mental disability to change the terms of General Instructions
and date of actual payment or, if
the trust.
applicable, the total amount of If the estate or trust was required to
contributions paid to each organization distribute income currently or if it paid,
during the next tax year, to be treated as Also, certain testamentary trusts that
were established by a will that was credited, or was required to distribute
paid in the prior tax year. any other amounts to beneficiaries
executed on or before October 9, 1969,
The election must be filed by the due may qualify. See Regulations section during the tax year, complete
date (including extensions) for Form 1.642(c)-2(b). Schedule B to determine the estate's or
1041 for the next tax year. If the original trust's income distribution deduction.
return was filed on time, you may make Don't include any capital gains for the Note. Use Schedule I (Form 1041) to
the election on an amended return filed tax year allocated to corpus and paid or compute the DNI and income
no later than 6 months after the due permanently set aside for charitable distribution deduction on a minimum tax
date of the return (excluding purposes. Instead, enter these amounts basis.
extensions). Write “Filed pursuant to on line 4.
section 301.9100-2” at the top of the

-28- Instructions for Form 1041 (2019)

Pooled income funds. Don't complete Step 2. Subtract the Step 1 total from Reduce the amount on line 5 by any
Schedule B for these funds. Instead, the amount of tax-exempt interest allocable section 1202 exclusion.
attach a separate statement to support (including exempt-interest dividends)
the computation of the income received. Line 8—Accounting Income
distribution deduction. See Pooled If you are filing for a decedent's estate
Income Funds, earlier, for more Section 212 expenses that are
or a simple trust, skip this line. If you are
information. directly allocable to tax-exempt interest
filing for a complex trust, enter the
are allocated only to tax-exempt
Separate share rule. If a single trust or income for the tax year determined
interest. A reasonable proportion of
an estate has more than one under the terms of the governing
section 212 expenses that are indirectly
beneficiary, and if different beneficiaries instrument and applicable local law.
allocable to both tax-exempt interest
have substantially separate and Don't include extraordinary dividends or
and other income must be allocated to
independent shares, their shares are taxable stock dividends determined
each class of income.
treated as separate trusts or estates for under the governing instrument and
the sole purpose of determining the DNI applicable local law to be allocable to
Figure the interest expense allocable corpus.
allocable to the respective beneficiaries.
to tax-exempt interest according to the
If the separate share rule applies, guidelines in Rev. Proc. 72-18, 1972-1
figure the DNI allocable to each C.B. 740. Lines 9 and 10
beneficiary on a separate sheet and Don't include any:
attach the sheet to this return. Any See Regulations sections 1.643(a)-5 • Amount that was deducted on the
deduction or loss that is applicable and 1.265-1 for more information. prior year's return that was required to
solely to one separate share of the trust be distributed in the prior year;
or estate isn't available to any other • Amount that is paid or permanently
share of the same trust or estate. Line 3
set aside for charitable purposes or
For more information, see section Include all capital gains, whether or not otherwise qualifying for the charitable
663(c) and related regulations. distributed, that are attributable to deduction; or
income under the governing instrument • Amount that is properly paid or
Withholding of tax on foreign per- or local law. For example, if the trustee credited as a gift or bequest of a specific
sons. The fiduciary may be liable for distributed 50% of the current year's amount of money or specific property.
withholding tax on distributions to capital gains to the income beneficiaries
beneficiaries who are foreign persons. (and reflects this amount in column (1), Note. An amount that can be paid or
For more information, see Pub. 515, line 19 of Schedule D (Form 1041)), but credited only from income isn't
Withholding of Tax on Nonresident under the governing instrument all considered a gift or bequest. Also, to
Aliens and Foreign Entities, and Forms capital gains are attributable to income, qualify as a gift or bequest, the amount
1042 and 1042-S. then include 100% of the capital gains must be paid in three or fewer
Specific Instructions on line 3. If the amount on Schedule D installments.
(Form 1041), line 19, column (1), is a
Line 1—Adjusted Total Income net loss, enter zero.
Line 9—Income Required To Be
Generally, enter on line 1, Schedule B,
If the exclusion of gain from the sale Distributed Currently
the amount from line 17 on page 1 of
Form 1041. However, if both line 4 and or exchange of QSB stock was claimed, Line 9 is to be completed by all simple
line 17 on page 1 of Form 1041 are don't reduce the gain on line 3 by any trusts as well as complex trusts and
losses, enter on line 1, Schedule B, the amount excluded under section 1202. decedent's estates that are required to
smaller of those losses. If line 4 is zero distribute income currently, whether it is
or a gain and line 17 is a loss, enter zero Line 5 distributed or not. The determination of
on line 1, Schedule B. whether trust income is required to be
In figuring the amount of long-term and distributed currently depends on the
If you are filing for a simple trust, short-term capital gain for the tax year terms of the governing instrument and
subtract from adjusted total income any included on Schedule A, line 1, the the applicable local law.
extraordinary dividends or taxable stock specific provisions of the governing
dividends included on page 1, line 2, instrument control if the instrument The line 9 distributions are referred to
and determined under the governing specifically provides as to the source as first tier distributions and are
instrument and applicable local law to from which amounts are paid, deductible by the estate or trust to the
be allocable to corpus. permanently set aside, or to be used for extent of the DNI. The beneficiary
charitable purposes. includes such amounts in his or her
Line 2—Adjusted Tax-Exempt income to the extent of his or her
In all other cases, determine the proportionate share of the DNI.
Interest amount to enter by multiplying line 1 of
To figure the adjusted tax-exempt Schedule A by a fraction, the numerator Line 10—Other Amounts Paid,
interest: of which is the amount of net capital
gains that are included in the accounting
Credited, or Otherwise Required
Step 1. Add tax-exempt interest income of the estate or trust (that is, not To Be Distributed
income on line 2 of Schedule A, any allocated to corpus) and are distributed Line 10 is to be completed only by a
expenses allowable under section 212 to charities, and the denominator of decedent's estate or complex trust.
allocable to tax-exempt interest, and which is all items of income (including These distributions consist of any other
any interest expense allocable to the amount of such net capital gains) amounts paid, credited, or required to
tax-exempt interest. included in the DNI.

Instructions for Form 1041 (2019) -29-

be distributed and are referred to as purposes of figuring the allowable 2019 Tax Rate Schedule
second tier distributions. Such amounts income distribution deduction, the DNI If taxable
include annuities to the extent not paid (line 7) is figured without regard to any income
out of income, mandatory and tax-exempt interest. is:
discretionary distributions of corpus, But not
Of the
and distributions of property in kind. If tax-exempt interest is the only Over—
over—
Its tax is: amount
tax-exempt income included in the total over—
$0 $2,600 10% $0
If Form 1041-T was timely filed to distributions (line 11), and the DNI 2,600 9,300 $260 + 24% 2,600
elect to treat estimated tax payments as (line 7) is less than or equal to line 11, 9,300 12,750 1,868 + 35% 9,300
made by a beneficiary, the payments then enter on line 12 the amount from 12,750 ----- 3,075.50 + 37% 12,750
are treated as paid or credited to the line 2.
beneficiary on the last day of the tax
year and must be included on line 10. If tax-exempt interest is the only
Schedule D (Form 1041) and Sched-
tax-exempt income included in the total
ule D Tax Worksheet. Use Part V of
Unless a section 643(e)(3) election is distributions (line 11), and the DNI is
Schedule D (Form 1041) or the
made, the value of all noncash property more than line 11 (that is, the estate or
Schedule D Tax Worksheet, whichever
actually paid, credited, or required to be trust made a distribution that is less than
is applicable, to figure the estate's or
distributed to any beneficiaries is the the DNI), then figure the adjustment by
trust's tax if the estate or trust files
smaller of: multiplying line 2 by a fraction, the
Schedule D (Form 1041) and has:
numerator of which is the total
1. The estate's or trust's adjusted
distributions (line 11), and the • A net capital gain and any taxable
basis in the property immediately before income, or
denominator of which is the DNI (line 7).
distribution, plus any gain or minus any
Enter the result on line 12. • Qualified dividends on line 2b(2) of
loss recognized by the estate or trust on Form 1041 and any taxable income.
the distribution (basis of beneficiary), or If line 11 includes tax-exempt income Qualified Dividends Tax Worksheet.
2. The FMV of such property. other than tax-exempt interest, figure If you don't have to complete Part I or
line 12 by subtracting the total of the Part II of Schedule D and the estate or
If a section 643(e)(3) election is made
following from tax-exempt income trust has an amount entered on
by the fiduciary, then the amount
included on line 11: line 2b(2) of Form 1041 and any taxable
entered on line 10 will be the FMV of the
property. 1. The charitable contribution income (line 23), then figure the estate's
deduction allocable to such tax-exempt or trust's tax using the worksheet, later,
A fiduciary of a complex trust or a income, and and enter the tax on line 1a.
decedent's estate may elect to treat any 2. Expenses allocable to tax-exempt Note. You must reduce the amount you
amount paid or credited to a beneficiary income. enter on line 2b(2) of Form 1041 by the
within 65 days following the close of the
Expenses that are directly allocable portion of the section 691(c) deduction
tax year as being paid or credited on the
to tax-exempt income are allocated only claimed on line 19 of Form 1041 if the
last day of that tax year. To make this
to tax-exempt income. A reasonable estate or trust received qualified
election, see the instructions for Other
proportion of expenses indirectly dividends that were IRD.
Information, Question 6, later.
allocable to both tax-exempt income Line 1c—AMT. Attach Schedule I
The beneficiary includes the amounts and other income must be allocated to (Form 1041) if any of the following
on line 10 in his or her income only to each class of income. apply.
the extent of his or her proportionate • The estate or trust must complete
share of the DNI. Schedule B.
Schedule G—Tax • The estate or trust claims a credit on
Complex trusts. If the second tier
distributions exceed the DNI allocable to Computation and line 2b, 2c, or 2d of Schedule G.
the second tier, the trust may have an Payments • The estate's or trust's share of
accumulation distribution. See the alternative minimum taxable income
line 11 instructions below. Part I – Tax Computation (line 27 of Schedule I (Form 1041))
exceeds $25,000.
Line 1a Enter the amount from line 54 of
Line 11—Total Distributions Schedule I (Form 1041) on line 1c.
2019 tax rate schedule. For tax years
If line 11 is more than line 8, and you are beginning in 2019, figure the tax using Line 1d—Total. If the amount from
filing for a complex trust that has the following Tax Rate Schedule and line 14 of Form 8978 is a positive
previously accumulated income, see the enter the tax on line 1a. However, see amount, include it in the total reported
instructions for Schedule J, later, to see the Instructions for Schedule D (Form on line 1d.
if you must complete Schedule J (Form 1041) and the Qualified Dividends Tax
1041). Worksheet, later. Line 2a—Foreign Tax Credit
Attach Form 1116, Foreign Tax Credit
Line 12—Adjustment for (Individual, Estate, or Trust), if you elect
Tax-Exempt Income to claim credit for income or profits
taxes paid or accrued to a foreign
In figuring the income distribution
country or a U.S. possession. The
deduction, the estate or trust isn't
estate or trust may claim credit for that
allowed a deduction for any item of the
part of the foreign taxes not allocable to
DNI that isn't included in the gross
the beneficiaries (including charitable
income of the estate or trust. Thus, for

-30- Instructions for Form 1041 (2019)

Qualified Dividends Tax Worksheet—Schedule G, Part I, line 1a Keep for Your Records
Caution: Don’t use this worksheet if the estate or trust must complete Schedule D (Form 1041).
1. Enter the amount from Form 1041, line 23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.
2. Enter the amount from Form 1041, line 2b(2) . . . . . . . . 2.
3. If you are claiming investment interest expense on Form
4952, enter the amount from line 4g; otherwise
enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.
4. Subtract line 3 from line 2. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . 4.
5. Subtract line 4 from line 1. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . 5.
6. Enter the smaller of the amount on line 1 or $2,650 .................... 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 $12,950 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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 2019 Tax Rate Schedule . . . . . . . . . . . . . . . . . . . . . 20.
21. Add lines 15, 19 and 20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.
22. Figure the tax on the amount on line 1. Use the 2019 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.

beneficiaries). Enter the estate's or trust's only source of a credit is from a a tax credit bond. Also, be sure to
trust's share of the credit on line 2a. See pass-through entity and the beneficiary include the credit in interest income.
Pub. 514, Foreign Tax Credit for isn't entitled to an allocable share of a
Individuals, for details. credit, you aren't required to complete Line 2e—Total Credits
the source form for that credit. However, To claim a credit allowable to the estate
Line 2b—General Business certain credits have limitations and or trust other than the credits entered on
Credit special computations that may require lines 2a through 2d, include the
you to complete the source form. See allowable credit in the total for line 2e.
Don't include any amounts that
the Instructions for Form 3800 for more Complete and attach the appropriate
! are allocated to a beneficiary.
CAUTION Credits that are allocated
information. form and write the form number and
amount of the allowable credit on the
between the estate or trust and the Line 2c—Credit for Prior Year dotted line to the left of the entry space.
beneficiaries are listed in the
Minimum Tax
instructions for Schedule K-1, box 13, If the amount from line 14 of Form
later. Generally, these credits are An estate or trust that paid AMT in a 8978 is a negative amount, treat it as a
apportioned on the basis of the income previous year may be eligible for a positive amount and add it to the total
allocable to the estate or trust and the minimum tax credit in 2019. See Form reported on line 2e.
beneficiaries. 8801, Credit for Prior Year Minimum
Tax—Individuals, Estates, and Trusts. Line 4—Tax on the ESBT
Enter on line 2b the estate's or trust's Portion of the Trust
total general business credit allowed for Line 2d—Bond Credits
Complete and attach Form 8912, Credit Use the ESBT Tax Worksheet ESBT
the current year from Form 3800. The
to Holders of Tax Credit Bonds, if the Tax Worksheet, later, to figure the ESBT
estate or trust must file Form 3800 to
estate or trust claims a credit for holding tax. Enter the amount from line 17 of the
claim any of the general business
ESBT Worksheet on line 4.
credits. Generally, if the estate's or

Instructions for Form 1041 (2019) -31-

ESBT Tax Worksheet—Schedule G, Part I, line 4 Keep for Your Records
Electing Small Business Trust Tax Computation
1. Ordinary income (loss) from Schedule K-1 (Form 1120-S) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.
2a. Total ordinary dividends from Schedule K-1 (Form 1120-S) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2a.
2b. Qualified Dividends from Schedule K-1 (Form 1120-S) . . . . . . . . . . . . . . . . . . 2b.
3. Capital gain. See instructions and attach Schedule D (Form 1041) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.
4. Other Income (loss) reported on Schedule K-1 (Form 1120-S) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.
5. Total income. Add lines 1, 2a, 3, and 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.
6. Other allowable deductions from Schedule K-1 (Form 1120-S) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.
7. Administrative expenses (allocated to the S portion) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.
8. State and local income taxes (allocated to the S portion) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.
9. Interest expense on indebtedness to acquire S corporation stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.
10. Charitable contribution deduction. Check here if deduction includes prior year carryover [ ] . . . . . . 10.
11. Qualified business income deduction (S portion). Attach Form 8995 or 8995-A . . . . . . . . . . . . . . . . . 11.
12. Total deductions. Add lines 6 through 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.
13. Taxable income (S portion). Subtract line 12 from 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.
14a. Tax: Tax on taxable income. See instructions. . . . . . . . . . . . . . . . . . . . . . . . . . 14a.
14b. Alternative minimum tax (S portion). Attach Schedule I (Form 1041) . . . . . . . 14b.
14c. Total Add lines 14a and 14b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14c.
.
15a. Foreign tax credit (S portion). Attach Form 1116 . . . . . . . . . . . . . . . . . . . . . . . . 15a.
15b. General business credit (S portion). Attach Form 3800 . . . . . . . . . . . . . . . . . . 15b.
15c. Credit for prior-year minimum tax (S portion). Attach Form 8801 . . . . . . . . . . . 15c.
15d. Bond credits (S portion). Attach Form 8912 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15d.
15e. Total credits Add lines 15a through 15d . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15e.
.
16. Recapture taxes (S portion). Check if from: Form 4255 [ ] or Form 8611 [ ] . . . . . . . . . . . . . . . . . . 16.
17. Total ESBT tax. Subtract line 15e from line 14c and add line 16. Enter here and on Form 1041,
Schedule G, Part I, line 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.

See Electing Small Business Trusts Elections under section 965(i). If “ICR” on the dotted line to the left of the
(ESBTs), earlier, for the special tax you made a section 965(i) election, entry space.
computation rules that apply to the include on the attachment the S
Recapture of low-income housing
portion of an ESBT consisting of stock corporation shareholder total deferred
credit. If the estate or trust disposed of
in one or more S corporations. net 965 tax liability from Form 965-A,
property (or there was a reduction in the
Part I, column (e), line 3.
Note. You also must attach a separate qualified basis of the property) on which
computation of the net 965 tax liability Line 5—Net Investment Income the low-income housing credit was
attributable to the S portion of the ESBT. Tax claimed, see Form 8611, Recapture of
Low-Income Housing Credit, to figure
Portion of net 965 tax attributable to Enter the amount of net investment any recapture tax allocable to the estate
S portion of an ESBT. The net 965 tax income tax calculated and attach Form or trust. Include the tax on line 6 and
liability attributable to the S portion of an 8960. See the Instructions for Form write “LIHCR” on the dotted line to the
ESBT must be shown separately from 8960 to calculate the tax and Net left of the entry space.
the regular ESBT tax computation and Investment Income Tax, later, for more
separately from any net 965 tax liability information. Recapture of qualified electric vehi-
attributable to the non-S portion of the cle credit. If the estate or trust claimed
Line 6—Recapture Taxes the qualified electric vehicle credit in a
trust. Attach a statement that shows the
amount of the net 965 tax liability Recapture of investment credit. If prior tax year for a vehicle that ceased
attributable to the S portion of the ESBT. the estate or trust disposed of to qualify for the credit, part or all of the
See Line 25–2019 Net 965 Tax Liability investment credit property or changed credit may have to be recaptured. See
Paid and Schedule G, Part II, line 15– its use before the end of the recapture Regulations section 1.30-1(b) for
2019 Net 965 Tax Liability-Eligible for period, see Form 4255, Recapture of details. If the estate or trust owes any
Installment Payment Election to report Investment Credit, to figure the recapture tax, include it on line 6 and
these amounts. recapture tax allocable to the estate or write “QEVCR” on the dotted line to the
trust. Include the tax on line 6 and write left of the entry space.

-32- Instructions for Form 1041 (2019)

Recapture of the Indian employment 2. The estate or trust withheld Form 8866, Interest Computation
credit. Generally, if the estate or trust federal income tax during 2019 at the Under the Look-Back Method for
terminates a qualified employee less request of any household employee. Property Depreciated Under the In-
than 1 year after the date of initial 3. The estate or trust paid total cash come Forecast Method. Include the
employment, any Indian employment wages of $1,000 or more in any interest due under the look-back
credit allowed for a prior tax year by calendar quarter of 2018 or 2019 to method of section 167(g)(2). To the left
reason of wages paid or incurred to that household employees. of the entry space, write “From Form
employee must be recaptured. See 8866” and the amount of interest due.
Form 8845 and section 45A for details. Note. See Amended Schedule H (Form
1040 or 1040-SR) under F. Initial Interest on deferral of gain from cer-
If the estate or trust owes any recapture
Return, Amended Return, etc., earlier tain constructive ownership transac-
tax, include it on line 6 and write “IECR”
for information on filing an amended tions. Include the interest due under
on the dotted line to the left of the entry
Schedule H (Form 1040 or 1040-SR) for section 1260(b) on any deferral of gain
space.
a Form 1041. from certain constructive ownership
Recapture of the new markets credit. transactions. To the left of the entry
If the estate or trust owes any new Line 8 — Other Taxes and space, write “1260(b)” and the amount
markets recapture tax, include it on Amounts Due of interest due.
line 6 and write “NMCR” on the dotted
Triggering event under section Form 5329, Additional Taxes on
line to the left of the entry space. For
965(i). If you had a triggering event Qualified Plans (Including IRAs) and
more information, including how to
under section 965(i) during the year, Other Tax-Favored Accounts. If the
figure the recapture amount, see section
enter on Line 8, Other taxes and estate or trust fails to receive the
45D(g).
amounts due, the current year tax minimum distribution under section
Recapture of the credit for employ- liability from the triggered deferred net 4974, use Form 5329 to pay the excise
er-provided child care facilities. If 965 tax liability from Form 965-A, Part tax. To the left of the entry space, write
the facility ceased to operate as a IV, column (f). “From Form 5329” and the amount of
qualified child care facility or there was the tax.
ESBTs. If a triggering event occurred
a change in ownership, part or all of the
in the S portion of the ESBT, also Additional tax on the early disposi-
credit may have to be recaptured. See
include on the attachment that shows tion of noncash property for which a
Form 8882 for details. If the estate or
the amount of the net 965 tax liability section 247(g)(3) election was made
trust owes any recapture tax, include it
attributable to the S portion of the trust by an Alaska Native Settlement
on line 6 and write “ECCFR” on the
the triggered deferred net 965 tax Trust. This additional 10% tax only
dotted line to the left of the entry space.
liability from Form 965-A, Part IV, should be shown on an amended return
Recapture of the alternative motor column (f). filed by a Settlement Trust for the year in
vehicle credit. See section 30B(h)(8) which the Settlement Trust received a
Interest on deferred tax attributable
for details. Include the tax on line 6 and contribution of noncash property from
to installment sales of certain time-
write “AMVCR” on the dotted line to the an Alaska Native Corporation and
shares and residential lots and cer-
left of the entry space. elected to defer the recognition of
tain nondealer real property install-
income related to such property, but
Recapture of the alternative fuel ve- ment obligations. If an obligation
disposed of the property within the first
hicle refueling property credit. See arising from the disposition of real
tax year subsequent to the tax year the
section 30C(e)(5) for details. Include the property to which section 453(l) or 453A
Settlement Trust received the property.
tax on line 6 and write “ARPCR” on the applies is outstanding at the close of the
Determine the increase in tax due to the
dotted line to the left of the entry space. year, the estate or trust must include the
inclusion of the deferred income and
interest due under section 453(l)(3)(B)
Line 7 — Household or 453A(c), whichever is applicable, in
include on this line the additional tax
Employment Taxes due, equal to 10% of the increase in tax
the amount to be entered on line 8 of
due to the inclusion of the deferred
If any of the following apply, get Schedule G, Form 1041, with the
income. The increase in tax due to the
Schedule H (Form 1040 or 1040-SR), notation “Section 453(l) interest” or
inclusion of the deferred income, which
Household Employment Taxes, and its “Section 453A(c) interest,” whichever is
is the base amount for the computation
instructions, to see if the estate or trust applicable. Attach a schedule showing
of the additional 10% tax shown on this
owes these taxes. the computation.
line, should be shown elsewhere on
1. The estate or trust paid any one Form 4970, Tax on Accumulation Schedule G. If the amended return also
household employee cash wages of Distribution of Trusts. Include on this shows changes to income, deductions,
$2,100 or more in 2019. Cash wages line any tax due on an accumulation or credits unrelated to the inclusion of
include wages paid by checks, money distribution from a trust. To the left of the the deferred income, attach a schedule
orders, etc. When figuring the amount of entry space, write “From Form 4970” showing the computation of the
cash wages paid, combine cash wages and the amount of the tax. additional tax due only to the inclusion
paid by the estate or trust with cash of the deferred income. To the left of the
wages paid to the household employee Form 8697, Interest Computation
entry space, write “Section 247(g)(3)
in the same calendar year by the Under the Look-Back Method for
tax.”
household of the decedent or Completed Long-Term Contracts.
beneficiary for whom the administrator, Include the interest due under the
executor, or trustee of the estate or trust look-back method of section 460(b)(2).
is acting. To the left of the entry space, write
“From Form 8697” and the amount of
interest due.

Instructions for Form 1041 (2019) -33-

Part II – Payments Line 13—Tax Paid with Form Line 16b—Credit for Federal
Line 10—2019 Estimated Tax 7004 Tax on Fuels
Payments and Amount Applied If you filed Form 7004 to request an Enter any credit for federal excise taxes
extension of time to file Form 1041, paid on fuels that are ultimately used for
From 2018 Return enter the amount that you paid with the nontaxable purposes (for example, an
Enter the amount of any estimated tax extension request. off-highway business use). Attach Form
payment you made with Form 1041-ES 4136, Credit for Federal Tax Paid on
for 2019 plus the amount of any Line 14—Federal Income Tax Fuels. See Pub. 510, Excise Taxes, for
overpayment from the 2018 return that Withheld more information.
was applied to the 2019 estimated tax. Use line 14 to claim a credit for any
federal income tax withheld (and not
If the estate or trust is the beneficiary
repaid) by: (a) an employer on wages Net Investment Income
of another trust and received a payment
of estimated tax that was credited to the and salaries of a decedent received by Tax
trust (as reflected on the Schedule K-1 the decedent's estate; (b) a payer of Certain estates and trusts may be
issued to the trust), then report this certain gambling winnings (for example, subject to the Net Investment Income
amount separately with the notation state lottery winnings); or (c) a payer of Tax (NIIT). Estates and trusts use Form
“section 643(g)” in the space next to distributions from pensions, annuities, 8960 to report their Net Investment
line 10 and include this amount in the retirement or profit-sharing plans, IRAs, Income (NII) and calculate the tax. The
amount entered on line 10. insurance contracts, etc., received by a amount of NIIT payable by the estate or
decedent's estate or trust. Attach a copy trust is reported on Form 1041,
Don't include on Form 1041 of Form W-2, Form W-2G, or Form Schedule G, line 5.
! estimated tax paid by an 1099-R to the front of the return.
CAUTION individual before death. Instead, The NIIT is imposed on estates and
include those payments on the Except for backup withholding
trusts to the extent that they have
decedent's final income tax return. ! (as explained below), withheld
CAUTION income tax can't be passed
undistributed net investment income
and adjusted gross income (AGI)
Line 11—Estimated Tax through to beneficiaries on either
exceeding $12,750. See Definitions,
Schedule K-1 or Form 1041-T.
Payments Allocated to earler, for the calculation of an estate or
Beneficiaries (from Form Backup withholding. If the estate or trust’s AGI. The following types of
estates and trusts may owe the NIIT in
1041-T) trust received a 2019 Form 1099
addition to their regular income tax
The trustee (or executor, for the final showing federal income tax withheld
(that is, backup withholding) on interest liability:
year of the estate) may elect under • Decedent’s estates,
section 643(g) to have any portion of its income, dividends, or other income,
check the box and include the amount • Simple and complex trusts,
estimated tax treated as a payment of • Electing small business trusts
estimated tax made by a beneficiary or withheld on income retained by the
estate or trust in the total for line 14. (ESBTs),
beneficiaries. The election is made on • Pooled income funds, and
Form 1041-T, Allocation of Estimated Report on Schedule K-1 (Form • Bankruptcy estates.
Tax Payments to Beneficiaries, which 1041), box 13, code B, any credit for
must be filed by the 65th day after the backup withholding on income However, in the case of bankruptcy
close of the trust's tax year. Form distributed to the beneficiary. estates, the adjusted gross income
1041-T shows the amounts to be threshold is $125,000.
Line 15—2019 Net 965 Tax
allocated to each beneficiary. This
amount is reported on the beneficiary's Liability - Eligible for Calculation of Net Investment In-
Installment Payment Election come. In general, an estate or trust’s
Schedule K-1 (Form 1041), box 13,
NII is calculated in the same way as an
code A. If you have a 2019 net 965 tax liability individual. However, there are special
Attach Form 1041-T to your return eligible for installment payment election, rules for the calculation of NII in the
only if you haven't yet filed it; however, enter this amount from Form 965-A, Part case of an ESBT. See instructions to
attaching Form 1041-T to Form 1041 I, column (f), line 3. Form 8960 and Regulations section
doesn't extend the due date for filing 1.1411-3(e) for information on the
Note. Include on line 15 amounts from
Form 1041-T. If you have already filed calculation (and Regulations section
the net 965 tax liability attributable to the
Form 1041-T, don't attach a copy to 1.1411-3(c)(1) for information on the
S portion of an ESBT that are not
your return. ESBT calculation).
deferred under section 965(i). See
Failure to file Form 1041-T by Schedule G, Part I, Line 4-Tax on Distributions on Net Investment In-
! the due date (March 5, 2020, for ESBTs, earlier, for more information. come. The NIIT is imposed on estates
CAUTION calendar year estates and and trusts to the extent it has
trusts) will result in an invalid election. Line 16a—Credit for Tax Paid undistributed net investment income. In
An invalid election will require the filing on Undistributed Capital Gains order to arrive at the estate or trust’s
of amended Schedules K-1 for each Attach Copy B of Form 2439, Notice to undistributed net investment income,
beneficiary who was allocated a Shareholder of Undistributed the estate or trust’s NII is reduced for (1)
payment of estimated tax. Long-Term Capital Gains. 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

-34- Instructions for Form 1041 (2019)

information on the calculation of investment income to the estate or trust, Question 3
undistributed net investment income. but not included in its taxable income, Check the “Yes” box and enter the
and (b) the distributions from the estate name of the foreign country if either 1 or
NII allocable to the deduction under
or trust to the beneficiary(s) in the year 2 below applies.
section 642(c). An estate, trust, or
exceed the amount of the income
pooled income fund’s NII is reduced by 1. The estate or trust owns more
distribution deduction allowed for
the amount of NII allocable to the than 50% of the stock in any corporation
regular tax purposes (from Schedule B,
charitable deduction allowed under that owns one or more foreign bank
line 15).
section 642(c). In the case of an estate, accounts.
trust, or pooled income fund that has NII Special rules. In the final year of an 2. At any time during the year the
and non-NII income in a year when a estate or trust, deductions in excess of estate or trust had an interest in or
section 642(c) deduction is claimed, the income may be reported to the signature or other authority over a bank,
amount of the NII deduction allocable to beneficiary on Schedule K-1, box 11. securities, or other financial account in a
the section 642(c) deduction will be less These deductions may also be foreign country.
than the amount reported on Form deductible by the beneficiary for NIIT
1041, Schedule A, line 7 (or on the purposes. In this situation, the Exception. Check “No” if either of the
separate calculation in the case of a terminating estate or trust should following applies to the estate or trust:
pooled income fund). provide the beneficiary information • The combined value of the accounts
Beneficiary reporting. In general, the regarding whether the amounts reported was $10,000 or less during the whole
amount of the income distribution in box 11, codes A through D, include year, or
deduction (from Form 1041, any amounts that are deductible for NIIT • The accounts were with a U.S.
Schedule B, line 15) that reduces the purposes. See Regulations section military banking facility operated by a
estate or trust’s NII will be the amount of 1.1411-4(g)(4). U.S. financial institution.
NII that will be taxable to the If you checked “Yes” for Question 3,
beneficiaries on their Schedules K-1 electronically file FinCEN Form 114,
(Form 1041). Other Information Report of Foreign Bank and Financial
The Schedule K-1 has a code H in Question 1 Accounts (FBAR), with the Department
box 14 to report the amount of net of the Treasury using the FinCEN's BSA
If the estate or trust received tax-exempt
investment income distributed to the E-Filing Sytem. Because FinCEN Form
income, figure the allocation of
beneficiary. The amount reported in 114 isn't a tax form, don't file it with
expenses between tax-exempt and
code H represents an adjustment (either Form 1041.
taxable income on a separate sheet and
positive or negative) that the beneficiary attach it to the return. Enter only the See fincen.gov for more information.
must use in completing its Form 8960 (if deductible amounts on the return. Don't
necessary). In the case where the trust’s If you are required to file
figure the allocation on the return itself. FinCEN Form 114 but don't, you
income distribution deduction allowed in For more information, see the !
CAUTION may have to pay a penalty of up
calculating undistributed net investment instructions for Allocation of Deductions
income is less than the amount on to $10,000 (or more in some cases).
for Tax-Exempt Income, earlier.
Schedule B, line 15, then code H will
show a negative number that is the Question 4
Report the amount of tax-exempt
difference between the two amounts. In interest income received or accrued in The estate or trust may be required to
the case of an estate or trust that issues the space provided below Question 1. file Form 3520, Annual Return To
more than one Schedule K-1 for a year, Report Transactions With Foreign
the sum of the amounts reported in Also, include any exempt-interest Trusts and Receipt of Certain Foreign
code H on all of the Schedules K-1 will dividends the estate or trust received as Gifts, if:
be the difference between Schedule B, a shareholder in a mutual fund or other • It directly or indirectly transferred
line 15, and the amount deducted on regulated investment company. property or money to a foreign trust. For
Form 8960, line 18b, for amounts of NII this purpose, any U.S. person who
distributed to a beneficiary. Question 2 created a foreign trust is considered a
All salaries, wages, and other transferor;
The beneficiary's NII will equal compensation for personal services • It is treated as the owner of any part
TIP all taxable amounts reported on must be included on the return of the of the assets of a foreign trust under the
the Schedule K-1, adjusted by person who earned the income, even if grantor trust rules; or
the amount reported in box 14, code H. the income was irrevocably assigned to • It received a distribution from a
a trust by a contract assignment or foreign trust.
The only instance where code H
similar arrangement.
TIP will be a positive number is An owner of a foreign trust must
when: The grantor or person creating the TIP ensure that the trust files an
annual information return on
• The estate or trust owns directly, or trust is considered the owner if he or
Form 3520-A, Annual Information
indirectly, an (a) interest in a section she keeps “beneficial enjoyment” of or
substantial control over the trust Return of Foreign Trust With a U.S.
1291 fund, or (b) interest in a controlled
property. The trust's income, Owner.
foreign corporation or qualified electing
fund and no election under Regulations deductions, and credits are allocable to
section 1.1411–10(g) has been made the owner. Question 5
with respect to that interest, and An estate or trust claiming an interest
• The distribution from one of the If you checked “Yes” for Question 2, deduction for qualified residence
entities described above is (a) net see Special Reporting Instructions, interest (as defined in section 163(h)(3))
earlier.

Instructions for Form 1041 (2019) -35-

on seller-provided financing must Question 10 under Other Information, 965-A for how to make the installment
include on an attachment to the 2019 Form 1041. election.
Form 1041 the name, address, and TIN See Line 25 — 2019 Net 965 Tax
of the person to whom the interest was Question 11a
A distribution of S corporation stock by Liability Paid, and Schedule G, Part II,
paid or accrued (that is, the seller). Line 15 — 2019 Net 965 Tax Liability –
an estate or trust that results in a
If the estate or trust received or change of ownership for federal income Eligible for Installment Payment
accrued such interest, it must provide tax purposes is a triggering event Election, earlier, for how to report
identical information on the person described in Regulations section payments of the 965 tax.
liable for such interest (that is, the 1.965-7(c)(3). If the estate or trust The due date of the original
buyer). This information doesn't need to transfers less than all of its shares of Form 965-E is within 30 days of
be reported if it duplicates information stock of the S corporation, the transfer
! the triggering event.
already reported on Form 1098.
CAUTION

will be a triggering event only with

Question 6 respect to the portion of the estate’s or The due date of the election to
trust’s section 965(i) net tax liability that ! pay in installments is the due
To make the section 663(b) election to CAUTION date of the return for the tax
is properly allocable to the transferred
treat any amount paid or credited to a
shares. If the person who received the year, including extension. The actual
beneficiary within 65 days following the
distribution of S corporation stock is an payment of the first installment is due no
close of the tax year as being paid or
eligible section 965(i) transferee, the later than the due date of the return for
credited on the last day of that tax year,
estate or trust may enter into a transfer the tax year without extension, even if
check the box. This election can be
agreement with the eligible section the election is made on a return filed by
made by the fiduciary of a complex trust
965(i) transferee to prevent the the extended due date.
or the executor of a decedent's estate.
assessment of the estate’s or trust’s
For the election to be valid, you must file
Form 1041 by the due date (including
section 965(i) net tax liability in the tax Question 12
year that includes the triggering event.
extensions). Once made, the election is Note: Check the “Yes” box if the estate
irrevocable. The estate or trust must report in Part or trust entered into a transfer
IV, column (g) of Form 965-A, Individual agreement as an eligible 965(i)
Question 7
Report of Net 965 Tax Liability, the transferee.
To make the section 643(e)(3) election transfer out of the section 965 tax
to recognize gain on property distributed liability properly allocable to S The estate or trust must report on
in kind, check the box and see the corporation shares for which the estate Form 965-A the net 965 tax liability with
Instructions for Schedule D (Form or trust entered into a transfer respect to an S corporation, whether or
1041). agreement with an eligible section not deferred. If during the tax year the
965(i) transferee. See the instructions estate or trust entered into a transfer
Question 9 agreement as an eligible 965(i)
for Form 965-A for additional
Generally, a beneficiary is a skip person information. transferee, the estate or trust must
if the beneficiary is in a generation that report the transfer in of that liability on
is two or more generations below the The transfer agreement must be Part IV of Form 965-A. See the
generation of the transferor to the trust. ! filed within 30 days of the instructions for Form 965-A for
CAUTION triggering event. See Form
To determine if a beneficiary that is a additional information.
965-D, Transfer Agreement Under
trust is a skip person, and for exceptions 965(i)(2), and the related instructions for Question 13
to the general rules, see the definition of additional information. If the deemed owner of a grantor portion
a skip person in the instructions for
of the ESBT is a nonresident alien, the
Schedule R of Form 706.
Question 11b items of income, deduction, and credit
Question 10 If the estate or trust distributed S from that grantor portion must be
A domestic trust that is a specified corporation shares and the estate or reallocated to the S portion. See
domestic entity must file Form 8938 trust did not enter into a timely transfer Schedule G, Part I, line 4, Tax on the
along with Form 1041 for the tax year. agreement for all shares transferred ESBT Portion of the Trust, earlier for
Form 8938 must be filed each year the during the tax year, the transfer of how to figure the tax on the S portion of
value of the trust's specified foreign shares not covered by a transfer the trust.
financial assets meets or exceeds the agreement is a triggering event. See Question 14
reporting threshold. A trust exceeds the Triggering event under section 965(i),
earlier. The S portion of the ESBT must take
threshold amount if the total value of the
into account the qualified items of
specified foreign financial assets is
The estate or trust may file a consent income, gain, deduction, and loss and
more than $50,000 on the last day of the
agreement under section 965(i)(4)(D) to other items from any S corporation
tax year or more than $75,000 at any
make the election under section 965(h) owned by the ESBT, and any qualified
time during the tax year. For more
to pay in installments the triggered items of income, gain, deduction, and
information on domestic trusts that are
section 965(i) net tax liability. See Form loss and other items reallocated to the S
specified domestic entities, the filing
965-E, Consent Agreement Under portion. See Question 13, earlier. For
threshold, and the types of foreign
Section 965(i)(4)(D), and the related purposes of determining whether the
financial assets that must be reported,
instructions for how to file the consent taxable income of an ESBT exceeds the
see the Instructions for Form 8938.
agreement. See the instructions for threshold amount, the S portion and the
A domestic trust that is required to Triggered deferred S non-S portion of an ESBT are treated as
file Form 8938 along with Form 1041 for corporation-related net 965 tax liability, a single trust. See Regulations section
the tax year must check “Yes” to in Part I of the instructions for Form 1.199A-6(d)(3)(vi).

-36- Instructions for Form 1041 (2019)

 Generally, amounts accumulated Line 11—Prior Accumulation
Schedule J (Form 1041) — before a beneficiary reaches age 21 Distribution Thrown Back to Any
Accumulation Distribution may be excluded by the beneficiary.
Throwback Year
See sections 665 and 667(c) for
for Certain Complex exceptions relating to multiple trusts. Enter the amount of prior accumulation
Trusts The trustee reports to the IRS the total distributions thrown back to the
amount of the accumulation distribution throwback years. Don't enter
General Instructions distributions excluded under section
before any reduction for income
Use Schedule J (Form 1041) to report accumulated before the beneficiary 663(a)(1) for gifts, bequests, etc.
an accumulation distribution for a reaches age 21. If the multiple trust
domestic complex trust that was: rules don't apply, the beneficiary claims Line 13—Throwback Years
• Previously treated at any time as a the exclusion when filing Form 4970, as
foreign trust (unless an exception is Allocate the amount on line 5 that is an
you may not be aware that the
provided in future regulations), or accumulation distribution to the earliest
beneficiary may be a beneficiary of
• Created before March 1, 1984, applicable year first, but don't allocate
other trusts with other trustees.
unless that trust would not be more than the amount on line 12 for any
aggregated with other trusts under the For examples of accumulation throwback year. An accumulation
rules of section 643(f) if that section distributions that include payments from distribution is thrown back first to the
applied to the trust. one trust to another trust, and amounts earliest preceding tax year in which
distributed for a dependent's support, there is undistributed net income (UNI).
An accumulation distribution is the Then, it is thrown back beginning with
excess of amounts properly paid, see Regulations section 1.665(b)-1A(b).
the next earliest year to any remaining
credited, or required to be distributed Part II—Ordinary Income preceding tax years of the trust. The
(other than income required to be Accumulation Distribution portion of the accumulation distribution
distributed currently) over the DNI of the allocated to the earliest preceding tax
trust reduced by income required to be Enter the applicable year at the top of
each column for each throwback year. year is the amount of the UNI for that
distributed currently. To have an year. The portion of the accumulation
accumulation distribution, the distribution allocated to any remaining
distribution must exceed the accounting Line 6—DNI for Earlier Years preceding tax year is the amount by
income of the trust. Enter the applicable amounts as which the accumulation distribution is
Specific Instructions follows: larger than the total of the UNI for all
earlier preceding tax years.
Part I—Accumulation Distribution Throwback
in 2019 year(s) Amount from line A tax year of a trust during which the
1969–1977 . . . . . . . Form 1041, Schedule C, line 5 trust was a simple trust for the entire
1978–1979 . . . . . . . Form 1041, line 61 year isn't a preceding tax year unless (a)
Line 1—Distribution Under Section 1980 . . . . . . . . . . . . Form 1041, line 60 during that year the trust received
1981–1982 . Form 1041, line 58
661(a)(2) 1983–1996 .
. . . . . .
. . . . . . Form 1041, Schedule B, line 9
outside income, or (b) the trustee didn't
Enter the amount from Form 1041, 1997–2018 . . . . . . . Form 1041, Schedule B, line 7
distribute all of the trust's income that
Schedule B, line 10, for 2019. This is the was required to be distributed currently
amount properly paid, credited, or for that year. In this case, UNI for that
required to be distributed other than the year must not be more than the greater
For information about throwback of the outside income or income not
amount of income for the current tax years, see the instructions for line 13.
year required to be distributed currently. distributed during that year.
For purposes of line 6, in figuring the
DNI of the trust for a throwback year, The term “outside income” means
Line 2—DNI subtract any estate tax deduction for amounts that are included in the DNI of
Enter the amount from Form 1041, IRD if the income is includible in figuring the trust for that year but that aren't
Schedule B, line 7, for 2019. This is the the DNI of the trust for that year. “income” of the trust as defined in
amount of DNI for the current tax year Regulations section 1.643(b)-1. Some
determined under section 643(a). Line 7—Distributions Made During examples of outside income are: (a)
Earlier Years income taxable to the trust under
Line 3—Distribution Under Section section 691; (b) unrealized accounts
Enter the applicable amounts as receivable that were assigned to the
661(a)(1) follows: trust; and (c) distributions from another
Enter the amount from Form 1041, trust that include the DNI or UNI of the
Schedule B, line 9, for 2019. This is the Throwback Amount from line other trust.
year(s)
amount of income for the current tax
year required to be distributed currently. 1969–1977 . . . . . . Form 1041, Schedule C, line 8
Line 16—Tax-Exempt Interest
1978 . . . . . . . . . . . Form 1041, line 64
1979 . . . . . . . . . . . Form 1041, line 65 Included on Line 13
Line 5—Accumulation Distribution 1980 . . . . . . . . . . . Form 1041, line 64
1981–1982 . . . . . . Form 1041, line 62 For each throwback year, divide line 15
If line 11 of Form 1041, Schedule B, is 1983–1996 . . . . . . Form 1041, Schedule B, line 13 by line 6 and multiply the result by the
more than line 8 of Form 1041, 1997–2018 . . . . . . Form 1041, Schedule B, line 11 following:
Schedule B, complete the rest of
Schedule J and file it with Form 1041,
unless the trust has no previously
accumulated income.

Instructions for Form 1041 (2019) -37-

 Throwback Amount from line Schedule D, line 20, column (b) 1980–1984 . . . . . . . . Form 1041, line 25
year(s) 1980–1981 . . . Schedule D, line 14, column (b), or 1985–1986 . . . . . . . . Form 1041, line 24
Schedule D, line 16, column (b) 1987 . . . . . . . . . . . . . Form 1041, line 21
1969–1977 . . . . Form 1041, Schedule C, line 2(a) 1982 . . . . . . . . Schedule D, line 16, column (b), or 1988–1996 . . . . . . . . Form 1041, line 22
1978–1979 . . . . Form 1041, line 58(a) Schedule D, line 18, column (b) 1997 . . . . . . . . . . . . . Form 1041, line 23
1980 . . . . . . . . . Form 1041, line 57(a) 1983–1996 . . . Schedule D, line 15, column (b), or 1998–2018 . . . . . . . . Form 1041, line 22
1981–1982 . . . . Form 1041, line 55(a) Schedule D, line 17, column (b)
1983–2018 . . . . Form 1041, Schedule B, line 2
1997–2002 . . . Schedule D, line 14, column (2), or
Schedule D, line 16, column (2)
2003 . . . . . . . . Schedule D, line 14a, column (2), Line 26—Tax on Income Other
Part III—Taxes Imposed on or
Than Long-Term Capital Gain
Schedule D, line 16a, column (2)
Undistributed Net Income 2004–2012 . Schedule D, line 13, column (2), or
. .
Enter the applicable amounts as
For the regular tax computation, if there Schedule D, line 15, column (2)
follows:
is a capital gain, complete lines 18 2013– Schedule D, line 17, column (2), or
2018 . . Schedule D, line 19, column (2)
through 25 for each throwback year. If .
Throwback Amount from line
the trustee elected the alternative tax on year(s)
capital gains, complete lines 26 through 1969 . . . . . . . . . . . . . . Schedule D, line 20
31 instead of lines 18 through 25 for
Line 20—Trust's Share of Net 1970 . . . . . . . . . . . . . . Schedule D, line 19
each applicable year. If there is no 1971 . . . . . . . . . . . . . . Schedule D, line 50
capital gain for any year, or there is a Long-Term Gain 1972–1975 . . . . . . . . . Schedule D, line 48
capital loss for every year, enter on 1976–1978 . Schedule D, line 27
Enter the applicable amounts as . . . . . . . .

line 9 the amount of the tax for each follows:

year identified in the instruction for
Throwback Amount from line
line 18 and don't complete Part III. If the year(s) Line 27—Trust's Share of Net
trust received an accumulation
distribution from another trust, see
1969–1970 . . . . . . 50% of Schedule D, line 13(e) Short-Term Gain
1971–1977 . . . . . . 50% of Schedule D, line 17(e)
Regulations section 1.665(b)-1A. If there is a loss on any of the following
1978 . . . . . . . . . . . Schedule D, line 17(e), or line
31, whichever is applicable,
lines, enter zero on line 27 for the
Note. The alternative tax on capital applicable throwback year. Otherwise,
less Form 1041, line 23
gains was repealed for tax years 1979 . . . . . . . . . . . Schedule D, line 25 or line 27, enter the applicable amounts as follows:
beginning after December 31, 1978. whichever is applicable, less
The maximum rate on net capital gain Form 1041, line 23 Throwback Amount from line
for 1981, 1987, and 1991 through 2018 1980–1981 . . . . . . Schedule D, line 21, less year(s)
isn't an alternative tax for this purpose. Schedule D, line 22
1969–1970 . . . . . . Schedule D, line 10, column 2
1982 . . . . . . . . . . . Schedule D, line 23, less
1971–1978 . . . . . . Schedule D, line 14, column 2
Schedule D, line 24
Line 18—Regular Tax 1983–1986 . . . . . . Schedule D, line 22, less
Schedule D, line 23
Enter the applicable amounts as 1987–1996 . . . . . . Schedule D, the smaller
follows: of any gain on line 16 Line 28—Trust's Share of Taxable
or line 17, column (b)
Income Less Section 1202
Throwback Amount from line 1997–2001 . . . . . . Schedule D, the smaller
year(s) of any gain on line 15c or Deduction
1969–1976 . . . Form 1041, page 1, line 24 line 16, column (2) Enter the applicable amounts as
1977 . . . . . . . . Form 1041, page 1, line 26 2002 . . . . . . . . . . . Schedule D, the smaller follows:
1978–1979 . . . Form 1041, line 27 of any gain on line 15a or
1980–1984 . . . Form 1041, line 26c line 16, column (2)
1985–1986 . . . Form 1041, line 25c Throwback year(s) Amount from line
2003 . . . . . . . . . . . Schedule D, the smaller
1987 . . . . . . . . Form 1041, line 22c 1969 . . . . . . . . . . . . . . . Schedule D, line 19
of any gain on line 15a or
1988–2018 . . . Form 1041, Schedule G, line 1a 1970 . . . . . . . . . . . . . . . Schedule D, line 18
line 16a, column (2)
1971 . . . . . . . . . . . . . . . Schedule D, line 38
2004–2012 . . . . . . Schedule D, the smaller
1972–1975 . . . . . . . . . . Schedule D, line 39
of any gain on line 14a
1976–1978 . . . . . . . . . . Schedule D, line 21
or line 15, column (2)
Line 19—Trust's Share of Net 2013–2018 . . . Schedule D, the smaller of any
gain on line 18a or line 19,
Short-Term Gain column (2) Part IV—Allocation to
For each throwback year, enter the
smaller of the capital gain from the two
Beneficiary
lines indicated. If there is a capital loss Complete Part IV for each beneficiary. If
or a zero on either or both of the two Line 22—Taxable Income the accumulation distribution is
lines indicated, enter zero on line 19. Enter the applicable amounts as allocated to more than one beneficiary,
Throwback Amount from line follows: attach an additional copy of Schedule J
year(s) with Part IV completed for each
1969–1970 . . . Schedule D, line 10, column 2, or Throwback Amount from line additional beneficiary. Give each
Schedule D, line 12, column 2
year(s) beneficiary a copy of his or her
1971–1978 . . . Schedule D, line 14, column 2, or 1969–1976 . . . . . . . . Form 1041, page 1, line 23 respective Part IV information. If more
Schedule D, line 16, column 2 1977 . . . . . . . . . . . . . Form 1041, page 1, line 25 than 5 throwback years are involved,
1978–1979 . Form 1041, line 26
1979 . . . . . . . . Schedule D, line 18, column (b), or . . . . . . .
use another Schedule J, completing
Parts II and III for each additional
throwback year.

-38- Instructions for Form 1041 (2019)

 If the beneficiary is a nonresident may use Form W-9 to request the Estates and complex trusts. The
alien individual or a foreign corporation, beneficiary's identifying number. beneficiary of a decedent's estate or
see section 667(e) about retaining the complex trust must include in his or her
Penalty. You may be charged a $50
character of the amounts distributed to gross income the sum of:
penalty for each failure to provide a
determine the amount of the U.S.
required TIN, unless reasonable cause 1. The amount of the income
withholding tax.
is established for not providing it. required to be distributed currently, or if
The beneficiary uses Form 4970 to Explain any reasonable cause in a the income required to be distributed
figure the tax on the distribution. The signed affidavit and attach it to this currently to all beneficiaries exceeds the
beneficiary also uses Form 4970 for the return. DNI (figured without taking into account
section 667(b)(6) tax adjustment if an Truncating recipient's identification the charitable deduction), his or her
accumulation distribution is subject to number on beneficiary's statement. proportionate share of the DNI (as so
estate or generation-skipping transfer The estate or trust can truncate a figured), and
tax. This is because the trustee can't be beneficiary’s identifying number on the 2. All other amounts properly paid,
the estate or generation-skipping Schedule K-1 the estate or trust sends credited, or required to be distributed, or
transfer tax return filer. to the beneficiary. Truncation isn't if the sum of the income required to be
allowed on the Schedule K-1 the estate distributed currently and other amounts
properly paid, credited, or required to be
Schedule K-1 (Form or trust files with the IRS. Also, the
distributed to all beneficiaries exceeds
estate or trust can't truncate its own
1041)— Beneficiary's identification number on any form. the DNI, his or her proportionate share
Share of Income, To truncate, where allowed, replace of the excess of DNI over the income
Deductions, Credits, etc. the first five digits of the nine-digit required to be distributed currently.
number with asterisks (*) or Xs (for See Regulations section 1.662(c)-4
General Instructions example, a SSN xxx-xx-xxxx would for a comprehensive example.
Use Schedule K-1 (Form 1041) to report appear as ***-**-xxxx or XXX-XX-xxxx).
For complex trusts that have more
the beneficiary's share of income, For more information, see Regulations
than one beneficiary, and if different
deductions, and credits from a trust or a section 301.6109-4.
beneficiaries have substantially
decedent's estate.
separate and independent shares, their
Substitute Forms shares are treated as separate trusts for
Note. Section 67(g) suspends
miscellaneous itemized deductions You don't need IRS approval to use a the sole purpose of determining the
subject to the 2% floor for tax years substitute Schedule K-1 if it is an exact amount of DNI allocable to the
2018 through 2025. See Notice 2018-61 copy of the IRS schedule. The boxes respective beneficiaries. A similar rule
for information about allowable must use the same numbers and titles applies to treat substantially separate
beneficiary deductions under section and must be in the same order and and independent shares of different
67(e) and 642(h). format as on the comparable IRS beneficiaries of an estate as separate
Schedule K-1. The substitute schedule estates. For examples of the application
Grantor type trusts don't use must include the OMB number and the of the separate share rule, see the
! Schedule K-1 (Form 1041) to 6-digit form ID code in the upper regulations under section 663(c).
CAUTION report the income, deductions,
right-hand corner of the schedule. Gifts and bequests. Don't include in
or credits of the grantor (or other person
treated as owner). See Grantor Type the beneficiary's income any gifts or
You must provide each beneficiary
Trusts, earlier. bequests of a specific sum of money or
with the Instructions for Beneficiary
of specific property under the terms of
Filing Form 1040 or 1040-SR or other
the governing instrument that are paid
prepared specific instructions for each
Who Must File or credited in three installments or less.
item reported on the beneficiary's
The fiduciary (or one of the joint Schedule K-1. Amounts that can be paid or credited
fiduciaries) must file Schedule K-1. A only from income of the estate or trust
copy of each beneficiary's Schedule K-1 don't qualify as a gift or bequest of a
Inclusion of Amounts in
is attached to the Form 1041 filed with specific sum of money.
the IRS, and each beneficiary is given a Beneficiaries' Income
Past years. Don't include in the
copy of his or her respective Simple trust. The beneficiary of a beneficiary's income any amounts
Schedule K-1. One copy of each simple trust must include in his or her deducted on Form 1041 for an earlier
Schedule K-1 must be retained for the gross income the amount of the income year that were credited or required to be
fiduciary's records. required to be distributed currently, distributed in that earlier year.
whether or not distributed, or if the
Beneficiary's Identifying Number income required to be distributed Character of income. The
currently to all beneficiaries exceeds the beneficiary's income is considered to
As a payer of income, you are required have the same proportion of each class
to request and provide a proper DNI, his or her proportionate share of
the DNI. The determination of whether of items entering into the computation of
identifying number for each recipient of DNI that the total of each class has to
income. Enter the beneficiary's number trust income is required to be distributed
currently depends on the terms of the the DNI (for example, half dividends and
on the respective Schedule K-1 when half interest if the income of the estate
you file Form 1041. Individuals and trust instrument and applicable local
law. See Regulations section 1.652(c)-4 or trust is half dividends and half
business recipients are responsible for interest).
giving you their TINs upon request. You for a comprehensive example.

Instructions for Form 1041 (2019) -39-

 Allocation of deductions. beneficiary's tax year during which the Specific Instructions
Generally, items of deduction that enter tax year of the estate or trust ends. See
into the computation of DNI are Pub. 559 for more information, including Part I. Information About the
allocated among the items of income to the effect of the death of a beneficiary Estate or Trust
the extent such allocation isn't during the tax year of the estate or trust. On each Schedule K-1, enter the name,
inconsistent with the rules set out in address, and identifying number of the
section 469 and its regulations, relating General Reporting Information
estate or trust. Also, enter the name and
to passive activity loss limitations, in the If the return is for a fiscal year or a short address of the fiduciary.
following order. tax year, fill in the tax year space at the
First, all deductions directly top of each Schedule K-1. On each
Schedule K-1, enter the information Item D
attributable to a specific class of income
are deducted from that income. For about the estate or trust and the If the fiduciary of a trust or decedent's
example, rental expenses, to the extent beneficiary in Parts I and II (items A estate filed Form 1041-T, you must
allowable, are deducted from rental through H). In Part III, enter the check this box and enter the date it was
income. beneficiary's share of each item of filed.
income, deduction, credit, and any other
Second, deductions that aren't information the beneficiary needs to file
directly attributable to a specific class of Item E
his or her income tax return.
income generally may be allocated to If this is the final year of the estate or
any class of income, as long as a Codes. In box 9 and boxes 11 through trust, you must check this box.
reasonable portion is allocated to any 14, identify each item by entering a
code in the column to the left of the Note. If this is the final K-1 for the
tax-exempt income. Deductions beneficiary, check the “Final K-1” box at
considered not directly attributable to a entry space for the dollar amount.
These codes are identified in these the top of Schedule K-1.
specific class of income under this rule
include fiduciary fees, and state income instructions and on the back of the Part II. Information About the
and personal property taxes. The Schedule K-1.
Beneficiary
charitable deduction, however, must be Attached statements. Enter an Complete a Schedule K-1 for each
ratably apportioned among each class asterisk (*) after the code, if any, in the beneficiary. On each Schedule K-1,
of income included in DNI. column to the left of the dollar amount enter the beneficiary's name, address,
Finally, any excess deductions that entry space for each item for which you and identifying number.
are directly attributable to a class of have attached a statement providing
income may be allocated to another additional information. For those
Item H
class of income. However, in no case informational items that can't be
can excess deductions from a passive reported as a single dollar amount, Check the foreign beneficiary box if the
activity be allocated to income from a enter the code and asterisk in the beneficiary is a nonresident alien
nonpassive activity, or to portfolio left-hand column and enter “STMT” in individual, a foreign corporation, or a
income earned by the estate or trust. the entry space to the right to indicate foreign estate or trust. Otherwise, check
Excess deductions attributable to that the information is provided on an the domestic beneficiary box.
tax-exempt income can't offset any attached statement. More than one
Part III. Beneficiary's Share of
other class of income. attached statement can be placed on
the same sheet of paper and should be Current Year Income,
In no case can deductions be
allocated to an item of income that isn't identified in alphanumeric order by box Deductions, Credits, and Other
included in the computation of DNI, or number followed by the letter code (if Items
attributable to corpus. any). For example: “Box 9, Code
A—Depreciation” (followed by the Box 1—Interest
You can't show any negative information the beneficiary needs). Enter the beneficiary's share of the
amounts for any class of income shown taxable interest income minus allocable
in boxes 1 through 8 of Schedule K-1. Too few entry spaces on Sched-
deductions.
However, for the final year of the estate ule K-1? If the estate or trust has more
or trust, certain deductions or losses coded items than the number of spaces
can be passed through to the in box 9 or boxes 11 through 14, don't Box 2a—Total Ordinary Dividends
beneficiary(ies). See the instructions for enter a code or dollar amount in the last Enter the beneficiary's share of ordinary
box 11 for more information on these entry space of the box. In the last entry dividends minus allocable deductions.
deductions and losses. Also, the space, enter an asterisk in the left
beneficiary's share of depreciation and column and enter “STMT” in the entry Box 2b—Total Qualified Dividends
depletion is apportioned separately. space to the right. Report the additional
These deductions may be allocated to items on an attached statement and Enter the beneficiary's share of qualified
the beneficiary(ies) in amounts greater provide the box number, code, dividends minus allocable deductions.
than his or her income. See description, and dollar amount or
Depreciation, Depletion, and information for each additional item. For Box 3—Net Short-Term Capital
Amortization, earlier, and Rev. Rul. example: “Box 13, Code H—Biofuel Gain
74-530, 1974-2 C.B. 188. Producer Credit, $500.00.”
Enter the beneficiary's share of the net
short-term capital gain from Schedule D
Beneficiary's Tax Year (Form 1041), line 17, column (1), minus
The beneficiary's income from the allocable deductions. Don't enter a loss
estate or trust must be included in the in box 3. If, for the final year of the
estate or trust, there is a capital loss

-40- Instructions for Form 1041 (2019)

carryover, enter in box 11, code B, the Box 9—Directly Apportioned attributable to depletion separately in
beneficiary's share of short-term capital Deductions box 12, using code H.
loss carryover. However, if the
The limitations on passive Amortization (code C). Itemize the
beneficiary is a corporation, enter in
activity losses and credits under beneficiary's share of the amortization
box 11, code B, the beneficiary's share !
CAUTION section 469 apply to estates
deductions directly apportioned to each
of all short- and long-term capital loss
and trusts. Estates and trusts that activity reported in boxes 5 through 8.
carryovers as a single item. See section
distribute income to beneficiaries are Apportion the amortization deductions
642(h) and related regulations for more
allowed to apportion depreciation, between the estate or trust and the
information.
depletion, and amortization deductions beneficiaries in the same way that the
to the beneficiaries. These deductions depreciation and depletion deductions
Boxes 4a through 4c—Net are divided. Report any AMT
are referred to as “directly apportionable
Long-Term Capital Gain deductions.” adjustment attributable to amortization
Enter the beneficiary's share of the net separately in box 12, using code I.
long-term capital gain from Schedule D Rules for treating a beneficiary's income
(Form 1041), lines 18a through 18c, and directly apportionable deductions Box 10—Estate Tax Deduction
column (1), minus allocable deductions. from an estate or trust and other rules (Including Certain
for applying the passive loss and credit
Generation-Skipping Transfer
Don't enter a loss in boxes 4a limitations to beneficiaries of estates
through 4c. If, for the final year of the and trusts haven't yet been issued. Taxes)
estate or trust, there is a capital loss Any directly apportionable deduction, If the distribution deduction consists of
carryover, enter in box 11, code C, the such as depreciation, is treated by the any IRD, and the estate or trust was
beneficiary's share of the long-term beneficiary as having been incurred in allowed a deduction under section
capital loss carryover. (If the beneficiary the same activity as incurred by the 691(c) for the estate tax paid
is a corporation, see the instructions for estate or trust. However, the character attributable to such income (see the
box 3.) See section 642(h) and related of such deduction may be determined line 19 instructions), then the beneficiary
regulations for more information. as if the beneficiary incurred the is allowed an estate tax deduction in
deduction directly. proportion to his or her share of the
Gains or losses from the complete or distribution that consists of such
partial disposition of a rental, rental real To assist the beneficiary in figuring any income. For an example of the
estate, or trade or business activity that applicable passive activity loss computation, see Regulations section
is a passive activity must be shown on limitations, also attach a separate 1.691(c)-2. Figure the computation on a
an attachment to Schedule K-1. schedule showing the beneficiary's separate sheet and attach it to the
share of directly apportionable return.
Box 5—Other Portfolio and deductions derived from each trade or
Nonbusiness Income business, rental real estate, and other Box 11, Code A—Excess
rental activity.
Enter the beneficiary's share of Deductions on Termination
annuities, royalties, or any other Enter the beneficiary's share of directly
If this is the final return of the estate or
income, minus allocable deductions apportioned deductions using codes A
trust, and there are excess deductions
(other than directly apportionable through C.
on termination (see the instructions for
deductions), that isn't subject to any Depreciation (code A). Enter the line 23), enter the beneficiary's share of
passive activity loss limitation rules at beneficiary's share of the depreciation the excess deductions in box 11, using
the beneficiary level. Use boxes 6 deductions directly apportioned to each code A. Figure the deductions on a
through 8 to report income items subject activity reported in boxes 5 through 8. separate sheet and attach it to the
to the passive activity rules at the See the instructions under Deductions, return.
beneficiary's level. earlier, for a discussion of how the
depreciation deduction is apportioned Excess deductions on termination
Boxes 6 through 8—Ordinary between the beneficiaries and the occur only during the last tax year of the
Business Income, Rental Real estate or trust. Report any AMT trust or decedent's estate when the total
adjustment or tax preference item deductions (excluding the charitable
Estate, and Other Rental Income
attributable to depreciation separately in deduction and exemption) are greater
Enter the beneficiary's share of trade or box 12, using code G. than the gross income during that tax
business, rental real estate, and other year.
rental income, minus allocable Note. An estate or trust can't make an
deductions (other than directly election under section 179 to expense
Generally, a deduction based on an
apportionable deductions). To assist the certain depreciable business assets.
NOL carryover isn't available to a
beneficiary in figuring any applicable Depletion (code B). Enter the beneficiary as an excess deduction.
passive activity loss limitations, also beneficiary's share of the depletion However, if the last tax year of the
attach a separate schedule showing the deduction under section 611 directly estate or trust is also the last year in
beneficiary's share of income derived apportioned to each activity reported in which an NOL carryover may be taken
from each trade or business, rental real boxes 5 through 8. See Depreciation, (see section 172(b)), the NOL carryover
estate, and other rental activity. Depletion, and Amortization, earlier, for is considered an excess deduction on
a discussion of how the depletion the termination of the estate or trust to
deduction is apportioned between the the extent it isn't absorbed by the estate
beneficiaries and the estate or trust. or trust during its final tax year. For more
Report any tax preference item information, see Regulations section

Instructions for Form 1041 (2019) -41-

1.642(h)-4 for a discussion of the AMT adjustment attributable to Income tax withheld on wages
allocation of the carryover among the qualified dividends, net short-term ! can't be distributed to the
beneficiaries. capital gains, or net long-term capi- CAUTION beneficiary.

Only the beneficiary of an estate or

tal gains (codes B through D). If any • The low-income housing credit (code
part of the amount reported in box 12, C). Attach a statement that shows the
trust that succeeds to its property is code A, is attributable to qualified
allowed to deduct that entity's excess beneficiary's share of the amount, if any,
dividends (code B), net short-term entered on line 6 of Form 8586,
deductions on termination. A beneficiary capital gain (code C), or net long-term
who doesn't have enough income in that Low-Income Housing Credit, with
capital gain (code D), enter that part instructions to report that amount on
year to absorb the entire deduction can't using the applicable code.
carry the balance over to any Form 8586, line 4 or Form 3800, Part III,
succeeding year. An individual AMT adjustment attributable to un- line 1d, if the beneficiary's only source
beneficiary must be able to itemize recaptured section 1250 gain or 28% for the credit is a pass-through entity.
deductions in order to claim the excess rate gain (codes E and F). Enter the Also, show the beneficiary's share of the
deductions in determining taxable beneficiary's distributive share of any amount, if any, entered on line 13 of
income. AMT adjustments to the unrecaptured Form 8586 with instructions to report
section 1250 gain (code E) or 28% rate that amount on Form 8586, line 11 or
gain (code F), whichever is applicable, Form 3800, Part III, line 4d, if the
Box 11, Codes B and C—Unused beneficiary's only source for the credit is
in box 12.
Capital Loss Carryover a pass-through entity.
Accelerated depreciation, depletion, • Rehabilitation credit and energy
Upon termination of the trust or
and amortization (codes G through credit (code D). Attach a statement that
decedent's estate, the beneficiary
I). Enter any adjustments or tax shows the beneficiary's apportioned
succeeding to the property is allowed as
preference items attributable to share of basis, expenditures, and other
a deduction any unused capital loss
depreciation, depletion, or amortization information that is necessary for the
carryover under section 1212. If the
that were directly apportioned to the beneficiary to complete Form 3468,
estate or trust incurs capital losses in
beneficiary. For property placed in Investment Credit, for the rehabilitation
the final year, use the Capital Loss
service before 1987, report separately credit and the energy credit. See the
Carryover Worksheet in the Instructions
the accelerated depreciation of real and Instructions for Form 3468 for more
for Schedule D (Form 1041) to figure the
leased personal property. information.
amount of capital loss carryover to be
allocated to the beneficiary. Exclusion items (code J). Enter the • Other qualifying investment credit
beneficiary's share of the adjustment for (code E). Attach a statement that shows
minimum tax purposes from the beneficiary's apportioned share of
Box 11, Codes D and E—NOL
Schedule K-1, box 12, code A, that is qualified investment and other
Carryover information that is necessary for the
attributable to exclusion items
Upon termination of a trust or (Schedule I (Form 1041), lines 2, 3, 4, 5, beneficiary to complete Form 3468 for
decedent's estate, a beneficiary and 7). the qualifying advanced coal project
succeeding to its property is allowed to credit, qualifying gasification project
deduct any unused NOL (and any credit, and qualifying advanced energy
Box 13—Credits and Credit
ATNOL) carryover for regular and AMT project credit. See the Instructions for
purposes if the carryover would be Recapture Form 3468 for more information.
allowable to the estate or trust in a later Enter each beneficiary's share of the • Work opportunity credit (code F).
tax year but for the termination. Enter in credits and credit recapture using the • Credit for small employer health
box 11, using codes D and E, the applicable codes. Listed below are the insurance premiums (code G).
unused carryover amounts. credits that can be allocated to the • Biofuel producer credit (code H).
beneficiary(ies). Attach a statement if • Credit for increasing research
Box 12—AMT Items additional information must be provided activities (code I).
to the beneficiary as explained below. • Renewable electricity, refined coal,
Adjustment for minimum tax purpo- and Indian coal production credit (code
ses (code A). Enter the beneficiary's • Credit for estimated taxes (code A). J). Attach a statement that shows
share of the adjustment for minimum tax Payment of estimated tax to be credited separately the amount of the credit the
purposes. to the beneficiary (section 643(g)). beneficiary must report on line 19 of
To figure the adjustment, subtract the See the instructions for Form 8835, including the allocation of
beneficiary's share of the income Schedule G, Part II, line 11 the Part II credit for production during
distribution deduction figured on
!
CAUTION before you make an entry to
the 4-year period beginning on the date
Schedule B, line 15, from the allocate any estimated tax payments to the facility was placed in service and for
beneficiary's share of the income a beneficiary. If the fiduciary doesn't production after that period.
distribution deduction on a minimum tax make a valid election, then the IRS will • Empowerment zone employment
basis figured on Schedule I (Form disallow the estimated tax payment that credit (code K).
1041), line 42. The difference is the is reported on Schedule K-1 and • Indian employment credit (code L).
beneficiary's share of the adjustment for claimed on the beneficiary's return. • Orphan drug credit (code M).
minimum tax purposes. • Credit for employer provided child
• Credit for backup withholding (code care and facilities (code N).
Note. Schedule B, line 15 equals the B). • Biodiesel and renewable diesel fuels
sum of all Schedules K-1, boxes 1, 2a, credit (code O). If the credit includes the
3, 4a, 5, 6, 7, and 8. small agri-biodiesel credit, attach a
statement that shows the beneficiary's

-42- Instructions for Form 1041 (2019)

share of the small agri-biodiesel credit, indicate that the information is provided of qualified property limitations.
the number of gallons claimed for the on an attached statement. Do not add Therefore, neither the PTP nor its
small agri-biodiesel credit, and the amounts into a single number and owners (including estates and trusts) is
estate's or trust's productive capacity for report it on Schedule K-1. The required to report W-2 wages or UBIA of
agri-biodiesel. information must be separately qualified property amounts related to a
• Credit to holders of tax credit bonds identified for each trade or business the trade or business operated by a PTP.
(code P). trust or estate directly conducts,
• Credit for employer differential wage including specified service trades or Trusts and estates should use
payments (code Q). businesses (SSTBs). The trust or estate Statement B—QBI Pass-through Entity
• Recapture of credits (code R). On an must attach the statement to each Aggregation Election(s), in these
attached statement to Schedule K-1, Schedule K-1, separately identifying the instructions, or a substantially similar
provide any information the beneficiary beneficiary’s allocable share of: statement, to report aggregated trades
will need to report recapture of credits. 1. Qualified items of income, gain, or businesses and provide supporting
• Other credits (code Z). Use code Z to deduction, and loss; information to beneficiaries on each
report the beneficiary's share of the Schedule K-1.
employee retention credit. See Form 2. W-2 wages;
5884-A and its instructions for more 3. Unadjusted basis immediately Trusts and estates should use
information about the employee after acquisition (UBIA) of qualified Statement C—QBI Pass-through Entity
retention credit. property; Reporting- Patrons of Specified
4. Qualified PTP items; and Agricultural and Horticultural
Box 14—Other Information 5. Section 199A dividends, also Cooperatives, in these instructions, or a
known as qualified real estate substantially similar statement, to report
Enter the dollar amounts and applicable allocable QBI and W-2 wages allocable
codes for the items listed under Other investment trust (REIT) dividends.
to qualified payments from a specified
Information. agricultural or horticultural cooperative
Foreign taxes (code B). Enter the The trust or estate must make an initial for each trade or business. This
beneficiary's allocable share of taxes determination of which items are statement should also be used to report
paid or accrued to a foreign country. qualified items of income, gain, each beneficiary’s allocable section
Attach a statement reporting the deduction, and loss at its level and 199A(g) deduction reported to the trust
beneficiary's share of foreign tax (paid report to each beneficiary their share of or estate by the specified cooperative.
or accrued) and income by category all items that may be qualified items at
the beneficiary level. See the heading Determining the trust or estate’s
including interest, dividends, rents and
Determining the Trust or Estate’s QBI or qualified trades or businesses. The
royalties, and other income. See Form
Qualified PTP Income, below. The trust or estate’s qualified trades or
1116 and Pub. 514 for more
beneficiary must then determine businesses include its section 162
information.
whether each item is includible in QBI. trades or businesses, except for
Foreign trading gross receipts specified service trades or businesses,
(code G). Enter the beneficiary's In addition, the trust or estate must also or the trade or business of providing
share, if any, of foreign trading gross report on whether any of its trades or services as an employee. A section 162
receipts. See Form 8873, Extraterritorial businesses are SSTBs and identify on trade or business generally includes any
Income Exclusion, for more information. the statement any trades or businesses activity carried on to make a profit and
that are aggregated. with considerable, regular, and
Net investment income tax (code H).
continuous activity. For more
Use code H to identify the amount of the
Trusts and estates should use information on what qualifies as a trade
beneficiary's adjustment for section
Statement A—QBI Pass-through Entity or business for purposes of section
1411 net investment income or
Reporting, in these instructions, or a 199A, see the Instructions for Form
deductions. See the Instructions for
substantially similar statement, to report 8995, Qualified Business Income
Form 8960. An attachment may be
each beneficiary’s allocable information Deduction Simplified Computation, or
provided with the K-1 informing the
from each trade or business, including Form 8995-A, Qualified Business
beneficiary of the detailed items to be
QBI items, W-2 wages, UBIA of Income Deduction.
reported on Form 1040 or 1040-SR.
See Net Investment Income Tax, earlier, qualified property, qualified PTP items, Rental real estate. Rental real
for more information on these amounts. and section 199A dividends by estate may constitute a trade or
attaching the completed statement(s) to business for purposes of the QBI
Section 199A information (code I).
each beneficiary’s Schedule K-1. The deduction if the rental real estate:
In the case of a trust or estate, the
qualified business income (QBI)
trust or estate should also use • Rises to the level of a trade or
Statement A—QBI Pass-through Entity business under section 162,
deduction, also known as the section
199A deduction, is determined at the
Reporting to report each beneficiary’s • Satisfies the requirements for the
share of QBI items, W-2 wages, UBIA of rental real estate safe harbor in Rev.
beneficiary level for the portions of QBI,
qualified property, qualified PTP items, Proc. 2019-38, 2019-42 I.R.B. 942, or
qualified REIT dividends, and qualified
publicly traded partnership items
and section 199A dividends reported to • Meets the self-rental exception (that
the trust or estate by another entity. is, the rental or licensing of property to a
apportioned to the beneficiaries. To
allow beneficiaries to correctly figure commonly controlled trade or business
Note. The estate or trust must report conducted by an individual or relevant
their QBI deduction, the trust or estate each beneficiary's share of qualified
must enter an asterisk (*) on each passthrough entity (RPE)) in
items of income, gain, deduction and Regulations section 1.199A-1(b)(14).
beneficiary’s Schedule K-1 next to code loss from a PTP. The PTP component is
I and enter “STMT” in the right column to not limited by the W-2 wages and UBIA

Instructions for Form 1041 (2019) -43-

The determination of whether rental real property from an SSTB may be used by The trust or estate must provide a
estate constitutes a trade or business the beneficiary to compute their QBI written explanation for any changes to
for purposes of the QBI deduction is deduction. Therefore, the statement prior year aggregations that describes
made by the trust or estate. The trust or attached to the Schedule K-1 issued to the change in facts and circumstances.
estate must first make this each beneficiary must identify any items
determination and then only include the relating to SSTBs. If the trust or estate directly or indirectly
allocable share of rental real estate owns an interest in a relevant RPE that
items of income, gain, loss, and Aggregation. A trust or estate aggregates multiple trades or
deduction on the statement provided to engaged in more than one trade or businesses, it must attach a copy of the
beneficiaries. Rental real estate that business may choose to aggregate RPE’s aggregation to each
does not meet one of the three multiple trades or businesses into a Schedule K-1. The trust or estate
conditions noted above does not single trade or business for purposes of cannot break apart the aggregation of
constitute a trade or business for section 199A if it meets the following another RPE, but it may add trades or
purposes of the QBI deduction and requirements. businesses to the aggregation,
must not be included in the QBI 1. The same person, or group of assuming the requirements above are
information provided to beneficiaries. persons, either directly or through satisfied.
attribution, owns 50% or more of each
Specified service trades or trade or business for a majority of the Determining the Trust or Estate’s
businesses excluded from qualified tax year, including the last day of the tax QBI or Qualified PTP Items. The trust
trades or businesses. SSTBs are year, and all trades or businesses use or estate’s items of QBI that must be
generally excluded from the definition of the same tax year-end; reported to beneficiaries include the
a qualified trade or business. An SSTB allocated amounts of qualified items of
is any trade or business providing 2. None of the trades or businesses income, gain, deduction, and loss from
services in the fields of health, law, are an SSTB; and the trust or estate’s trades or
accounting, actuarial science, 3. The trades or businesses to be businesses that are effectively
performing arts, consulting, athletics, aggregated meet at least two of the connected with the conduct of a trade or
financial services, brokerage services, following three factors: business within the United States. This
investing and investment management, a. They provide products, property, may include, but is not limited to, items
trading or dealing in securities, trust or or services that are the same or that are such as ordinary business income or
estate interests, or commodities or any customarily offered together; (losses), section 1231 gains or (losses),
other trade or business where the b. They share facilities or share charitable contributions, section 179
principal asset is the reputation or skill significant centralized business deductions, and interest from debt
of one or more of its employees or elements, such as personnel, financed distributions.
owners. The term any trade or business accounting, legal, manufacturing,
where the principal asset is the purchasing, human resources, or QBI may also include rental income
reputation or skill of one or more of its information technology resources; or (losses) or royalty income, if the activity
employees or owners means any trade rises to the level of a trade or business;
or business that consists of any of the c. They are operated in coordination and gambling gains or (losses), but only
following: (i) a trade or business in with, or reliance upon, one or more of if the trust or estate is engaged in the
which a person receives fees, the businesses in the aggregated group. trade or business of gambling. Whether
compensation, or other income for an activity rises to the level of a trade or
endorsing products or services; (ii) a If the trust or estate chooses to business must be determined at the
trade or business in which a person aggregate multiple trades or entity level and, once made, is binding
licenses or receives fees, businesses, it must report the on beneficiaries.
compensation, or other income for the aggregation on Statement B, or a
use of an individual’s image, likeness, substantially similar statement, and Qualified PTP items that must be
name, signature, voice, trademark, or attach it to each Schedule K-1. The reported to the beneficiaries include the
any other symbols associated with the statement must provide the information allocated amounts of the trust or
individual’s identity; or (iii) receiving necessary to identify each separate estate’s share of qualified items of
fees, compensation, or other income for trade or business included in each income, gain, deduction, and loss from
appearing at an event or on radio, aggregation, a description of the a PTP and may also include gain or loss
television, or another media format. aggregated trades or businesses, and recognized on the disposition of the
an explanation of the factors met that trust or estate’s partnership interest that
Exception. If the beneficiary’s is not treated as a capital gain or loss.
taxable income is equal to or less than allow the aggregation in accordance
the threshold for the reporting 2019 tax with Regulations section 1.199A-4. The
aggregation statement must be However, QBI and qualified PTP items
year, $160,700 ($321,400 if married don’t include any of the following.
filing jointly or $160,725 if married filing completed each year to show the trust
separately or married nonresident or estate's trade or business • Items that are treated as capital gain
aggregations. Failure to disclose the or loss under any provision of the Code.
alien), the QBI from the SSTB may be
used by the beneficiary to compute their aggregations may cause them to be • Dividends or dividend equivalents,
disaggregated. including qualified REIT dividends.
QBI deduction. If the beneficiary’s
taxable income is within the phase-in
• Interest income (unless received in
The trust or estate's aggregations must connection with the trade or business).
range, the threshold amount plus
$50,000 ($100,000 if married filing be reported consistently for all • Wage income.
jointly), an applicable percentage of the subsequent years, unless there is a • Income that is not effectively
change in facts and circumstances that connected with the conduct of a trade or
QBI, W-2 wages, and UBIA of qualified business within the United States (for
changes or disqualifies the aggregation.

-44- Instructions for Form 1041 (2019)

more information, go to IRS.gov and • Annuities (unless received in QBI flowchart. Trusts or estates
type in the key word “effectively connection with the trade or business). may use the flow chart below to help
connected income”). • Guaranteed payments described in them determine if an allocated item of
• Commodities transactions, or foreign section 707(c) received by the entity for income, gain, deduction, or loss is
currency gains or losses described in services rendered to a partnership. includible in QBI reportable to
section 954(c)(1)(C) or (D). • Payments described in section beneficiaries.
• Income, loss, or deductions from 707(a) received by the entity for
notional principal contracts under services rendered to a partnership.
section 954(c)(1)(F). .

QBI Flowchart

Questions Yes No
Is the item effectively connected with the conduct of a trade or business within the United Continue Stop, this item isn’t QBI.
States?
Is the item attributable to a trade or business (this may include section 1231 gain (loss), Continue Stop, this item isn’t QBI.
charitable contributions, section 179 deductions, interest from debt financed distributions,
etc.)? Examples of an item not considered attributable to the trade or business at the entity
level include gambling income (loss) where the entity isn’t engaged in trade or business of
gambling, income (loss) from vacation properties when the entity isn’t in that trade or
business, activities not engaged in for profit, etc.
Is the item treated as a capital gain or loss under any provision of the Internal Revenue Code Stop, this item isn’t QBI. Continue
or is it a dividend or dividend equivalent?
Is the item interest income other than interest income properly allocable to a trade or Stop, this item isn’t QBI. Continue
business? (Note that interest income attributable to an investment of working capital,
reserves, or similar accounts isn’t properly allocable to a trade or business).
Is the item an annuity, other than an annuity received in connection with the trade or business? Stop, this item isn’t QBI. Continue
Is the item gain or loss from a commodities transaction or foreign currency gain or loss Stop, this item isn’t QBI. Continue
described in sections 954(c)(1)(C) or (D)?
Is the item gain or loss from a notional principal contract under section 954(c)(1)(F)? Stop, this item isn’t QBI. Continue
Is the item of income or loss from a qualified publicly traded partnership? This item is a qualified PTP This item is QBI. Report this
item. Report this item as item as QBI subject to
qualified PTP income or beneficiary-specific
loss, subject to determinations.
beneficiary-specific
determinations, and
check the PTP box.

Specific Instructions for Statement business the trust or estate owns as the W-2 wages and UBIA of qualified
A—QBI Pass-through Entity Report- directly or indirectly. Use the QBI Flow property from a PTP are not allowed in
ing. Chart above to determine if an allocated computing the W-2 wage and UBIA
item is reportable as a QBI item or limitations.
QBI or qualified PTP items. The qualified PTP item subject to
trust or estate must first determine if it is beneficiary-specific determinations. The W-2 wages are amounts paid to
engaged in one or more trades or Each item included under “Other” must employees described in section 6051(a)
businesses. It must then determine if be stated separately, identifying the (3) and (8). If the trust or estate
any of its trades or businesses are nature and amount of each item. conducts more than one trade or
SSTBs. The trust or estate must also businesses, it must allocate the W-2
determine whether it has qualified PTP W-2 wages and UBIA of qualified wages among its trades or businesses.
items from an interest in a PTP. The property. The trust or estate must See Rev. Proc. 2019-11, 2019-09 I.R.B.
trust or estate must indicate the status determine the W-2 wages and UBIA of 742 or more information.
on the appropriate check boxes for each qualified property properly allocable to
trade or business (or aggregated trade QBI for each qualified trade or business The unadjusted basis of qualified
or business) or PTP interest reported. and report the allocable share to each property is figured by adding the
beneficiary on Statement A, or a unadjusted basis of all qualified assets
Note. SSTBs and PTPs cannot be substantially similar statement, attached immediately after acquisition. Qualified
aggregated with any other trade or to Schedule K-1. This includes the property includes all tangible property
business. So, if the aggregation box is allocable share of W-2 wages and UBIA subject to depreciation under section
checked, the SSTB and PTP boxes for of qualified property reported to the trust 167 for which the depreciable period
that specific aggregated trade or or estate from any qualified trades or hasn't ended that is held and used for
business should not be checked. businesses of an RPE the trust or estate the production of QBI by the trade or
owns directly or indirectly. However, business during the tax year and held
Next, the trust or estate must report to trusts or estates that own a direct or on the last day of the tax year. The
each beneficiary their allocable share of indirect interest in a PTP may not depreciable period ends on the later of
all apportioned items that are QBI or include any amounts for W-2 wages or 10 years after the property is placed in
qualified PTP items for each trade or UBIA of qualified property from the PTP,

Instructions for Form 1041 (2019) -45-

service or the last day of the full year for dividend under section 857(b)(3) and is and (8) for the calendar year ended with
the applicable recovery period under not a qualified dividend under section or within the trust or estate’s tax year. If
section 168. 1(h)(11), plus any apportioned qualified the trust or estate conducts more than
REIT dividends received from a one trade or business, it must allocate
Section 199A dividends. The trust regulated investment company (RIC). W-2 wages among its trades or
or estate must report the apportioned businesses. See Rev. Proc. 2019-11 for
allocable share of any REIT dividends to Fiscal year trusts and estates. For more information.
each beneficiary on Statement A, or a purposes of determining the QBI or
substantially similar statement, attached qualified PTP items, UBIA of qualified Note. The trust or estate must report
to Schedule K-1. Section 199A property, and the aggregate amount of each beneficiary’s share of qualified
dividends do not have to be reported by qualified section 199A dividends, fiscal items of income, gain, deduction and
trade or business and can be reported year trusts or estates include all items loss from a PTP, but the W-2 wages and
as a single amount to beneficiaries. from the fiscal tax year. UBIA of qualified property from the PTP
Section 199A dividends include should not be reported as the
dividends the trust or estate receives For purposes of determining W-2 beneficiary cannot use that information
from a REIT held for more than 45 days, wages, fiscal year trusts or estates in computing their QBI deduction.
for which the payment is not obligated to include apportioned amounts paid to
someone else, is not a capital gain employees under section 6051(a)(3)

Statement A—QBI Pass-through Entity Reporting

Pass-through entity’s name: Pass-through entity’s EIN:

Beneficiary’s name: Benificiary’s identifying number:

PTP PTP PTP

Beneficiary's Share of: Aggregated Aggregated Aggregated
SSTB SSTB SSTB
QBI or Qualified PTP Items Subject to Beneficiary-specific Determinations TB1 TB2 TB3
Ordinary business income
Rental income
Other

W-2 Wages
UBIA of Qualified Property

Section 199A Dividends

Specific Instructions for Statement business and an explanation of the year aggregations that describes the
B—QBI Pass-through Entity Aggre- factors met that allow the aggregation. change in facts and circumstances.
gation Election(s). If the trust or
estate elects to aggregate more than The aggregation statement must be If the trust or estate holds a direct or
one trade or business that meet all the completed each year to show the trust’s indirect interest in an RPE that
requirements to aggregate, the trust or or estate’s trade or business aggregates multiple trades or
estate must report the aggregation to aggregations. Failure to disclose the businesses, the trust or estate must also
beneficiaries on Statement B, or a aggregations may cause them to be include a copy of the RPE’s
substantially similar statement, and disaggregated. The trust’s or estate’s aggregations with each beneficiary’s
attach it to each Schedule K-1. The trust aggregations must be reported Schedule K-1. The trust or estate
or estate must indicate trades or consistently for all subsequent years, cannot break apart the aggregation of
businesses that were aggregated by unless there is a change in facts and another RPE, but it may add trades or
checking the appropriate box for each circumstances that changes or businesses to the aggregation,
aggregated trade or business. The trust disqualifies the aggregation. The trust or assuming the aggregation requirements
or estate must also provide a estate must provide a written are satisfied.
description of the aggregated trade or explanation for any changes to prior

-46- Instructions for Form 1041 (2019)

Statement B—QBI Pass-through Entity Aggregation Election(s)

Pass-through entity’s name: Pass-through entity’s EIN:

Aggregation of Pass-through Business Operations
Aggregation 1
Provide a description of the aggregated trades or businesses and an explanation of the factors met that allow the aggregation in accordance with
Regulations section 1.199A-4. In addition, if the pass-through entity holds a direct or indirect interest in a relevant pass-through entity (RPE) that
aggregates multiple trades or businesses, attach a copy of the RPE's aggregations.

Has this trade or business aggregation changed from the prior year? This includes changes in the aggregation due to a trade or business being
formed, acquired, disposed, or ceasing operations. If yes, explain.

Note. If you have more than one aggregated group, attach additional Statements B. Name the additional aggregations 2, 3, 4, and so forth.

Specific Instructions for Statement from each trade or business to each of reported to the trust or estate on Form
C—QBI Pass-through Entity Report- its beneficiaries on Statement C, or a 1099-PATR from the cooperative.
ing - Patrons of Specified Agricultur- substantially similar statement, and
attach it to Schedules K-1 so each Section 199A(g) Deduction. The
al and Horticultural Cooperatives. trust or estate must report to its
beneficiary can compute their patron
QBI items and wages allocable to reduction under section 199A(b)(7). beneficiaries their allocable share of any
qualified payments. If the trust or apportioned section 199A(g) deduction
estate is a patron of a specified QBI items and W-2 wages allocable to passed-through the cooperative, as
agricultural or horticultural cooperative, qualified payments include apportioned reported on Form 1099-PATR. Section
the trust or estate must provide the QBI items included on Statement A that 199A(g) deductions do not have to be
allocable share of QBI items and W-2 are allocable to the qualified payments reported by trade or business and can
wages allocable to qualified payments be reported as a single amount to
beneficiaries.

Statement C—QBI Pass-through Entity Reporting- Patrons of Specified Agricultural and Horticultural
Cooperatives

Pass-through entity’s name: Pass-through entity’s EIN:

Beneficiary’s name: Beneficiary's identifying number:

PTP PTP PTP

Beneficiary’s Share of: Aggregated Aggregated Aggregated
SSTB SSTB SSTB
QBI Items Allocable to Qualified Payments Subject to Beneficiary-Specific
TB1 TB2 TB3
Determinations
Ordinary business income
Rental income
Other

W-2 Wages Allocable to Qualified Payments

Section 199A(g) Deduction

Instructions for Form 1041 (2019) -47-

Other information (code Z). List on a Section 199 Domestic production years beginning after 2017. If
separate sheet the tax information the activities deduction (DPAD). If the applicable, provide the necessary
beneficiary will need to complete his or estate or trust is a recipient of the DPAD information to each domestic corporate
her return that isn't entered elsewhere from a pass-through entity (partnership, beneficiary for its calculation of FDII
on Schedule K-1. S corporation, estate, trust, or benefit. See section 250 for more
cooperative) with a tax year beginning information. See the Instructions for
For example, if the estate or trust Form 8993 for details.
participates in a transaction that must before 2018, the DPAD can be taken in
be disclosed on Form 8886 (see limited circumstances. See Form 8903 Limitation on business interest ex-
earlier), both the estate or trust and its and its instructions for details. pense. If an estate or trust is required
beneficiaries may be required to file Inclusion of global intangible to file Form 8990, the adjusted taxable
Form 8886. The estate or trust must low-taxed income (GILTI). Section income of an estate or trust beneficiary
determine if any of its beneficiaries are 951A requires U.S. shareholders of is reduced by any income (including any
required to disclose the transaction and controlled foreign corporations to report distributable net income) received from
provide those beneficiaries with their ratable share of GILTI in taxable the estate or trust by the beneficiary to
information they will need to file Form income. If applicable, provide the the extent such income supported a
8886. This determination is based on information necessary to figure the deduction for business interest expense
the category(ies) under which a GILTI inclusion to each beneficiary. See under section 163(j)(1)(B) in computing
transaction qualified for disclosure. See the Instructions for Form 8992 for the estate's or trust's taxable income. If
the Instructions for Form 8886 for details. applicable, provide the beneficiary the
details. necessary information to calculate this
Foreign-derived intangible amount in an attachment to
In addition, if the beneficiary is a
income (FDII). Public Law 115-97 Schedule K-1. See Form 8990 and the
“covered person” in connection with a
enacted section 250, which allows a Instructions for Form 8990 for additional
foreign tax credit splitter arrangement
domestic corporation a deduction for information.
under section 909, attach a statement
the eligible percentage of FDII and
that identifies the arrangement including
GILTI. Section 250 is effective for tax
the foreign taxes paid or accrued.

-48- Instructions for Form 1041 (2019)

Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws of the
United States. You are required to give us the information. We need it to ensure that you are complying with these laws and to
allow us to figure and collect the right amount of tax.
You aren't required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the
form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as
their contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return
information are confidential, as required by Code section 6103.
The time needed to complete and file this form and related schedules will vary depending on individual circumstances. The
estimated average times are:

Form 1041 Schedule D Schedule I Schedule J Schedule K-1 Form 1041-V

Recordkeeping 41 hr., 17 min. 14 hr., 35 min. 17 hr., 42 min. 11 hr., 00 min. 6 hr., 27 min. 43 min.
Learning about the law
or the form 17 hr., 08 min. 3 hr., 38 min. 4 hr., 22 min. 1 hr., 27 min. 35 min. ----
Preparing the form 32 hr., 23 min. 4 hr., 58 min. 4 hr., 51 min. 2 hr., 37 min. 43 min. ----
Copying, assembling, and
sending the form to the IRS 3 hr., 59 min. 16 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 us your comments from IRS.gov/FormComments. Or
you can send comments to Internal Revenue Service, Tax Forms and Publications Division,1111 Constitution Ave. NW,
IR-6526, Washington, DC 20224. Don't send Form 1041 to this address. Instead, see Where To File, earlier.

Instructions for Form 1041 (2019) -49-

Index

S portion 15 Revocable Living Trusts:

Elections: Section 645 Election 20
A M
Section 643(e)(3) 30
Accounting income 3 Minimum taxable income 27
Section 643(g) 10
Alaska Native Settlement Trusts 7 Section 645 5 S
Amended return 19 Special rule for qualified Second tier distributions 30
Amounts paid or permanently set N
revocable trusts 5 Separate share rule 29
aside 28 Net investment income tax 34
Treating contributions as paid Special filing instructions:
Assembly 13 Net operating loss 27
in prior tax year 28 Bankruptcy estates 17
Attachments 13 Nonexempt charitable
Electronic deposits 10 Electing small business
ESBTs (See Electing small deduction 19 trusts 15
business trusts) Nonexempt charitable trust 18, 28 Grantor trusts 13
B Estate 5, 39 Nonqualified deferred Pooled income funds 15
Bankruptcy estate 7, 15, 18 Bankruptcy 7, 18 compensation plans 18 Split-interest trust 19
Bankruptcy information 15 Exemption for 27 Substitute forms 39
Beneficiary 4 Foreign 5
Allocation of estimated tax Who must file 5 P
payment 10 Estate tax deduction 26 Paid preparer 9
Complex trust 39 Estimated tax 10, 27 T
Paid preparer authorization 9
Estate 39 Allocation of payments to Taxable income 27
Penalties:
Simple trust 39 beneficiaries 10 Tax rate schedule 30
Estimated tax 27
Tax year for inclusion 40 Penalty 27 Throwback years 37
Failure to provide a required
Withholding on foreign Exemption 27 Trusts 4
TIN 39
person 29 Extraterritorial income Alaska Native Settlement 7
Failure to provide information
Blind trust 20 exclusion 20 Blind 20
timely 10 Common trust fund 7
Late filing of return 10 Complex 39
Late payment of tax 10 Domestic 5
C F Other 11 Exemption for 27
Cemetery perpetual care fund 26 Fiduciary 4, 5, 8 Trust fund recovery 11 Foreign 35
Charitable deduction 27 Fiduciary accounting income Underpaid estimated tax 11 Grantor 3
Charitable remainder trusts 19 (FAI) (See Accounting income) Pooled income funds 15, 18, 28, Inter vivos 3, 4
Common trust fund 7 Final return 19 29 Nonexempt charitable 18, 19,
First tier distributions 29 Pre-need funeral trusts 18 28
Foreign tax credit 30 Pre-need funeral 18
D Form 1041-T 10 Qualified disability 27
Decedent's Estate 4 Form 8855 5 Q Qualified revocable 5
Definitions: Qualified business income Simple 39
Accumulation distribution 37 deduction 26 Split-interest 19
Adjusted gross income (AGI) 4 G Qualified disability trust 27 Testamentary 3, 4
Beneficiary 4 General business credit 31 Qualified revocable trust 5 Who must file 5, 39
Complex trust 18 Grantor trusts 3, 5, 13, 18 Qualified settlement funds 8
Decedent's Estate 4 Backup withholding 14 Qualified small business stock 29
Decedent's estate 17 Nonqualified deferred Qualified subchapter S trust W
DNI 4 compensation plans 18 (QSST) 5, 13, 14, 18 Where to file 9
Fiduciary 4 Optional filing methods 13 Who must file:
Grantor trusts 18 Pre-need funeral trusts 18 Decedent's estate 5
IRD 4 Special filing instructions 13 R Trust 5
Outside income 37 GST tax deduction 26 Returns: Withholding on foreign person 29
Pooled income fund 18 Amended 19
Revocable Living Trust 5 Common trust fund 7
Simple trust 18 Electronic and magnetic
I
Trust 4 media 8
Income distribution deduction 3,
Trusts 5 Final 19
Distributable net income (See DNI) 26, 28
Interest income 20 Nonexempt charitable
DNI 4, 28 trust 18, 19
Inter vivos 3, 4
IRD: Qualified settlement funds 8
Deduction 26 Split-interest trust 19
E When to file 8
Electing small business trusts 15 Who must file 5
ESBT (S portion only) 18

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