Formulaire 1041 Instructions des annexes A, B, G, J et K-1
Instructions pour le formulaire 1041, Déclaration de revenus des États-Unis pour les successions et les fiducies, et annexes A, B, G, J et K-1
Rév. 2023
Formulaires associés
- Formulaire 1041 - Déclaration de revenus des États-Unis pour les successions et les fiducies
- Formulaire 1041-A - Déclaration de renseignements des États-Unis Trust Cumul des montants de bienfaisance
- Formulaire 1041 Tableau J - Distribution d'accumulation pour certaines fiducies complexes
Department of the Treasury
Internal Revenue Service
2023
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 Code unless
otherwise noted.
Contents
Page
Contents
Page
Schedule J (Form 1041)—Accumulation
Schedule K-1 (Form 1041)—Beneficiary's Share of
Income Taxation of Trusts and Decedents'
Future Developments
For the latest information about developments related to
Form 1041 and Schedules A, B, G, J, K-1 and its instructions,
such as legislation enacted after they were published, go to
What's New
Due date of return. Calendar year estates and trusts must
file Form 1041 by April 15, 2024. If you live in Maine or
Massachusetts, you have until April 17, 2024, because of the
Patriots' Day and Emancipation Day holidays.
Capital gains and qualified dividends. For tax year 2023,
the 20% maximum capital gains rate applies to estates and
trusts with income above $14,650. The 0% and 15% rates
apply to certain threshold amounts. The 0% rate applies to
amounts up to $3,000. The 15% rate applies to amounts over
$3,000 and up to $14,650.
Bankruptcy estate filing threshold. For tax year 2023, the
requirement to file a return for a bankruptcy estate applies
only if gross income is at least $13,850.
Qualified disability trust. For tax year 2023, a qualified
disability trust can claim an exemption of up to $4,700. This
amount is not subject to phaseout.
Qualified sick and family leave credits. Generally, the
credits for qualified sick and family leave wages have expired.
However, qualified sick and family leave wages paid in 2023
for leave taken before April 1, 2021, and for leave taken after
March 31, 2021, and before October 1, 2021, may be eligible
to claim the credits in 2023.
Reminders
Review a copy of the will or trust instrument, including any
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amendments or codicils, before preparing an estate's or
trust's return.
We encourage you to use Form 1041-V, Payment Voucher
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for Estates and Trusts, to accompany your payment of a
Jan 9, 2024
Cat. No. 11372D
balance of tax due on Form 1041, particularly if your payment
is made by check or money order.
Item G. Section 645 election. If the estate has made a
section 645 election, the executor must check item G and
provide the taxpayer identification number (TIN) of the
electing trust with the highest total asset value in the box
provided.
The executor must also attach a statement to Form 1041
providing the following information for each electing trust
(including the electing trust provided in item G): (a) the name
of the electing trust, (b) the TIN of the electing trust, and (c)
the name and address of the trustee of the electing trust.
Form 1041 e-filing. When e-filing Form 1041, use either
Form 8453-FE, U.S. Estate or Trust Declaration for an IRS
e-file Return, or Form 8879-F, IRS e-file Signature
Authorization for Form 1041.
Worksheet—Schedule G, Part I, Line 8 has been added to
the instructions to calculate the amount due when there is a
negative amount from Form 8978, line 14, that was not used
to reduce Schedule G, line 3, to zero, and you have chapter 1
taxes and/or tax and interest from Form 8621.
Advanced manufacturing production credit. Section
13502 of the Inflation Reduction Act of 2022 (IRA 2022)
created the advanced manufacturing production credit for
certain components produced and sold after 2022. See Form
7207, Advanced Manufacturing Production Credit, and its
instructions and section 45X.
Note. Form 8879-F can only be associated with a single
Form 1041. Form 8879-F can no longer be used with multiple
Forms 1041.
For more information about e-filing returns through MeF,
see Pub. 4164, Modernized e-File (MeF) Guide for Software
Developers and Transmitters.
Net operating loss (NOL) carryback. Generally, an NOL
arising in a tax year beginning in 2021 or later may not be
carried back and instead must be carried forward indefinitely.
However, farming losses arising in tax years beginning in
2021 or later may be carried back 2 years and carried
forward indefinitely.
For special rules for NOLs arising in 2018, 2019 or 2020,
see Pub. 536, Net Operating Losses (NOLs) for Individuals,
Estates, and Trusts, for more information.
Section 965. Section 965(a) inclusion amounts are not
applicable for tax year 2021 and later years. However,
section 965 may still apply to certain estates and trusts
(including the S portion of electing small business trusts
(ESBTs)) where a section 965(h) or section 965(i) election
has been made.
Photographs of Missing Children
The Internal Revenue Service is a proud partner with the
Photographs of missing children selected by the Center may
appear in instructions on pages that would otherwise be
blank. You can help bring these children home by looking at
the photographs and calling 1-800-THE-LOST
(1-800-843-5678) if you recognize a child.
The Taxpayer Advocate Service (TAS)
The TAS Is Here To Help You
What Is TAS?
Section 1061 reporting. Section 1061 recharacterizes
certain long-term capital gains of applicable partnership
interests held by an estate or trust as short-term capital
Regulations - TD9918, each excess deduction on termination
of an estate or trust retains its separate character as an
amount allowed in arriving at adjusted gross income (AGI), a
non-miscellaneous itemized deduction, or a miscellaneous
itemized deduction.
TAS is an independent organization within the IRS that
helps taxpayers and protects taxpayer rights. TAS strives to
ensure that every taxpayer is treated fairly and that you know
How Can You Learn About Your Taxpayer Rights?
Itemized Deductions, later, for more information.
The Taxpayer Bill of Rights describes 10 basic rights that all
taxpayers have when dealing with the IRS. Go to
these rights mean to you and how they apply. These are your
rights. Know them. Use them.
Qualified Opportunity Investment. With the exception of
grantor trusts, if you held a qualified investment in a qualified
opportunity fund (QOF) at any time during the year, you must
file your return with Form 8997, Initial and Annual Statement
of Qualified Opportunity Fund (QOF) Investments, attached
to your return. For more information, see Form 8997 and its
instructions.
Extension of time to file. The extension of time to file an
estate (other than a bankruptcy estate) or trust return is 51/2
months.
Item A. Type of entity. On page 1 of Form 1041, item A,
taxpayers should select more than one box, when
appropriate, to reflect the type of entity.
Item F. Net operating loss (NOL) carryback. If an
amended return is filed for an NOL carryback, check the Net
later, for complete information.
What Can TAS Do for You?
TAS can help you resolve problems that you can't resolve
with the IRS. And their service is free. If you qualify for their
assistance, you will be assigned to one advocate who will
work with you throughout the process and will do everything
possible to resolve your issue. TAS can help you if:
Your problem is causing financial difficulty for you, your
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family, or your business;
You face (or your business is facing) an immediate threat
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of adverse action; or
You’ve tried repeatedly to contact the IRS but no one has
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responded, or the IRS hasn’t responded by the date
promised.
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Instructions for Form 1041 (2023)
(the grantor) is treated as the owner of the trust's assets.
Such a trust is a grantor type trust. See Grantor Type Trusts,
later, under Special Reporting Instructions.
How Can You Reach TAS?
TAS has offices in every state, the District of Columbia, and
A trust or decedent's estate figures its gross income in
much the same manner as an individual. Most deductions
and credits allowed to individuals are also allowed to estates
and trusts. However, there is one major distinction. A trust or
decedent's estate is allowed an income distribution
deduction for distributions to beneficiaries. To figure this
deduction, the fiduciary must complete Schedule B. The
income distribution deduction determines the amount of any
distributions taxed to the beneficiaries.
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Download Pub. 1546, The Taxpayer Advocate Service Is
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Call the IRS toll free at 800-TAX-FORM (800-829-3676) to
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order a copy of Pub. 1546;
Check your local directory; or
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Call TAS toll free at 877-777-4778.
For this reason, a trust or decedent's estate is sometimes
referred to as a “pass-through entity.” The beneficiary, and not
the trust or decedent's estate, pays income tax on their
distributive share of income. Schedule K-1 (Form 1041) is
used to notify the beneficiaries of the amounts to be included
on their income tax returns.
How Else Does TAS Help Taxpayers?
TAS works to resolve large-scale problems that affect many
taxpayers. If you know of one of these broad issues, report it
taxpayer information.
Before preparing Form 1041, the fiduciary must figure the
accounting income of the estate or trust under the will or trust
instrument and applicable local law to determine the amount,
if any, of income that is required to be distributed, because
the income distribution deduction is based, in part, on that
amount.
How To Get Forms and Publications
Internet. You can access the IRS website 24 hours a
Download forms, including talking tax forms, instructions,
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and publications;
Abusive Trust Arrangements
Order IRS products;
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Certain trust arrangements claim to reduce or eliminate
federal taxes in ways that are not permitted under the law.
Abusive trust arrangements are typically promoted by the
promise of tax benefits with no meaningful change in the
taxpayer's control over or benefit from the taxpayer's income
or assets. The promised benefits may include reduction or
elimination of income subject to tax; deductions for personal
expenses paid by the trust; depreciation deductions of an
owner's personal residence and furnishings; a stepped-up
basis for property transferred to the trust; the reduction or
elimination of self-employment taxes; and the reduction or
elimination of gift and estate taxes. These promised benefits
are inconsistent with the tax rules applicable to trust
arrangements.
Use the online Internal Revenue Code, regulations, and
other official guidance;
Research your tax questions;
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Search publications by topic or keyword;
Apply for an employer identification number (EIN); and
Sign up to receive local and national tax news by email.
Tax forms and publications. The estate or trust can
download or print all of the forms and publications it may
forms mailed to it. The IRS will process your order for forms
and publications as soon as possible.
Abusive trust arrangements often use trusts to hide the
true ownership of assets and income or to disguise the
substance of transactions. These arrangements frequently
involve more than one trust, each holding different assets of
the taxpayer (for example, the taxpayer's business, business
equipment, home, automobile, etc.). Some trusts may hold
interests in other trusts, purport to involve charities, or are
foreign trusts. Funds may flow from one trust to another trust
by way of rental agreements, fees for services, purchase
agreements, and distributions.
General Instructions
Purpose of Form
The fiduciary of a domestic decedent's estate, trust, or
bankruptcy estate uses Form 1041 to report:
The income, deductions, gains, losses, etc., of the estate
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or trust;
The income that is either accumulated or held for future
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distribution or distributed currently to the beneficiaries;
Any income tax liability of the estate or trust;
Employment taxes on wages paid to household
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Some of the abusive trust arrangements that have been
identified include unincorporated business trusts (or
organizations), equipment or service trusts, family residence
trusts, charitable trusts, and final trusts. In each of these
trusts, the original owner of the assets nominally subject to
the trust effectively retains the authority to cause financial
benefits of the trust to be directly or indirectly returned or
made available to the owner. For example, the trustee may be
the promoter, a relative, or a friend of the owner who simply
carries out the directions of the owner whether or not
permitted by the terms of the trust.
employees; and
Net Investment Income Tax (NIIT). See Schedule G, Part I,
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line 5, and the Instructions for Form 8960.
Income Taxation of Trusts and
Decedents' Estates
A trust or a decedent's estate is a separate legal entity for
federal tax purposes. A decedent's estate comes into
existence at the time of death of an individual. A trust may be
created during an individual's life (inter vivos) or at the time of
their death under a will (testamentary). If the trust instrument
contains certain provisions, then the person creating the trust
When trusts are used for legitimate business, family, or
estate planning purposes, either the trust, the beneficiary, or
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Instructions for Form 1041 (2023)
the transferor of assets to the trust will pay the tax on income
generated by the trust property. Trusts can't be used to
transform a taxpayer's personal, living, or educational
expenses into deductible items, and can't seek to avoid tax
liability by ignoring either the true ownership of income and
assets or the true substance of transactions. Therefore, the
tax results promised by the promoters of abusive trust
arrangements are not allowable under the law, and the
participants in and promoters of these arrangements may be
subject to civil or criminal penalties in appropriate cases.
All accrued income of a decedent who reported their
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income on the cash method of accounting,
Income accrued solely because of the decedent's death in
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the case of a decedent who reported their income on the
accrual method of accounting, and
Income to which the decedent had a contingent claim at
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the time of their death.
Some examples of IRD for a decedent who kept their
books on the cash method are:
Deferred salary payments that are payable to the
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decedent's estate,
For more details, including the legal principles that control
the proper tax treatment of these abusive trust arrangements,
see Notice 97-24, 1997-1 C.B. 409.
Uncollected interest on U.S. savings bonds,
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Proceeds from the completed sale of farm produce, and
The portion of a lump-sum distribution to the beneficiary of
For additional information about abusive tax
search box.
a decedent's individual retirement arrangement (IRA) that
equals the balance in the IRA at the time of the owner's
death. This includes unrealized appreciation and income
accrued to that date, less the aggregate amount of the
owner's nondeductible contributions to the IRA. Such
amounts are included in the beneficiary's gross income in the
tax year that the distribution is received.
Definitions
Adjusted gross income (AGI). Compute the AGI of an
estate or a non-grantor trust by subtracting the following from
total income on line 9 of page 1.
1. The administration costs of the estate or trust (the total
of lines 12, 14, and 15a to the extent they are costs incurred
in the administration of the estate or trust) that wouldn't have
been incurred if the property were not held by the estate or
trust.
The IRD has the same character it would have had if the
decedent had lived and received such amount.
Deductions and credits in respect of a decedent. The
following deductions and credits, when paid by the
decedent's estate, are allowed on Form 1041 even though
they were not allowable on the decedent's final income tax
return.
2. The income distribution deduction (line 18).
3. The amount of the exemption (line 21).
Business expenses deductible under section 162.
Interest deductible under section 163.
Taxes deductible under section 164.
Percentage depletion allowed under section 611.
Foreign tax credit.
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4. The net operating loss deduction (NOLD) claimed on
line 15b.
Electing small business trust (ESBT). Compute the
AGI of the S portion of an ESBT in the same manner as an
individual taxpayer, except that administration costs allocable
to the S portion (to the extent they are costs incurred in the
administration of the trust that wouldn't have been incurred if
the property were not held by the estate or trust) shall be
deducted in arriving at AGI.
For more information on IRD, see section 691 and Pub.
559, Survivors, Executors, and Administrators.
Income required to be distributed currently. Income
required to be distributed currently is income that is required
under the terms of the governing instrument and applicable
local law to be distributed in the year it is received. The
fiduciary must be under a duty to distribute the income
currently, even if the actual distribution is not made until after
the close of the trust's tax year. See Regulations section
1.651(a)-2.
Fiduciary. A fiduciary is a trustee of a trust, or an executor,
executrix, administrator, administratrix, personal
representative, or person in possession of property of a
decedent's estate.
Beneficiary. A beneficiary includes an heir, a legatee, or a
devisee.
Decedent's estate. The decedent's estate is an entity that
is formed at the time of an individual's death and is generally
charged with gathering the decedent's assets, paying the
decedent's debts and expenses, and distributing the
remaining assets. Generally, the estate consists of all the
property, real or personal, tangible or intangible, wherever
situated, that the decedent owned an interest in at death.
Distributable net income (DNI). The income distribution
deduction allowable to estates and trusts for amounts paid,
credited, or required to be distributed to beneficiaries is
limited to DNI. This amount, which is figured on Schedule B,
line 7, is also used to determine how much of an amount
paid, credited, or required to be distributed to a beneficiary
will be includible in their gross income.
Income in respect of a decedent (IRD). When completing
Form 1041, you must take into account any items that are
IRD.
In general, IRD is income that a decedent was entitled to
receive but that was not properly includible in the decedent's
final income tax return under the decedent's method of
accounting.
Note. Any reference in these instructions to “you” means the
fiduciary of the estate or trust.
Trust. A trust is an arrangement created either by a will or by
an inter vivos declaration by which trustees take title to
property for the purpose of protecting or conserving it for the
beneficiaries under the ordinary rules applied in chancery or
probate courts.
Revocable living trust. A revocable living trust is an
arrangement created by a written agreement or declaration
during the life of an individual and can be changed or ended
at any time during the individual's life. A revocable living trust
is generally created to manage and distribute property. Many
people use this type of trust instead of (or in addition to) a
will.
IRD includes:
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Instructions for Form 1041 (2023)
Because this type of trust is revocable, it is treated as a
grantor type trust for tax purposes. See Grantor Type Trusts
under Special Reporting Instructions, later, for special filing
instructions that apply to grantor trusts.
U.S. owner must generally file Form 3520-A, Annual
Information Return of Foreign Trust With a U.S. Owner.
If a domestic trust becomes a foreign trust, it is treated
under section 684 as having transferred all of its assets to a
foreign trust, except to the extent a grantor or another person
is treated as the owner of the trust when the trust becomes a
foreign trust.
Be sure to read Optional Filing Methods for Certain
Grantor Type Trusts, later. Generally, most people
TIP
that have revocable living trusts will be able to use
Optional Method 1. This method is the easiest and least
burdensome way to meet your obligations.
Grantor Type Trusts
If all or any portion of a trust is a grantor type trust, then that
trust or portion of a trust must follow the special reporting
requirements discussed later under Special Reporting
Instructions. See Grantor Type Trust under Specific
Instructions, later, for more details on what makes a trust a
grantor type trust.
Who Must File
Decedent's Estate
The fiduciary (or one of the joint fiduciaries) must file Form
1041 for a domestic estate that has:
1. Gross income for the tax year of $600 or more;
2. A beneficiary who is a nonresident alien; or
Note. A trust may be part grantor trust and part “other” type
of trust, for example, simple or complex, or ESBT.
3. If you held a qualified investment in a qualified
opportunity fund (QOF) at any time during the year, you must
file your return with Form 8997 attached. See the Form 8997
instructions.
Qualified subchapter S trusts (QSSTs). QSSTs must
follow the special reporting requirements for these trusts,
discussed later under Special Reporting Instructions.
An estate is a domestic estate if it isn't a foreign estate. A
foreign estate is one the income of which is from sources
outside the United States that isn't effectively connected with
the conduct of a U.S. trade or business and isn't includible in
gross income. If you are the fiduciary of a foreign estate, file
Form 1040-NR, U.S. Nonresident Alien Income Tax Return,
instead of Form 1041.
Special Rule for Certain Revocable Trusts
Section 645 provides that if both the executor (if any) of an
estate (the related estate) and the trustee of a qualified
revocable trust (QRT) elect the treatment in section 645, the
trust must be treated and taxed as part of the related estate
during the election period. This election may be made by a
QRT even if no executor is appointed for the related estate.
Trust
The fiduciary (or one of the joint fiduciaries) must file Form
In general, Form 8855, Election To Treat a Qualified
Revocable Trust as Part of an Estate, must be filed by the due
date for Form 1041 for the first tax year of the related estate.
This applies even if the combined related estate and electing
trust don't have sufficient income to be required to file Form
1041. However, if the estate is granted an extension of time
to file Form 1041 for its first tax year, the due date for Form
8855 is the extended due date.
1041 for a domestic trust taxable under section 641 that has:
1. Any taxable income for the tax year;
2. Gross income of $600 or more (regardless of taxable
income);
3. A beneficiary who is a nonresident alien; or
4. If you held a qualified investment in a QOF at any time
during the year, you must file your return with Form 8997
attached. See the Form 8997 instructions.
Once made, the election is irrevocable.
Qualified revocable trusts (QRTs). In general, a QRT is
any trust (or part of a trust) that, on the day the decedent
died, was treated as owned by the decedent because the
decedent held the power to revoke the trust as described in
section 676. An electing trust is a QRT for which a section
645 election has been made.
Two or more trusts are treated as one trust if the trusts
have substantially the same grantor(s) and substantially the
same primary beneficiary(ies) and a principal purpose of
such trusts is avoidance of tax. This provision applies only to
that portion of the trust that is attributable to contributions to
corpus made after March 1, 1984.
Election period. The election period is the period of time
during which an electing trust is treated as part of its related
estate.
A trust is a domestic trust if:
A U.S. court is able to exercise primary supervision over
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the administration of the trust (court test), and
The election period begins on the date of the decedent's
One or more U.S. persons have the authority to control all
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death and terminates on the earlier of:
substantial decisions of the trust (control test).
The day on which the electing trust and related estate, if
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See Regulations section 301.7701-7 for more information
on the court and control tests.
any, distribute all of their assets; or
The day before the applicable date.
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To determine the applicable date, first determine whether a
Form 706, United States Estate (and Generation-Skipping
Transfer) Tax Return, is required to be filed as a result of the
decedent's death. If no Form 706 is required to be filed, the
applicable date is 2 years after the date of the decedent's
death. If Form 706 is required, the applicable date is the later
of 2 years after the date of the decedent's death or 6 months
after the final determination of liability for estate tax. For
additional information, see Regulations section 1.645-1(f).
Also treated as a domestic trust is a trust (other than a
trust treated as wholly owned by the grantor) that:
Was in existence on August 20, 1996,
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Was treated as a domestic trust on August 19, 1996, and
Elected to continue to be treated as a domestic trust.
A trust that isn't a domestic trust is treated as a foreign
trust. If you are the trustee of a foreign trust, file Form
1040-NR instead of Form 1041. Also, a foreign trust with a
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Instructions for Form 1041 (2023)
under the name and TIN of the filing trustee's trust. A
statement providing the same information about the electing
trusts (except the filing trust) that is listed under If there is an
executor above must be attached to these Forms 1041. All
electing trusts must choose the same tax year.
If there is more than one electing trust, the filing trustee is
responsible for ensuring that the filing trust's share of the
combined tax liability is paid.
For additional information on filing requirements when
there is no executor, including application of the separate
share rule, see Regulations section 1.645-1(e). For
information on the requirements when an executor is
appointed after an election is made and the executor doesn't
agree to the election, see later.
Taxpayer identification number (TIN). All QRTs must
obtain a new TIN following the death of the decedent whether
or not a section 645 election is made. (Use Form W-9,
Request for Taxpayer Identification Number and Certification,
to notify payers of the new TIN.)
An electing trust that continues after the termination of the
election period doesn't need to obtain a new TIN following
the termination unless:
An executor was appointed and agreed to the election
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after the electing trust made a valid section 645 election, and
the electing trust filed a return as an estate under the trust's
TIN; or
No executor was appointed and the QRT was the filing
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trust (as explained later).
Responsibilities of the trustee when there is an
executor (or there isn't an executor and the trustee isn't
the filing trustee). When there is an executor (or there isn't
an executor and the trustee isn't the filing trustee), the trustee
of an electing trust is responsible for the following during the
election period.
A related estate that continues after the termination of the
election period doesn't need to obtain a new TIN.
For more information about TINs, including trusts with
multiple owners, see Regulations sections 1.645-1 and
301.6109-1(a).
General procedures for completing Form 1041 during
To timely provide the executor with all the trust information
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the election period.
necessary to allow the executor to file a complete, accurate,
and timely Form 1041.
If there is an executor. The following rules apply to filing
To ensure that the electing trust's share of the combined
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Form 1041 while the election is in effect.
tax liability is paid.
The executor of the related estate is responsible for filing
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Form 1041 for the estate and all electing trusts. The return is
filed under the name and TIN of the related estate. Be sure to
check the “Decedent's estate” box at the top of Form 1041
and item G if the estate has made a section 645 election. The
executor continues to file Form 1041 during the election
period even if the estate distributes all of its assets before the
end of the election period.
The trustee does not file a Form 1041 during the election
period (except for a final return if the trust terminates during
the election period, as explained later).
Procedure for completing Form 1041 for the year in
which the election terminates.
If there is an executor. If there is an executor, the Form
1041 filed under the name and TIN of the related estate for
the tax year in which the election terminates includes (a) the
items of income, deduction, and credit for the related estate
for its entire tax year; and (b) the income, deductions, and
credits for the electing trust for the period that ends with the
last day of the election period. If the estate won't continue
after the close of the tax year, indicate that this Form 1041 is
a final return.
At the end of the last day of the election period, the
combined entity is deemed to distribute the share comprising
the electing trust to a new trust. All items of income, including
net capital gains, that are attributable to the share comprising
the electing trust are included in the calculation of DNI of the
electing trust and treated as distributed. The distribution rules
of sections 661 and 662 apply to this deemed distribution.
The combined entity is entitled to an income distribution
deduction for this deemed distribution, and the "new" trust
must include its share of the distribution in its income. See
Regulations sections 1.645-1(e)(2)(iii) and 1.645-1(h) for
more information.
The Form 1041 includes all items of income, deduction,
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and credit for the estate and all electing trusts.
For item G, the executor must provide the TIN of the
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electing trust with the highest total asset value.
The executor must attach a statement to Form 1041
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providing the following information for each electing trust
(including the electing trust provided in item G): (a) the name
of the electing trust, (b) the TIN of the electing trust, and (c)
the name and address of the trustee of the electing trust.
The related estate and the electing trust are treated as
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separate shares for purposes of computing DNI and applying
distribution provisions. Also, each of those shares can
contain two or more separate shares. For more information,
see Separate share rule, later, and Regulations section
1.645-1(e)(2)(iii).
The executor is responsible for ensuring that the estate's
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share of the combined tax obligation is paid.
For additional information, including treatment of transfers
between shares and charitable contribution deductions, see
Regulations section 1.645-1(e).
If the electing trust continues in existence after the
termination of the election period, the trustee must file Form
1041 under the name and TIN of the trust, using the calendar
year as its accounting period, if it is otherwise required to file.
If there isn't an executor. If there isn't an executor, the
following rules apply to filing Form 1041 for the tax year in
which the election period ends.
If there isn't an executor. If no executor has been
appointed for the related estate, the trustee of the electing
trust files Form 1041 as if it were an estate. File using the TIN
that the QRT obtained after the death of the decedent. The
trustee can choose a fiscal year as the trust's tax year during
the election period. Be sure to check the “Decedent's estate”
box at the top of Form 1041 and item G if the filing trust has
made a section 645 election. For item G, the filing trustee
must provide the TIN of the electing trust with the highest
total asset value. The electing trust is entitled to a single $600
personal exemption on returns filed for the election period.
The tax year of the electing trust closes on the last day of
•
the election period, and the Form 1041 filed for that tax year
includes all items of income, deduction, and credit for the
electing trust for the period beginning with the first day of the
tax year and ending with the last day of the election period.
If there is more than one electing trust, the trusts must
The deemed distribution rules discussed above apply.
•
appoint one trustee as the filing trustee. Form 1041 is filed
6
Instructions for Form 1041 (2023)
Check the box to indicate that this Form 1041 is a final
If the election terminates as the result of a later appointed
executor, the executor of the related estate must file Forms
1041 under the name and TIN of the related estate for all tax
years of the related estate beginning with the decedent's
death. The electing trust's election period and tax year
terminate the day before the appointment of the executor.
The trustee isn't required to amend any of the returns filed by
the electing trust for the period prior to the appointment of the
executor. The trust must file a final Form 1041 following the
instructions above for completing Form 1041 in the year in
which the election terminates and there is no executor.
Termination of the trust during the election period. If
an electing trust terminates during the election period, the
trustee of that trust must file a final Form 1041 by completing
the entity information (using the trust's EIN), checking the
Final return box, and signing and dating the form. Don't report
items of income, deduction, and credit. These items are
reported on the related estate's return.
•
return.
If the filing trust continues after the termination of the
•
election period, the trustee must obtain a new TIN. If the trust
meets the filing requirements, the trustee must file a Form
1041 under the new TIN for the period beginning with the day
after the close of the election period and, in general, ending
December 31 of that year.
Responsibilities of the trustee when there is an
executor (or there isn't an executor and the trustee isn't
the filing trustee). In addition to the requirements listed
above under this same heading, the trustee is responsible for
the following.
If the trust will not continue after the close of the election
•
period, the trustee must file a Form 1041 under the name and
TIN of the trust. Complete the entity information and items A,
C, D, and F. Indicate in item F that this is a final return. Don't
report any items of income, deduction, or credit.
If the trust will continue after the close of the election
•
Alaska Native Settlement Trusts
period, the trustee must file a Form 1041 for the trust for the
tax year beginning the day after the close of the election
period and, in general, ending December 31 of that year. Use
the TIN obtained after the decedent's death. Follow the
general rules for completing the return.
The trustee of an Alaska Native Settlement Trust may elect
the special tax treatment for the trust and its beneficiaries
provided for in section 646. The election must be made by
the due date (including extensions) for filing the trust's tax
return for its first tax year ending after June 7, 2001. Don't
use Form 1041. Use Form 1041-N, U.S. Income Tax Return
for Electing Alaska Native Settlement Trusts, to make the
election. Additionally, Form 1041-N is the trust's income tax
return and satisfies the section 6039H information reporting
requirement for the trust.
Special filing instructions.
When the election isn't made by the due date of the
QRT's Form 1041. If the section 645 election hasn't been
made by the time the QRT's first income tax return would be
due for the tax year beginning with the decedent's death, but
the trustee and executor (if any) have decided to make a
section 645 election, then the QRT isn't required to file a
Form 1041 for the short tax year beginning with the
decedent's death and ending on December 31 of that year.
However, if a valid election isn't subsequently made, the QRT
may be subject to penalties and interest for failure to file and
failure to pay.
Bankruptcy Estate
The bankruptcy trustee or debtor-in-possession must file
Form 1041 for the estate of an individual involved in
bankruptcy proceedings under chapter 7 or 11 of title 11 of
the U.S. Code if the estate has gross income for the tax year
of $13,850 or more. See Bankruptcy Estates, later, for
details.
If the QRT files a Form 1041 for this short period, and a
valid section 645 election is subsequently made, then the
trustee must file an amended Form 1041 for the electing
trust, excluding all items of income, deduction, and credit of
the electing trust. These amounts are then included on the
first Form 1041 filed by the executor for the related estate (or
the filing trustee for the electing trust filing as an estate).
Later appointed executor. If an executor for the related
estate isn't appointed until after the trustee has made a valid
section 645 election, the executor must agree to the trustee's
election and they must file a revised Form 8855 within 90
days of the appointment of the executor. If the executor
doesn't agree to the election, the election terminates as of
the date of appointment of the executor.
Charitable Remainder Trusts (CRTs)
A section 664 CRT doesn’t file Form 1041. Instead, a CRT
files Form 5227, Split-Interest Trust Information Return. If the
CRT has any unrelated business taxable income, it must also
file Form 4720, Return of Certain Excise Taxes Under
Chapters 41 and 42 of the Internal Revenue Code.
Common Trust Funds
Don't file Form 1041 for a common trust fund maintained by a
bank. Instead, the fund may use Form 1065, U.S. Return of
Partnership Income, for its return. For more details, see
section 584 and Regulations section 1.6032-1.
If the executor agrees to the election, the trustee must
amend any Form 1041 filed under the name and TIN of the
electing trust for the period beginning with the decedent's
death. The amended returns are still filed under the name
and TIN of the electing trust, and they must include the items
of income, deduction, and credit for the related estate for the
periods covered by the returns. Also, attach a statement to
the amended Forms 1041 identifying the name and TIN of
the related estate, and the name and address of the executor.
Check the “Final return” box on the amended return for the
tax year that ends with the appointment of the executor.
Except for this amended return, all returns filed for the
combined entity after the appointment of the executor must
be filed under the name and TIN of the related estate.
ESBTs
ESBTs file Form 1041. However, see Electing Small Business
Trusts (ESBTs), later, for a discussion of the special reporting
requirements for these trusts.
Pooled Income Funds
Pooled income funds file Form 1041. See Pooled Income
Funds, later, for the special reporting requirements for these
trusts. Additionally, pooled income funds must file Form 5227.
Qualified Funeral Trusts
Trustees of pre-need funeral trusts who elect treatment under
section 685 file Form 1041-QFT, U.S. Income Tax Return for
7
Instructions for Form 1041 (2023)
Qualified Funeral Trusts. All other pre-need funeral trusts, see
Grantor Type Trusts, later, for Form 1041 reporting
requirements.
Form 8879-F can only be associated with a single
Form 1041. Form 8879-F can't be used with multiple
Forms 1041.
!
CAUTION
Qualified Settlement Funds
Form 1041 may also be e-filed using Form 8453-FE.
The trustee of a designated or qualified settlement fund
(QSF) must generally file Form 1120-SF, U.S. Income Tax
Return for Settlement Funds, instead of Form 1041.
For more information about e-filing returns through MeF,
see Pub. 4164.
If Form 1041 is e-filed and there is a balance due, the
fiduciary may authorize an electronic funds withdrawal with
the return.
Special election. If a QSF has only one transferor, the
transferor may elect to treat the QSF as a grantor type trust.
To make the grantor trust election, the transferor must
attach an election statement to a timely filed Form 1041,
including extensions, that the administrator files for the QSF
for the tax year in which the settlement fund is established. If
Form 1041 isn't filed because Optional Method 1 or 2
(described later) was chosen, attach the election statement
to a timely filed income tax return, including extensions, of
the transferor for the tax year in which the settlement fund is
established.
Private Delivery Services (PDSs)
You can use certain PDSs designated by the IRS to meet the
“timely mailing as timely filing/paying” rule for tax returns and
designated services.
The PDS can tell you how to get written proof of the
mailing date.
Election statement. The election statement may be
made separately or, if filed with Form 1041, on the
attachment described under Grantor Type Trusts, later. At the
top of the election statement, enter “Section 1.468B-1(k)
Election” and include the transferor's:
For the IRS mailing address to use if you’re using a PDS,
PDSs can't deliver items to P.O. boxes. You must use
the U.S. Postal Service to mail any item to an IRS
!
CAUTION
P.O. box address.
Name,
•
•
•
•
Address,
TIN, and
When To File
A statement that they will treat the QSF as a grantor type
For calendar year estates and trusts, file Form 1041 and
Schedule(s) K-1 by April 15, 2024. If you live in Maine or
Massachusetts, you have until April 17, 2024, because of the
Patriots' Day and Emancipation Day holidays.
trust.
Widely Held Fixed Investment Trust (WHFITs)
Trustees and middlemen of WHFITs don't file Form 1041.
Instead, they report all items of gross income and proceeds
on the appropriate Form 1099. For the definition of a WHFIT,
see Regulations section 1.671-5(b)(22). A tax information
statement that includes the information given to the IRS on
Forms 1099, as well as additional information identified in
Regulations section 1.671-5(e), must be given to trust
interest holders. See the General Instructions for Certain
Information Returns for more information.
For fiscal year estates and trusts, file Form 1041 by the
15th day of the 4th month following the close of the tax year.
For example, an estate that has a tax year that ends on June
30, 2024, must file Form 1041 by October 15, 2024. If the
due date falls on a Saturday, Sunday, or legal holiday, file on
the next business day.
Extension of Time To File
If more time is needed to file the estate or trust return, use
Form 7004, Application for Automatic Extension of Time To
File Certain Business Income Tax, Information, and Other
Returns, to apply for an automatic 51/2-month extension of
time to file.
Electronic Filing
Qualified fiduciaries or transmitters may be able to file Form
1041 and related schedules electronically. To become an
e-file provider, complete the following steps.
Period Covered
File the 2023 return for calendar year 2023 and fiscal years
beginning in 2023 and ending in 2024. If the return is for a
fiscal year or a short tax year (less than 12 months), fill in the
tax year space at the top of the form.
The online application process takes 4–6 weeks to
complete.
The 2023 Form 1041 may also be used for a tax year
beginning in 2024 if:
Note. Existing e-file providers must now use e-Services to
make account updates.
1. The estate or trust has a tax year of less than 12
Desk at 866-255-0654 (512-416-7750 for international calls),
Monday through Friday, 6:30 a.m.–6:00 p.m. (Central time).
to answer questions or to guide users through the application
process.
months that begins and ends in 2024, and
2. The 2024 Form 1041 isn't available by the time the
estate or trust is required to file its tax return. However, the
estate or trust must show its 2024 tax year on the 2023 Form
1041 and incorporate any tax law changes that are effective
for tax years beginning after 2023.
If you file Form 1041 electronically, you may sign the return
electronically by using a personal identification number (PIN).
See Form 8879-F for details.
8
Instructions for Form 1041 (2023)
Where To File
For all estates and trusts, including charitable and split-interest trusts (other than CRTs).
THEN use this address if you...
IF you are located in...
Are not enclosing a check or money order:
Are enclosing a check or money order:
Connecticut, Delaware, District of
Columbia, Georgia, Illinois, Indiana,
Kentucky, Maine, Maryland,
Massachusetts, Michigan, New
Department of the Treasury
Department of the Treasury
Hampshire, New Jersey, New York, North Internal Revenue Service
Internal Revenue Service
Carolina, Ohio, Pennsylvania, Rhode
Island, South Carolina, Tennessee,
Vermont, Virginia, West Virginia,
Wisconsin
Kansas City, MO 64999-0048
Kansas City, MO 64999-0148
Alabama, Alaska, Arizona, Arkansas,
California, Colorado, Florida, Hawaii,
Idaho, Iowa, Kansas, Louisiana,
Minnesota, Mississippi, Missouri,
Montana, Nebraska, Nevada, New
Mexico, North Dakota, Oklahoma,
Oregon, South Dakota, Texas, Utah,
Washington, Wyoming
Department of the Treasury
Internal Revenue Service
Ogden, UT 84201-0048
Department of the Treasury
Internal Revenue Service
Ogden, UT 84201-0148
A foreign country or U.S. territory
Internal Revenue Service
P.O. Box 409101
Ogden, UT 84409
Internal Revenue Service
P.O. Box 409101
Ogden, UT 84409
appears in the Paid Preparer Use Only area of the estate's or
trust's return. It doesn't apply to the firm, if any, shown in that
section.
If the “Yes” box is checked, the fiduciary is authorizing the
IRS to call the paid preparer to answer any questions that
may arise during the processing of the estate's or trust's
return. The fiduciary is also authorizing the paid preparer to:
Who Must Sign
Fiduciary
The fiduciary, or an authorized representative, must sign
Form 1041. If there are joint fiduciaries, only one is required
to sign the return.
A financial institution that submitted estimated tax
payments for trusts for which it is the trustee must enter its
EIN in the space provided for the EIN of the fiduciary. Don't
enter the EIN of the trust. For this purpose, a financial
institution is one that maintains a Treasury Tax and Loan
(TT&L) account. If you are an attorney or other individual
functioning in a fiduciary capacity, leave this space blank.
Don't enter your individual social security number (SSN).
Give the IRS any information that is missing from the
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estate's or trust's return;
Call the IRS for information about the processing of the
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estate's or trust's return or the status of its refund or
payment(s); and
Respond to certain IRS notices that the fiduciary has
•
shared with the preparer about math errors, offsets, and
return preparation. The notices won't be sent to the preparer.
The fiduciary isn't authorizing the paid preparer to receive
any refund check, bind the estate or trust to anything
(including any additional tax liability), or otherwise represent
the estate or trust before the IRS.
The authorization will automatically end no later than the
due date (without regard to extensions) for filing the estate's
or trust's 2024 tax return. If the fiduciary wants to expand the
paid preparer's authorization or revoke the authorization
before it ends, see Pub. 947, Practice Before the IRS and
Power of Attorney.
Paid Preparer
Generally, anyone who is paid to prepare a tax return must
have a Preparer Tax Identification Number (PTIN), sign the
return, and fill in the other blanks in the Paid Preparer Use
Only area of the return.
The person required to sign the return must:
Complete the required preparer information including their
•
PTIN,
Sign it in the space provided for the preparer's signature (a
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facsimile signature is acceptable), and
Accounting Methods
Give you a copy of the return for your records.
•
Figure taxable income using the method of accounting
regularly used in keeping the estate's or trust's books and
records. Generally, permissible methods include the cash
method, the accrual method, or any other method authorized
by the Internal Revenue Code. In all cases, the method used
must clearly reflect income.
If you, as fiduciary, fill in Form 1041, leave the Paid
Preparer Use Only space blank.
If someone prepares this return and doesn't charge you,
that person should not sign the return.
Paid Preparer Authorization
Generally, the estate or trust may change its accounting
method (for income as a whole or for any material item) only
by getting consent on Form 3115, Application for Change in
Accounting Method. For more information, see Pub. 538,
Accounting Periods and Methods.
If the fiduciary wants to allow the IRS to discuss the estate's
or trust's 2023 tax return with the paid preparer who signed it,
check the “Yes” box in the signature area of the return. This
authorization applies only to the individual whose signature
9
Instructions for Form 1041 (2023)
3. A trust that was treated as owned by the decedent if
the trust will receive the residue of the decedent's estate
under the will (or, if no will is admitted to probate, is the trust
primarily responsible for paying debts, taxes, and expenses
of administration) for any tax year ending before the date that
is 2 years after the decedent's death.
Accounting Periods
For a decedent's estate, the moment of death determines the
end of the decedent's tax year and the beginning of the
estate's tax year. As executor or administrator, you choose
the estate's tax period when you file its first income tax return.
The estate's first tax year may be any period of 12 months or
less that ends on the last day of a month. If you select the last
day of any month other than December, you are adopting a
fiscal tax year.
For more information, see Form 1041-ES, Estimated
Income Tax for Estates and Trusts.
Electronic Deposits
To change the accounting period of an estate, use Form
1128, Application To Adopt, Change, or Retain a Tax Year.
A financial institution that has been designated as an
authorized federal tax depository, and acts as a fiduciary for
at least 200 taxable trusts that are required to pay estimated
tax, is required to deposit the estimated tax payments
electronically using the Electronic Federal Tax Payment
System (EFTPS).
Generally, a trust must adopt a calendar year. The
following trusts are exempt from this requirement.
A trust that is exempt from tax under section 501(a).
A charitable trust described in section 4947(a)(1).
A trust that is treated as wholly owned by a grantor under
•
•
•
A fiduciary that isn't required to make electronic deposits
of estimated tax on behalf of a trust or an estate may
voluntarily participate in EFTPS. To enroll in or get more
800-555-4477. To contact EFTPS using Telecommunications
Relay Services (TRS) for people who are deaf, hard of
hearing, or have a speech disability, dial 711 and then
provide the TRS assistant the 800-555-4477 number above
or 800-733-4829. Also, see Pub. 966, Electronic Federal Tax
Payment System: A Guide to Getting Started.
the rules of sections 671 through 679.
Rounding Off to Whole Dollars
You may round off cents to whole dollars on the estate's or
trust's return and schedules. If you do round to whole dollars,
you must round all amounts. To round, drop amounts under
50 cents and increase amounts from 50 to 99 cents to the
next dollar. For example, $1.39 becomes $1 and $2.50
becomes $3.
If you have to add two or more amounts to figure the
amount to enter on a line, include cents when adding the
amounts and round off only the total.
Depositing on time. For a deposit using EFTPS to be on
time, the deposit must be submitted by 8:00 p.m. Eastern
time the day before the due date of the deposit.
If you are entering amounts that include cents, make sure
to include the decimal point. There is no cents column on the
form.
Section 643(g) Election
Fiduciaries of trusts that pay estimated tax may elect under
section 643(g) to have any portion of their estimated tax
payments allocated to any of the beneficiaries.
Estimated Tax
Generally, an estate or trust must pay estimated income tax
for 2024 if it expects to owe, after subtracting any withholding
and credits, at least $1,000 in tax, and it expects the
withholding and credits to be less than the smaller of:
The fiduciary of a decedent's estate may make a section
643(g) election only for the final year of the estate.
Make the election by filing Form 1041-T, Allocation of
Estimated Tax Payments to Beneficiaries, by the 65th day
after the close of the estate's or trust's tax year. Then, include
that amount in box 13, code A, of Schedule K-1 (Form 1041)
for any beneficiaries for whom it was elected.
1. 90% of the tax shown on the 2024 tax return (662/3% of
the tax if the estate or trust qualifies as a farmer or
fisherman); or
2. 100% of the tax shown on the 2023 tax return (110%
of that amount if the estate's or trust's AGI on that return is
more than $150,000, and less than 2/3 of gross income for
2023 and 2024 is from farming or fishing).
If Form 1041-T was timely filed, the payments are treated
as paid or credited to the beneficiary on the last day of the tax
year and must be included as an other amount paid, credited,
or required to be distributed on Form 1041, Schedule B,
line 10. See the instructions for Schedule B, line 10, later.
However, if a return was not filed for 2023 or that return
didn't cover a full 12 months, item 2 doesn't apply.
Failure to make a timely election will result in the estimated
tax payments not being transferred to the beneficiary(ies)
even if you entered the amount on Schedule K-1.
For this purpose, include household employment taxes in
the tax shown on the tax return, but only if either of the
following is true.
See the instructions for Schedule G, Part II, line 11, for
more details.
The estate or trust will have federal income tax withheld for
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2024 (see the instructions for Schedule G, Part II, line 14).
The estate or trust would be required to make estimated
•
Interest and Penalties
tax payments for 2024 even if it didn't include household
employment taxes when figuring estimated tax.
Interest
Exceptions
Estimated tax payments aren't required from:
Interest is charged on taxes not paid by the due date, even if
an extension of time to file is granted.
1. An estate of a domestic decedent or a domestic trust
Interest is also charged on penalties imposed for failure to
file, negligence, fraud, substantial valuation misstatements,
substantial understatements of tax, and reportable
that had no tax liability for the full 12-month 2023 tax year;
2. A decedent's estate for any tax year ending before the
date that is 2 years after the decedent's death; or
transaction understatements. Interest is charged on the
10
Instructions for Form 1041 (2023)
penalty from the due date of the return (including extensions).
The interest charge is figured at a rate determined under
section 6621.
have been responsible for collecting, accounting for, or
paying over these taxes, and who acted willfully in not doing
so. The penalty is equal to the unpaid trust fund tax. See the
Instructions for Form 720; Pub. 15 (Circular E), Employer's
Tax Guide; or Pub. 51 (Circular A), Agricultural Employer's
Tax Guide, for more details, including the definition of
responsible persons.
Late Filing of Return
The law provides a penalty of 5% of the tax due for each
month, or part of a month, for which a return isn't filed up to a
maximum of 25% of the tax due (15% for each month, or part
of a month, up to a maximum of 75% if the failure to file is
fraudulent). If the return is more than 60 days late, the
minimum penalty is the smaller of $485 or the tax due.
Other Penalties
Other penalties can be imposed for negligence, substantial
understatement of tax, and fraud. See Pub. 17, Your Federal
Income Tax, for details on these penalties.
The penalty won't be imposed if you can show that the
failure to file on time was due to reasonable cause. If you
receive a notice about penalty and interest after you file this
return, send us an explanation and we will determine if you
meet reasonable-cause criteria. Don't attach an explanation
when you file Form 1041.
Other Forms That May Be Required
Form W-2, Wage and Tax Statement, and Form W-3,
Transmittal of Wage and Tax Statements.
Form 56, Notice Concerning Fiduciary Relationship. You
must notify the IRS of the creation or termination of a
fiduciary relationship. You may use Form 56 to provide this
notice to the IRS.
Late Payment of Tax
Generally, the penalty for not paying tax when due is 1/2 of 1%
of the unpaid amount for each month or part of a month it
remains unpaid. The maximum penalty is 25% of the unpaid
amount. The penalty applies to any unpaid tax on the return.
Any penalty is in addition to interest charges on late
payments.
Form 461, Limitation on Business Losses.
Form 706, United States Estate (and Generation-Skipping
Transfer) Tax Return; or Form 706-NA, United States Estate
(and Generation-Skipping Transfer) Tax Return, Estate of
nonresident not a citizen of the United States.
If you include interest on either of these penalties
Form 706-GS(D), Generation-Skipping Transfer Tax
Return for Distributions.
with your payment, identify and enter these amounts
in the bottom margin of Form 1041, page 1. Don't
TIP
include the interest or penalty amount in the balance of tax
due on line 28.
Form 706-GS(D-1), Notification of Distribution From a
Generation-Skipping Trust.
Form 706-GS(T), Generation-Skipping Transfer Tax
Return for Terminations.
Failure To Provide Information Timely
You must provide Schedule K-1 (Form 1041), on or before
the day you are required to file Form 1041, to each
beneficiary who receives a distribution of property or an
allocation of an item of the estate.
Form 709, United States Gift (and Generation-Skipping
Transfer) Tax Return.
Form 720, Quarterly Federal Excise Tax Return. Use Form
720 to report environmental excise taxes, communications
and air transportation taxes, fuel taxes, luxury tax on
passenger vehicles, manufacturers' taxes, ship passenger
tax, and certain other excise taxes.
For each failure to provide Schedule K-1 to a beneficiary
when due and each failure to include on Schedule K-1 all the
information required to be shown (or the inclusion of incorrect
information), a $310 penalty may be imposed with regard to
each Schedule K-1 for which a failure occurs. The maximum
penalty is $3,783,000 for all such failures during a calendar
year. If the requirement to report information is intentionally
disregarded, each $310 penalty is increased to $630 or, if
greater, 10% of the aggregate amount of items required to be
reported, and no maximum penalty applies.
See Trust Fund Recovery Penalty, earlier.
!
CAUTION
Form 926, Return by a U.S. Transferor of Property to a
Foreign Corporation. Use this form to report certain
information required under section 6038B.
The penalty won't be imposed if the fiduciary can show
that not providing information timely and correctly was due to
reasonable cause and not due to willful neglect.
Form 940, Employer's Annual Federal Unemployment
(FUTA) Tax Return. The estate or trust may be liable for FUTA
tax and may have to file Form 940 if it paid wages of $1,500
or more in any calendar quarter during the calendar year (or
the preceding calendar year) or one or more employees
worked for the estate or trust for some part of a day in any 20
different weeks during the calendar year (or the preceding
calendar year).
Underpaid Estimated Tax
If the fiduciary underpaid estimated tax, use Form 2210,
Underpayment of Estimated Tax by Individuals, Estates, and
Trusts, to figure any penalty. Enter the amount of any penalty
on Form 1041, line 27.
Form 941, Employer's QUARTERLY Federal Tax Return.
Employers must file this form quarterly to report income tax
withheld on wages and employer and employee social
security and Medicare taxes. Certain small employers must
file Form 944, Employer's ANNUAL Federal Tax Return,
instead of Form 941. For more information, see the
Trust Fund Recovery Penalty
This penalty may apply if certain excise, income, social
security, and Medicare taxes that must be collected or
withheld aren't collected or withheld, or these taxes aren't
paid. These taxes are generally reported on Forms 720, 941,
943, 944, or 945. The trust fund recovery penalty may be
imposed on all persons who are determined by the IRS to
Instructions for Form 944. Agricultural employers must file
Form 943, Employer's Annual Federal Tax Return for
11
Instructions for Form 1041 (2023)
Agricultural Employees, instead of Form 941, to report
income tax withheld and employer and employee social
security and Medicare taxes on farmworkers.
Form 8275-R, Regulation Disclosure Statement, is used to
disclose any item on a tax return for which a position has
been taken that is contrary to Treasury regulations.
See Trust Fund Recovery Penalty, earlier.
Form 8288, U.S. Withholding Tax Return for Certain
Dispositions by Foreign Persons; and Form 8288-A,
Statement of Withholding on Certain Dispositions by Foreign
Persons. Use these forms to report and transmit withheld tax
on the sale of U.S. real property by a foreign person. Also,
use these forms to report and transmit tax withheld from
amounts distributed to a foreign beneficiary from a “U.S. real
property interest account” that a domestic estate or trust is
required to establish under Regulations section 1.1445-5(c)
(1)(iii).
Form 8300, Report of Cash Payments Over $10,000
Received in a Trade or Business. Generally, this form is used
to report the receipt of more than $10,000 in cash or foreign
currency in one transaction (or a series of related
transactions).
!
CAUTION
Form 945, Annual Return of Withheld Federal Income Tax.
Use this form to report income tax withheld from nonpayroll
payments, including pensions, annuities, IRAs, gambling
winnings, and backup withholding.
See Trust Fund Recovery Penalty, earlier.
!
CAUTION
Form 965-A, Individual Report of Net 965 Tax Liability.
Form 982, Reduction of Tax Attributes Due to Discharge of
Indebtedness (and Section 1082 Basis Adjustment).
Form 1040, U.S. Individual Income Tax Return.
Form 8855, Election To Treat a Qualified Revocable Trust
as Part of an Estate. This election allows a QRT to be treated
and taxed (for income tax purposes) as part of its related
estate during the election period.
Form 8865, Return of U.S. Persons With Respect to
Certain Foreign Partnerships. The estate or trust may have to
file Form 8865 if it:
Form 1040-NR, U.S. Nonresident Alien Income Tax
Return.
Form 1040-SR, U.S. Tax Return for Seniors.
Form 1041-A, U.S. Information Return Trust Accumulation
of Charitable Amounts.
1. Controlled a foreign partnership (that is, owned more
Form 1042, Annual Withholding Tax Return for U.S.
Source Income of Foreign Persons; and Form 1042-S,
Foreign Person's U.S. Source Income Subject to Withholding.
Use these forms to report and transmit withheld tax on
payments or distributions made to nonresident alien
individuals, foreign partnerships, or foreign corporations to
the extent such payments or distributions constitute gross
income from sources within the United States that isn't
effectively connected with a U.S. trade or business. For more
information, see sections 1441 and 1442, and Pub. 515,
Withholding of Tax on Nonresident Aliens and Foreign
Entities.
than a 50% direct or indirect interest in a foreign partnership);
2. Owned at least a 10% direct or indirect interest in a
foreign partnership while U.S. persons controlled that
partnership;
3. Had an acquisition, disposition, or change in
proportional interest in a foreign partnership that:
a. Increased its direct interest to at least 10%,
b. Reduced its direct interest of at least 10% to less than
10%, or
c. Changed its direct interest by at least a 10% interest;
or
Forms 1099-A, B, INT, LTC, MISC, NEC, OID, Q, R, S, and
SA. You may have to file these information returns to report
acquisitions or abandonments of secured property; proceeds
from broker and barter exchange transactions; interest
payments; payments of long-term care and accelerated
death benefits; miscellaneous income payments;
4. Contributed property to a foreign partnership in
exchange for a partnership interest if:
a. Immediately after the contribution, the estate or trust
owned, directly or indirectly, at least a 10% interest in the
foreign partnership; or
b. The fair market value (FMV) of the property the estate
or trust contributed to the foreign partnership, for a
partnership interest, when added to other contributions of
property made to the foreign partnership during the
preceding 12-month period, exceeds $100,000.
nonemployee compensation; original issue discount;
distributions from Coverdell ESAs; distributions from
pensions, annuities, retirement or profit-sharing plans, IRAs
(including SEPs, SIMPLEs, Roth IRAs, Roth Conversions,
and IRA recharacterizations), insurance contracts, etc.;
proceeds from real estate transactions; and distributions from
an HSA, Archer MSA, or Medicare Advantage MSA.
Also, the estate or trust may have to file Form 8865 to
report certain dispositions by a foreign partnership of
property it previously contributed to that foreign partnership if
it was a partner at the time of the disposition.
For more details, including penalties for failing to file Form
8865, see Form 8865 and its separate instructions.
Also, use certain of these returns to report amounts
received as a nominee on behalf of another person, except
amounts reported to beneficiaries on Schedule K-1 (Form
1041).
Form 8275, Disclosure Statement. File Form 8275 to
disclose items or positions, except those contrary to a
regulation, that are not otherwise adequately disclosed on a
tax return. The disclosure is made to avoid parts of the
accuracy-related penalty imposed for disregard of rules or
substantial understatement of tax. Form 8275 is also used for
disclosures relating to preparer penalties for
Form 8886, Reportable Transaction Disclosure Statement.
Use Form 8886 to disclose information for each reportable
transaction in which the trust participated, directly or
indirectly. Form 8886 must be filed for each tax year that the
federal income tax liability of the estate or trust is affected by
its participation in the transaction. The estate or trust may
have to pay a penalty if it has a requirement to file Form 8886
but you fail to file it. The following are reportable transactions.
understatements due to unrealistic positions or disregard of
rules.
12
Instructions for Form 1041 (2023)
Any transaction that is the same as or substantially similar
1. Schedule I (Form 1041).
2. Form 4952.
3. Schedule H (Form 1040).
4. Schedule D (Form 1041).
5. Form 8949.
6. Form 8995 or Form 8995-A.
7. Form 4136.
8. Form 8978.
9. Form 965-A.
10. Form 8941.
11. Form 3800.
12. Form 8997.
•
to tax avoidance transactions identified by the IRS as listed
transactions.
Any transaction offered under conditions of confidentiality
•
and for which the estate or trust paid a minimum fee
(confidential transaction).
Any transaction for which the estate or trust or a related
•
party has contractual protection against disallowance of the
tax benefits (transaction with contractual protection).
Any transaction resulting in a loss of at least $2 million in
•
any single year or $4 million in any combination of years
($50,000 in any single year if the loss is generated by a
section 988 transaction) (loss transactions).
Any transaction substantially similar to one of the types of
•
transactions identified by the IRS as a transaction of interest.
13. Form 8960.
See the Instructions for Form 8886 for more details and
exceptions.
14. Schedule A (Form 8936).
15. Additional schedules in alphabetical order.
16. Additional forms in numerical order.
17. All other attachments.
Form 8918, Material Advisor Disclosure Statement.
Material advisors who provide material aid, assistance, or
advice on organizing, managing, promoting, selling,
implementing, insuring, or carrying out any reportable
transaction, and who directly or indirectly receive or expect to
receive a minimum fee, must use Form 8918 to disclose any
reportable transaction under Regulations section
301.6111-3. For more information, see Form 8918 and its
instructions.
Attachments
If you need more space on the forms or schedules, attach
separate sheets. Use the same size and format as on the
printed forms. But show the totals on the printed forms.
Attach these separate sheets after all the schedules and
forms. Enter the estate's or trust's EIN on each sheet.
Form 8938, Statement of Specified Foreign Financial
Assets.
Form 8960, Net Investment Income Tax—Individuals,
Estates, and Trusts.
Don't file a copy of the decedent's will or the trust
instrument unless the IRS requests it.
Form 8971, Information Regarding Beneficiaries Acquiring
Property From a Decedent.
Form 8975, Country-by-Country Report.
Schedule A (Form 8975), Tax Jurisdiction and Constituent
Entity Information.
Form 8978, Partner's Additional Reporting Year Tax.
Form 8990, Limitation on Business Interest Expense
Under Section 163(j).
Form 8992, U.S. Shareholder Calculation of Global
Intangible Low-Taxed Income (GILTI).
Special Reporting Instructions
Grantor type trusts, the S portion of ESBTs, and bankruptcy
estates all have reporting requirements that are significantly
different than other subchapter J trusts and decedents’
estates. Additionally, grantor type trusts have optional filing
methods available. Pooled income funds have many similar
reporting requirements that other subchapter J trusts (other
than grantor type trusts and ESBTs) have but there are some
very important differences. These reporting differences and
optional filing methods are discussed below by entity.
Form 8995, Qualified Business Income Deduction
Simplified Computation.
Form 8995-A, Qualified Business Income Deduction.
Form 8997, Initial and Annual Statement of Qualified
Opportunity Fund (QOF) Investments.
Grantor Type Trusts
A trust is a grantor trust if the grantor retains certain powers
or ownership benefits. This can also apply to only a portion of
a trust. See Grantor Type Trust, later, for details on what
makes a trust a grantor trust.
In general, a grantor trust is ignored for income tax
purposes and all of the income, deductions, etc., are treated
as belonging directly to the grantor. This also applies to any
portion of a trust that is treated as a grantor trust.
Additional Information
The following publications may assist you in preparing Form
1041.
Pub. 550, Investment Income and Expenses.
Pub. 559, Survivors, Executors, and Administrators.
Pub. 590-A, Contributions to Individual Retirement
•
•
•
Note. If only a portion of the trust is a grantor type trust,
indicate both grantor trust and the other type of trust, for
example, simple or complex trust, as the type of entities
checked in Section A on page 1 of Form 1041.
Arrangements (IRAs).
Pub. 590-B, Distributions from Individual Retirement
•
Arrangements (IRAs).
The following instructions apply only to grantor type
Pub. 4895, Tax Treatment of Property Acquired From a
•
trusts that are not using an optional filing method.
!
Decedent Dying in 2010.
CAUTION
Assembly and Attachments
How to report. If the entire trust is a grantor trust, fill in only
the entity information of Form 1041. Don't show any dollar
amounts on the form itself; show dollar amounts only on an
Assemble any schedules, forms, and attachments behind
Form 1041 in the following order.
13
Instructions for Form 1041 (2023)
attachment to the form. Don't use Schedule K-1 (Form 1041)
as the attachment.
All of the trust is treated as owned by the spouses, and
The spouses file their income tax return jointly for that tax
•
•
year.
If only part of the trust is a grantor type trust, the portion of
the income, deductions, etc., that is allocable to the
non-grantor part of the trust is reported on Form 1041, under
normal reporting rules. The amounts that are allocable
directly to the grantor are shown only on an attachment to the
form. Don't use Schedule K-1 (Form 1041) as the
Generally, if a trust is treated as owned by two or more
grantors or other persons, the trustee may choose Optional
Method 3 as the trust's method of reporting instead of filing
Form 1041.
attachment. However, Schedule K-1 is used to reflect any
income distributed from the portion of the trust that isn't
taxable directly to the grantor or owner.
Once you choose the trust's filing method, you must follow
the rules under Changing filing methods, later, if you want to
change to another method.
The fiduciary must give the grantor (owner) of the trust a
copy of the attachment.
Exceptions. The following trusts can't report using the
Attachment. On the attachment, show:
optional filing methods.
The name, identifying number, and address of the
•
A common trust fund (as defined in section 584(a)).
A foreign trust or a trust that has any of its assets located
•
person(s) to whom the income is taxable;
•
The income of the trust that is taxable to the grantor or
•
outside the United States.
another person under sections 671 through 678—report the
income in the same detail as it would be reported on the
grantor's return had it been received directly by the grantor;
and
A QSST (as defined in section 1361(d)(3)).
•
A trust all of which is treated as owned by one grantor or
•
one other person whose tax year is other than a calendar
year.
Any deductions, credits, or elections that apply to this
•
A trust all of which is treated as owned by one or more
•
income. Report these deductions and credits in the same
detail as they would be reported on the grantor's return had
they been received directly by the grantor.
grantors or other persons, one of which isn't a U.S. person.
A trust all of which is treated as owned by one or more
•
grantors or other persons if at least one grantor or other
person is an exempt recipient for information reporting
purposes, unless at least one grantor or other person isn't an
exempt recipient and the trustee reports without treating any
of the grantors or other persons as exempt recipients.
The income taxable to the grantor or another person under
sections 671 through 678 and the deductions and credits that
apply to that income must be reported by that person on their
own income tax return.
Optional Method 1. For a trust treated as owned by one
grantor or by one other person, the trustee must give all
payers of income during the tax year the name and TIN of the
grantor or other person treated as the owner of the trust and
the address of the trust. This method may be used only if the
owner of the trust provides the trustee with a signed Form
W-9. In addition, unless the grantor or other person treated
as owner of the trust is the trustee or a co-trustee of the trust,
the trustee must give the grantor or other person treated as
owner of the trust a statement that:
Example. The John Doe Trust is a grantor type trust.
During the year, the trust sold 100 shares of ABC stock for
$1,010 in which it had a basis of $10 and 200 shares of XYZ
stock for $10 in which it had a $1,020 basis.
The trust doesn't report these transactions on Form 1041.
Instead, a schedule is attached to the Form 1041 showing
each stock transaction separately and in the same detail as
John Doe (grantor and owner) will need to report these
transactions on his Form 8949, Sales and Other Dispositions
of Capital Assets; and Schedule D (Form 1040). The trust
doesn't net the capital gains and losses, nor does it issue
John Doe a Schedule K-1 (Form 1041) showing a $10
long-term capital loss.
QSSTs. Income allocated to S corporation stock held by the
trust is treated as owned by the income beneficiary of the
portion of the trust that owns the stock. Report this income
following the rules discussed above for grantor type trusts. A
QSST can't elect any of the optional filing methods discussed
below.
However, the trust, and not the income beneficiary, is
treated as the owner of the S corporation stock for figuring
and attributing the tax results of a disposition of the stock. For
example, if the disposition is a sale, the QSST election ends
as to the stock sold, and any gain or loss recognized on the
sale will be that of the trust. For more information on QSSTs,
see Regulations section 1.1361-1(j).
Shows all items of income, deduction, and credit of the
•
trust;
Identifies the payer of each item of income;
•
•
Explains how the grantor or other person treated as owner
of the trust takes those items into account when figuring the
grantor's or other person's taxable income or tax; and
Informs the grantor or other person treated as the owner of
•
the trust that those items must be included when figuring
taxable income and credits on their income tax return.
Grantor trusts that haven't applied for an EIN and are
going to file under Optional Method 1 don't need an
TIP
EIN for the trust as long as they continue to report
under that method.
Optional Method 2. For a trust treated as owned by one
grantor or by one other person, the trustee must give all
payers of income during the tax year the name, address, and
TIN of the trust. The trustee must also file with the IRS the
appropriate Forms 1099 to report the income or gross
proceeds paid to the trust during the tax year that show the
trust as the payer and the grantor, or other person treated as
owner, as the payee. The trustee must report each type of
income in the aggregate and each item of gross proceeds
separately. The due date for any Forms 1099 required to be
filed with the IRS by a trustee under this method is February
28, 2024 (March 31, 2024, if filed electronically).
Optional Filing Methods for Certain Grantor Type
Trusts
Generally, if a trust is treated as owned by one grantor or
other person, the trustee may choose Optional Method 1 or
Optional Method 2 as the trust's method of reporting instead
of filing Form 1041. Spouses will be treated as one grantor for
purposes of these two optional methods if:
14
Instructions for Form 1041 (2023)
In addition, unless the grantor, or other person treated as
owner of the trust, is the trustee or a co-trustee of the trust,
the trustee must give the grantor or other person treated as
owner of the trust a statement that:
For more information, see section 3406 and its
regulations.
Pooled Income Funds
If you are filing for a pooled income fund, attach a statement
to support the following.
Shows all items of income, deduction, and credit of the
•
trust;
Explains how the grantor or other person treated as owner
•
The calculation of the yearly rate of return.
•
of the trust takes those items into account when figuring the
grantor's or other person's taxable income or tax; and
The computation of the deduction for distributions to the
•
beneficiaries.
Informs the grantor or other person treated as the owner of
•
The computation of any charitable deduction.
•
the trust that those items must be included when figuring
taxable income and credits on their income tax return. This
statement satisfies the requirement to give the recipient
copies of the Forms 1099 filed by the trustee.
See section 642 and the regulations thereunder for more
information.
You don't have to complete Schedule A or B of Form 1041.
Optional Method 3. For a trust treated as owned by two or
more grantors or other persons, the trustee must give all
payers of income during the tax year the name, address, and
TIN of the trust. The trustee must also file with the IRS the
appropriate Forms 1099 to report the income or gross
proceeds paid to the trust by all payers during the tax year
attributable to the part of the trust treated as owned by each
grantor, or other person, showing the trust as the payer and
each grantor, or other person treated as owner of the trust, as
the payee. The trustee must report each type of income in the
aggregate and each item of gross proceeds separately. The
due date for any Forms 1099 required to be filed with the IRS
by a trustee under this method is February 28, 2024 (March
31, 2024, if filed electronically).
Also, you must file Form 5227 for the pooled income fund.
However, if all amounts were transferred in trust before May
27, 1969, or if an amount was transferred to the trust after
May 26, 1969, for which no deduction was allowed under any
of the sections listed under section 4947(a)(2), then Form
5227 does not have to be filed.
Note. Form 1041-A is no longer filed by pooled income
funds.
Electing Small Business Trusts (ESBTs)
Special rules apply when figuring the tax on the S portion of
an ESBT. The S portion of an ESBT is the portion of the trust
that consists of stock in one or more S corporations and isn't
treated as a grantor type trust. The tax on the S portion:
In addition, the trustee must give each grantor or other
Must be figured separately from the tax on the remainder
•
person treated as owner of the trust a statement that:
of the ESBT (if any) and attached to the return; and
Shows all items of income, deduction, and credit of the
•
Is entered on Schedule G, Part I, line 4.
•
trust attributable to the part of the trust treated as owned by
the grantor or other person;
The tax on the remainder (non-S portion) of the ESBT is
Explains how the grantor or other person treated as owner
•
figured in the normal manner on Form 1041.
of the trust takes those items into account when figuring the
grantor's or other person's taxable income or tax; and
Tax computation attachment. Attach to the return the tax
computation for the S portion of the ESBT.
Informs the grantor or other person treated as the owner of
•
the trust that those items must be included when figuring
taxable income and credits on their income tax return. This
statement satisfies the requirement to give the recipient
copies of the Forms 1099 filed by the trustee.
If you need to complete and attach a tax form or
worksheet for the S portion of the trust, enter “ESBT” in the
top margin of the tax form, worksheet, or attachment.
To compute the tax on the S portion:
Changing filing methods. A trustee who previously had
filed Form 1041 can change to one of the optional methods
by filing a final Form 1041 for the tax year that immediately
precedes the first tax year for which the trustee elects to
report under one of the optional methods. On the front of the
final Form 1041, the trustee must enter “Pursuant to section
1.671-4(g), this is the final Form 1041 for this grantor trust,”
and check the Final return box in item F.
Treat that portion of the ESBT as if it were a separate trust;
Include only the income, losses, deductions, and credits
•
•
allocated to the ESBT as an S corporation shareholder and
gain or loss from the disposition of S corporation stock;
Aggregate items of income, losses, deductions, and
•
credits allocated to the ESBT as an S corporation
shareholder if the S portion of the ESBT has stock in more
than one S corporation;
Deduct state and local income taxes directly related to the
•
For more details on changing reporting methods, including
changes from one optional method to another, see
Regulations section 1.671-4(g).
S portion or allocated to the S portion if the allocation is
reasonable in light of all the circumstances and
administrative expenses that wouldn't have been incurred if
the S corporation shares were not held by the trust;
Backup withholding. The following grantor trusts are
treated as payors for purposes of backup withholding.
Deduct interest expense paid or accrued on indebtedness
•
1. A trust established after 1995, all of which is owned by
two or more grantors (treating spouses filing a joint return as
one grantor).
incurred to acquire stock in an S corporation; and
Deduct charitable contributions attributable to the S
•
portion. See Pub. 526 to figure the amount of the deduction if
either of the following apply.
2. A trust with 10 or more grantors established after 1983
but before 1996.
1. Cash contributions or contributions of ordinary income
property are more than 30% of the AGI of the S portion.
The trustee must withhold a certain percentage of
reportable payments made to any grantor who is subject to
backup withholding.
2. Gifts of capital gain property are more than 20% of the
AGI of the S portion.
Don't claim a deduction for capital losses in excess of
•
capital gains;
15
Instructions for Form 1041 (2023)
Don't claim an income distribution deduction or an
•
Accounting Period
exemption amount;
Don't claim an exemption amount in figuring the alternative
•
A bankruptcy estate is allowed to have a fiscal year. However,
this period can't be longer than 12 months.
minimum tax (AMT); and
Don't use the tax rate schedule to figure the tax. The tax is
•
37% of the S portion's taxable income except in figuring the
maximum tax on qualified dividends and capital gains.
When To File
For additional information, see Regulations section
File Form 1041 on or before the 15th day of the 4th month
following the close of the tax year. Use Form 7004 to apply for
an automatic 6-month extension of time to file.
1.641(c)-1.
Other information. When figuring the tax and DNI on the
remaining (non-S) portion of the trust, disregard the S
corporation items.
Disclosure of Return Information
Don't apportion to the beneficiaries any of the S
Under section 6103(e)(5), tax returns of individual debtors
who have filed for bankruptcy under chapter 7 or 11 of title 11
are, upon written request, open to inspection by or disclosure
to the trustee.
corporation items.
If the ESBT consists entirely of stock in one or more S
corporations, don't make any entries on lines 1–23
of page 1. Instead:
Complete the entity portion;
•
The returns subject to disclosure to the trustee are those
for the year the bankruptcy begins and prior years. Use Form
4506, Request for Copy of Tax Return, to request copies of
the individual debtor's tax returns.
Follow the instructions above for figuring the tax on the S
•
corporation items;
Enter the ESBT tax on Schedule G, Part I, line 4;
•
Carry the Total tax from line 9 of Schedule G, Part I, to
•
line 24 on page 1; and
If the bankruptcy case wasn't voluntary, disclosure can't be
made before the bankruptcy court has entered an order for
relief, unless the court rules that the disclosure is needed for
determining whether relief should be ordered.
Complete the rest of the return.
•
The grantor portion (if any) of an ESBT will follow the rules
discussed under Grantor Type Trusts, earlier.
Bankruptcy Estates
Transfer of Tax Attributes From the Individual
Debtor to the Bankruptcy Estate
The bankruptcy estate that is created when an individual
debtor files a petition under either chapter 7 or 11 of title 11 of
the U.S. Code is treated as a separate taxable entity. The
bankruptcy estate is administered by a trustee or a
debtor-in-possession. If the case is later dismissed by the
bankruptcy court, the individual debtor is treated as if the
bankruptcy petition had never been filed.
The bankruptcy estate succeeds to the following tax
attributes of the individual debtor.
1. NOL carryovers.
2. Charitable contribution carryovers.
3. Recovery of tax benefit items.
4. Credit carryovers.
A separate taxable entity isn't created if a partnership or
corporation files a petition under any chapter of title 11 of the
U.S. Code.
5. Capital loss carryovers.
6. Basis, holding period, and character of assets.
7. Method of accounting.
For additional information about bankruptcy estates, see
Pub. 908, Bankruptcy Tax Guide.
8. Unused passive activity losses.
9. Unused passive activity credits.
10. Unused section 465 losses.
Who Must File
Every trustee (or debtor-in-possession) for an individual's
bankruptcy estate under chapter 7 or 11 of title 11 of the U.S.
Code must file a return if the bankruptcy estate has gross
income of $13,850 or more for tax years beginning in 2023.
Income, Deductions, and Credits
Failure to do so may result in an estimated Request for
Administrative Expenses being filed by the IRS in the
bankruptcy proceeding or a motion to compel filing of the
return.
Under section 1398(c), the taxable income of the bankruptcy
estate is generally figured in the same manner as that of an
individual. The gross income of the bankruptcy estate
includes any income included in property of the estate as
defined in U.S. Code, title 11, sections 541, 1115, and 1186.
The filing of a tax return for the bankruptcy estate
doesn't relieve the individual debtor(s) of their
!
In certain chapter 11 cases, under section 1115 of title 11,
property of the bankruptcy estate includes (a) earnings from
services performed by the debtor after the beginning of the
case (both wages and self-employment income) and before
the case is closed, dismissed, or converted to a case under a
different chapter; and (b) property described in section 541 of
title 11 and income earned therefrom that the debtor acquires
after the beginning of the case and before the case is closed,
dismissed, or converted. If section 1115 of title 11 applies,
the bankruptcy estate's gross income includes, as described
above, (a) the debtor's earnings from services performed
CAUTION
individual tax obligations.
EIN
Every bankruptcy estate of an individual required to file a
return must have its own EIN. The SSN of the individual
debtor can't be used as the EIN for the bankruptcy estate.
16
Instructions for Form 1041 (2023)
after the beginning of the case, and (b) the income from
property acquired after the beginning of the case.
Excess credits, such as the foreign tax credit, may also be
carried back to pre-bankruptcy years of the individual debtor.
Standard deduction. A bankruptcy estate that doesn't
itemize deductions is allowed a standard deduction of
$13,850 for tax year 2023.
Discharge of indebtedness. In a title 11 case, gross
income doesn't include amounts that would normally be
included in gross income resulting from the discharge of
indebtedness. However, any amounts excluded from gross
income must be applied to reduce certain tax attributes in a
certain order. Attach Form 982 to show the reduction of tax
attributes.
The income from property owned by the debtor when the
case began is also included in the bankruptcy estate's gross
income. However, if this property is exempted from the
bankruptcy estate or is abandoned by the trustee or
debtor-in-possession, the income from the property isn't
included in the bankruptcy estate's gross income. Also
included in income is gain from the sale of the bankruptcy
estate's property. To figure gain, the trustee or
debtor-in-possession must determine the correct basis of the
property.
Tax Rate Schedule
To determine whether any amount paid or incurred by the
bankruptcy estate is allowable as a deduction or credit, or is
treated as wages for employment tax purposes, treat the
amount as if it were paid or incurred by the individual debtor
in the same trade or business or other activity the debtor
engaged in before the bankruptcy proceedings began.
Administrative expenses. The bankruptcy estate is
allowed a deduction for any administrative expense allowed
under section 503 of title 11 of the U.S. Code, and any fee or
charge assessed under chapter 123 of title 28 of the U.S.
Code, to the extent not disallowed under an Internal Revenue
Code provision (for example, section 263, 265, or 275).
Bankruptcy administrative expenses and fees, including
accounting fees, attorney fees, and court costs, are
deductible on Schedule 1 (Form 1040), Part II, line 24z, as
allowable in arriving at AGI because they would not have
been incurred if property had not been held by the
bankruptcy estate. See section 67(e) and Final Regulations -
Figure the tax for the bankruptcy estate using the tax rate
schedule below. Enter the tax on Form 1040 or 1040-SR,
line 16.
If taxable income is:
Of the
But not over
Over—
The tax is: amount over
—
—
$0
11,000
$11,000
44,725
95,375
182,100
231,250
346,875
......
10%
$1,100.00 + 12%
5,147.00 + 22%
16,290.00 + 24%
37,104.00 + 32%
52,832.00 + 35%
93,300.75 + 37%
$0
11,000
44,725
44,725
95,375
95,375
182,100
231,250
346,875
182,100
231,250
346,875
Prompt Determination of Tax Liability
Administrative expenses of the bankruptcy estate
attributable to conducting a trade or business or for the
production of estate rents or royalties are deductible in
arriving at AGI on Form 1040, Schedules C, E, and F.
To request a prompt determination of the tax liability of the
bankruptcy estate, the trustee or debtor-in-possession must
file a written request for the determination with the IRS. The
request must be submitted in duplicate and executed under
penalties of perjury. The request must include a statement
indicating that it is a request for prompt determination of tax
liability and (a) the return type, and all the tax periods for
which prompt determination is sought; (b) the name and
location of the office where the return was filed; (c) the
debtor's name; (d) the debtor's SSN, TIN, or EIN; (e) the type
of bankruptcy estate; (f) the bankruptcy case number; and (g)
the court where the bankruptcy is pending. Send the request
to the Centralized Insolvency Operation, P.O. Box 7346,
Philadelphia, PA 19101-7346 (marked “Request for Prompt
Determination”).
Administrative expense loss. When figuring an NOL,
nonbusiness deductions (including administrative expenses)
are limited under section 172(d)(4) to the bankruptcy estate's
nonbusiness income. The excess nonbusiness deductions
are an administrative expense loss that may be carried back
to each of the 3 preceding tax years and forward to each of
the 7 succeeding tax years of the bankruptcy estate. The
amount of an administrative expense loss that may be carried
to any tax year is determined after the NOL deductions
allowed for that year. An administrative expense loss is
allowed only to the bankruptcy estate and can't be carried to
any tax year of the individual debtor.
The IRS will notify the trustee or debtor-in-possession
within 60 days from receipt of the request if the return filed by
the trustee or debtor-in-possession has been selected for
examination or has been accepted as filed. If the return is
selected for examination, it will be examined as soon as
possible. The IRS will notify the trustee or
Carryback of NOLs and credits.
Generally, an NOL arising in a tax year beginning in
2021 or later may not be carried back and instead
!
CAUTION
must be carried forward indefinitely. However,
farming losses arising in tax years beginning in 2021 or later
may be carried back 2 years and carried forward indefinitely.
See Pub. 536 and Pub. 225, Farmer’s Tax Guide, for more
information.
debtor-in-possession of any tax due within 180 days from
receipt of the request or within any additional time permitted
by the bankruptcy court.
See Rev. Proc. 2006-24, 2006-22 I.R.B. 943, available at
IRS.gov/irb/2006-22_IRB/ar12.html, modified by
Announcement 2011-77, available at IRS.gov/irb/
If the bankruptcy estate itself incurs an NOL (apart from
losses carried forward to the estate from the individual
debtor), it can carry back its NOLs not only to previous tax
years of the bankruptcy estate, but also to tax years of the
individual debtor prior to the year in which the bankruptcy
proceedings began.
17
Instructions for Form 1041 (2023)
Special Filing Instructions for Bankruptcy Estates
Address
Include the suite, room, or other unit number after the street
address. If the post office doesn't deliver mail to the street
address and the fiduciary has a P.O. box, show the box
number instead.
Use Form 1041 only as a transmittal for Form 1040 or
1040-SR. In the top margin of Form 1040 or 1040-SR, enter
“Attachment to Form 1041. DO NOT DETACH.” Attach Form
1040 or 1040-SR to Form 1041. Complete only the
identification area at the top of Form 1041. Enter the name of
the individual debtor in the following format: “John Q. Public
Bankruptcy Estate.” Beneath, enter the name of the trustee in
the following format: “Avery Snow, Trustee.” In item D, enter
the date the petition was filed or the date of conversion to a
chapter 7 or 11 case.
If you want a third party (such as an accountant or an
attorney) to receive mail for the estate or trust, enter on the
street address line “C/O” followed by the third party's name
and street address or P.O. box.
If the estate or trust has had a change of address
(including a change to an “in care of” name and address) and
did not file Form 8822-B, Change of Address or Responsible
Party — Business, check the Change in fiduciary's address
box in item F.
Enter on Form 1041, line 24, the total tax from line 24 of
Form 1040 or 1040-SR. Complete lines 25 through 30 of
Form 1041, and sign and date it.
If the estate or trust has a change of mailing address
(including a new "in care of" name and address) or
responsible party after filing its return, file Form 8822-B to
notify the IRS of the change.
In a chapter 11 case, the bankruptcy estate's gross
income may be affected by section 1115 or 1186 of title 11 of
the U.S. Code. See Income, Deductions, and Credits, earlier.
The debtor may receive a Form W-2, 1099-INT, 1099-DIV,
1099-MISC, or 1099-NEC or other information return
reporting wages or other income to the debtor for the entire
year, even though some or all of this income is includible in
the bankruptcy estate's gross income under section 1115 of
title 11 of the U.S. Code. If this happens, the income reported
to the debtor on the Form W-2 or 1099, or other information
return (and the withheld income tax shown on these forms)
must be reasonably allocated between the debtor and the
bankruptcy estate. The debtor-in-possession (or the
chapter 11 trustee, if one was appointed) must attach a
schedule that shows (a) all the income reported on the Form
W-2, Form 1099, or other information return; (b) the portion of
this income includible in the bankruptcy estate's gross
income; and (c) all the withheld income tax, if any, and the
portion of withheld tax reasonably allocated to the bankruptcy
estate. Also, the debtor-in-possesion (or the chapter 11
trustee, if one was appointed) must attach a copy of the Form
W-2, if any, issued to the debtor for the tax year if the Form
W-2 reports wages to the debtor and some or all of the
wages are includible in the bankruptcy estate's gross income
because of section 1115 of title 11 of the U.S. Code. For
more details, including acceptable allocation methods, see
Notice 2006-83, 2006-40 I.R.B. 596, available at IRS.gov/irb/
A. Type of Entity
Check the appropriate box(es) that describes the entity for
which you are filing the return.
In some cases, more than one box is checked. Check all
boxes that apply to your trust. For example, if only a portion of
a trust is a grantor type trust or if only a portion of an ESBT is
the S portion, then more than one box is checked.
Note. Determination of entity status is made on an annual
basis.
There are special reporting requirements for grantor
type trusts, pooled income funds, ESBTs, and
!
CAUTION
bankruptcy estates. See Special Reporting
Instructions, earlier.
Decedent's Estate
An estate of a deceased person is a taxable entity separate
from the decedent. It generally continues to exist until the
final distribution of the assets of the estate is made to the
heirs and other beneficiaries. The income earned from the
property of the estate during the period of administration or
settlement must be accounted for and reported by the estate.
Simple Trust
Specific Instructions
A trust may qualify as a simple trust if:
Name of Estate or Trust
1. The trust instrument requires that all income must be
Copy the exact name of the estate or trust from the Form
SS-4, Application for Employer Identification Number, that
you used to apply for the EIN. If the name of the trust was
changed during the tax year for which you are filing, enter the
trust's new name and check the “Change in trust's name” box
in item F.
distributed currently;
2. The trust instrument doesn't provide that any amounts
are to be paid, permanently set aside, or used for charitable
purposes; and
3. The trust doesn't distribute amounts allocated to the
corpus of the trust.
If a grantor type trust (discussed later), enter the name,
identification number, and address of the grantor(s) or other
owner(s) in parentheses after the name of the trust.
Complex Trust
A complex trust is any trust that doesn't qualify as a simple
trust as explained above.
Name and Title of Fiduciary
Qualified Disability Trust
A qualified disability trust is any non-grantor trust:
1. Described in 42 U.S.C. 1396p(c)(2)(B)(iv) and
established solely for the benefit of an individual under 65
years of age who is disabled, and
Enter the name and title of the fiduciary. If the name entered
is different from the name on the prior year's return, see
Change in Fiduciary's Name and Change in Fiduciary, later.
18
2. All the beneficiaries of which are determined by the
Commissioner of Social Security to have been disabled for
some part of the tax year within the meaning of 42 U.S.C.
1382c(a)(3).
life interest is figured using the yearly rate of return earned by
the trust. See section 642(c) and the related regulations for
more information.
B. Number of Schedules K-1 Attached
A trust will not fail to meet item 2 above just because the
trust's corpus may revert to a person who isn't disabled after
the trust ceases to have any disabled beneficiaries.
Every trust or decedent's estate claiming an income
distribution deduction on page 1, line 18, must enter the
number of Schedules K-1 (Form 1041) that are attached to
Form 1041.
ESBT (S Portion Only)
The S portion of an ESBT is the portion of the trust that
consists of S corporation stock and that isn't treated as
owned by the grantor or another person. See Electing Small
Business Trusts (ESBTs), earlier, for more information about
an ESBT.
C. Employer Identification Number
Every estate or trust that is required to file Form 1041 must
have an EIN. An EIN may be applied for in the following ways.
•
once the application information is validated.
By mailing or faxing Form SS-4.
•
Grantor Type Trust
If the estate or trust hasn't received its EIN by the time the
A grantor type trust is a legal trust under applicable state law
that isn't recognized as a separate taxable entity for income
tax purposes because the grantor or other substantial owners
have not relinquished complete dominion and control over
the trust.
return is due, enter “Applied for” and the date you applied in
the space for the EIN. For more details, see Pub. 583,
Starting a Business and Keeping Records.
D. Date Entity Created
Generally, for transfers made in trust after March 1, 1986,
the grantor is treated as the owner of any portion of a trust in
which they have a reversionary interest in either the income
or corpus therefrom, if, as of the inception of that portion of
the trust, the value of the reversionary interest is more than
5% of the value of that portion. Also, the grantor is treated as
holding any power or interest that was held by either the
grantor's spouse at the time that the power or interest was
created or who became the grantor's spouse after the
creation of that power or interest. See Grantor Type Trusts,
earlier, for more information.
Pre-need funeral trusts. The purchasers of pre-need
funeral services are the grantors and the owners of pre-need
funeral trusts established under state laws. See Rev. Rul.
87-127, 1987-2 C.B. 156. However, the trustees of pre-need
funeral trusts can elect to file the return and pay the tax for
qualified funeral trusts. For more information, see Form
1041-QFT.
Enter the date the trust was created, or, if a decedent's
estate, the date of the decedent's death.
E. Nonexempt Charitable and
Split-Interest Trusts
Section 4947(a)(1) Trust
Check this box if the trust is a nonexempt charitable trust
within the meaning of section 4947(a)(1).
A nonexempt charitable trust is a trust:
That isn't exempt from tax under section 501(a);
•
•
In which all of the unexpired interests are devoted to one or
more charitable purposes described in section 170(c)(2)(B);
and
For which a deduction was allowed under section 170 (for
•
individual taxpayers) or similar Code section for personal
holding companies, foreign personal holding companies, or
estates or trusts (including a deduction for estate or gift tax
purposes).
Nonqualified deferred compensation plans. Taxpayers
may adopt and maintain grantor trusts in connection with
nonqualified deferred compensation plans (sometimes
referred to as “rabbi trusts”). Rev. Proc. 92-64, 1992-2 C.B.
422, provides a “model grantor trust” for use in rabbi trust
arrangements. The procedure also provides guidance for
requesting rulings on the plans that use these trusts.
Nonexempt charitable trust treated as a private founda-
tion. If a nonexempt charitable trust is treated as though it
were a private foundation under section 509, then the
fiduciary must file Form 990-PF, Return of Private
Foundation, in addition to Form 1041.
If a nonexempt charitable trust is treated as though it were
a private foundation, and it has no taxable income under
subtitle A, it may check the box on Form 990-PF, Part VI-A,
line 15, and enter the tax-exempt interest received or accrued
during the year on that line, instead of filing Form 1041 to
meet its section 6012 filing requirement for that tax year.
Excise taxes. If a nonexempt charitable trust is treated as
a private foundation, then it is subject to the same excise
taxes under chapters 41 and 42 that a private foundation is
subject to. If the nonexempt charitable trust is liable for any of
these taxes (except the section 4940 tax), then it reports
these taxes on Form 4720. Taxes paid by the trust on Form
4720 or on Form 990-PF (the section 4940 tax) can't be taken
as a deduction on Form 1041.
QSSTs. The beneficiary of a QSST is treated as the
substantial owner of that portion of the trust which consists of
stock in an S corporation for which an election under section
1361(d)(2) has been made. See QSSTs, earlier.
Bankruptcy Estate
A chapter 7 or 11 bankruptcy estate is a separate and distinct
taxable entity from the individual debtor for federal income
tax purposes. See Bankruptcy Estates, earlier.
For more information, see section 1398 and Pub. 908.
Pooled Income Fund
A pooled income fund is a split-interest trust with a remainder
interest for a public charity and a life income interest retained
by the donor or for another person. The property is held in a
pool with other pooled income fund property and doesn't
include any tax-exempt securities. The income for a retained
Not a Private Foundation
Check this box if the nonexempt charitable trust (section
4947(a)(1)) isn't treated as a private foundation under section
19
Instructions for Form 1041 (2023)
509. For more information, see Regulations section
53.4947-1.
In the top margin of your corrected Schedule H, enter
“CORRECTED” and the date you discovered the error. Also,
on an attachment, explain the reason for your correction. If
you owe tax, pay the tax in full with your amended Form
1041. If you overpaid tax on a previously filed Schedule H,
depending on whether you choose the adjustment or claim
for refund process to correct the error, you must either repay
or reimburse the employee's share of social security and
Medicare taxes or get the employee's consent to the filing of
a refund claim for their share. See Pub. 926, Household
Employer's Tax Guide, for more information.
Amended Schedule K-1 (Form 1041). If the amended
return results in a change to income, or a change in
distribution of any income or other information provided to a
beneficiary, an amended Schedule K-1 (Form 1041) must
also be filed with the amended Form 1041 and given to each
beneficiary. Check the “Amended K-1” box at the top of the
amended Schedule K-1.
Other returns that must be filed. If a nonexempt charitable
trust isn't treated as though it were a private foundation, the
fiduciary must file Form 990, Return of Organization Exempt
From Income Tax; or Form 990-EZ, Short Form Return of
Organization Exempt From Income Tax, in addition to Form
1041, if the trust meets the filing requirements for either of
those forms.
If a nonexempt charitable trust isn't treated as though it
were a private foundation, and it has no taxable income
under subtitle A, it may answer “Yes” on Form 990, Part V,
line 12a, and enter the tax-exempt interest received or
accrued during the year on Form 990, Part V, line 12b,
instead of filing Form 1041 to meet its section 6012 filing
requirement for that tax year (or if Form 990-EZ is filed
instead of Form 990, you may check the box on Form
990-EZ, line 43, and enter the tax-exempt interest received or
accrued during the year on that line).
Final Return
Check this box if this is a final return because the estate or
trust has terminated. Also, check the “Final K-1” box at the
top of Schedule K-1.
Section 4947(a)(2) Trust
Check this box if the trust is a split-interest trust described in
section 4947(a)(2).
If, on the final return, there are excess deductions, an
unused capital loss carryover, or an NOL carryover, see the
instructions for box 11 of Schedule K-1, later.
A split-interest trust is a trust that:
Isn't exempt from tax under section 501(a);
•
•
Has some unexpired interests that are devoted to
purposes other than religious, charitable, or similar purposes
described in section 170(c)(2)(B); and
Change in Trust's Name
If the name of the trust has changed from the name shown on
the prior year's return (or Form SS-4 if this is the first return
being filed), be sure to check this box.
Has amounts transferred in trust after May 26, 1969, for
•
which a deduction was allowed under section 170 (for
individual taxpayers) or similar Code sections for personal
holding companies, foreign personal holding companies, or
estates or trusts (including a deduction for estate or gift tax
purposes).
Change in Fiduciary
If a different fiduciary enters their name on the line for Name
and title of fiduciary than was shown on the prior year's return
(or Form SS-4 if this is the first return being filed) and you
didn't file a Form 8822-B, be sure to check this box. If there is
a change in the fiduciary whose address is used as the
mailing address for the estate or trust after the return is filed,
use Form 8822-B to notify the IRS.
Other returns that must be filed. The fiduciary of a
split-interest trust must file Form 5227. However, see the
Instructions for Form 5227 for the exception that applies to
split-interest trusts other than section 664 CRTs.
F. Initial Return, Amended Return, etc.
Change in Fiduciary's Name
If the fiduciary changed their name from the name they
entered on the prior year's return (or Form SS-4 if this is the
first return being filed), be sure to check this box.
Amended Return
If you are filing an amended Form 1041:
Check the “Amended return” box in item F,
Complete the entire return,
•
•
•
•
Correct the appropriate lines with the new information, and
Refigure the estate's or trust's tax liability.
Change in Fiduciary's Address
If the same fiduciary who filed the prior year's return (or Form
SS-4 if this is the first return being filed) files the current
year's return and changed the address on the return
Note. If you are amending the return for an NOL
carryback, also check the “Net operating loss carryback” box
in item F.
(including a change to an "in care of" name and address),
and didn't report the change on Form 8822-B, check this box.
If the total tax on line 24 is larger on the amended return
than on the original return, you should generally pay the
difference with the amended return. However, you should
adjust this amount if there is any increase or decrease in the
total payments shown on line 26.
If the address shown on Form 1041 changes after you file
the form (including a change to an "in care of" name and
address), file Form 8822-B to notify the IRS of the change.
G. Section 645 Election
Attach a sheet that explains the reason for the
amendments and identifies the lines and amounts being
changed on the amended return.
Amended Schedule H (Form 1040). If you discover an
error on a Schedule H (Form 1040), Household Employment
Taxes, that you previously filed with Form 1041, file an
“Amended” Form 1041 and attach a corrected Schedule H.
If a section 645 election was made by filing Form 8855, check
the box in item G. See Special Rule for Certain Revocable
Trusts under Who Must File, earlier, and Form 8855 for more
information about this election.
20
Instructions for Form 1041 (2023)
Line 2a—Total Ordinary Dividends
Report the estate's or trust's share of all ordinary dividends
received during the tax year.
Income
Determining Qualified Business Income (QBI)
The estate's or trust's QBI includes items of income, gain,
deduction, and loss that are effectively connected with the
conduct of a trade or business within the United States and
included or allowed in determining taxable income for the
year. This includes the estate's or trust's share of items of
income, gain, deduction, and loss from trades or business
conducted by partnerships (other than publicly traded
partnerships (PTPs)), S corporations, and other estates or
trusts. For more information, see section 199A, the
Instructions for Form 8995, and the Instructions for Form
8995-A.
For the year of the decedent's death, Forms 1099-DIV
issued in the decedent's name may include dividends earned
after the date of death that should be reported on the income
tax return of the decedent's estate. When preparing the
decedent's final income tax return, report on Schedule B
(Form 1040), line 5, the ordinary dividends shown on Form
1099-DIV. Under the last entry on line 5, subtotal all the
dividends reported on line 5. Below the subtotal, enter “Form
1041” and the name and address shown on Form 1041 for
the decedent's estate. Also, show the part of the ordinary
dividends reported on Form 1041 and subtract it from the
subtotal.
Special Rule for Blind Trust
Report capital gain distributions on Schedule D
If you are reporting income from a qualified blind trust (under
the Ethics in Government Act of 1978), don't identify the
payer of any income to the trust but complete the rest of the
return as provided in the instructions. Also enter “Blind Trust”
at the top of page 1.
(Form 1041), line 13.
TIP
Line 2b—Qualified Dividends
Enter the beneficiary's allocable share of qualified dividends
on line 2b(1) and enter the estate's or trust's allocable share
on line 2b(2).
Extraterritorial Income Exclusion
The extraterritorial income exclusion isn't allowed for
transactions after 2006. However, income from certain
long-term sales and leases may still qualify for the exclusion.
For details and to figure the amount of the exclusion, see
Form 8873, Extraterritorial Income Exclusion, and its
separate instructions. The estate or trust must report the
extraterritorial income exclusion on line 15a of Form 1041,
page 1.
If the estate or trust received qualified dividends that were
derived from IRD, you must reduce the amount on line 2b(2)
by the portion of the estate tax deduction claimed on Form
1041, page 1, line 19, that is attributable to those qualified
dividends. Don't reduce the amounts on line 2b by any other
allocable expenses.
Note. The beneficiary's share (as figured above) may differ
from the amount entered on line 2b of Schedule K-1 (Form
1041).
Although the extraterritorial income exclusion is entered
on line 15a, it is an exclusion from income and should be
treated as tax-exempt income when completing other parts of
the return.
Qualified dividends. Qualified dividends are eligible for a
lower tax rate than other ordinary income. Generally, these
dividends are reported to the estate or trust in box 1b of
Form(s) 1099-DIV. See Pub. 550 for the definition of qualified
dividends if the estate or trust received dividends not
reported on Form 1099-DIV.
Exception. Some dividends may be reported to the estate
or trust as in box 1b of Form 1099-DIV but aren't qualified
dividends. These include the following.
Line 1—Interest Income
Report the estate's or trust's share of all taxable interest
income that was received during the tax year. Examples of
taxable interest include interest from:
Accounts (including certificates of deposit and money
•
market accounts) with banks, credit unions, and thrift
institutions;
Dividends received on any share of stock that the estate or
•
Notes, loans, and mortgages;
•
•
•
•
•
trust held for less than 61 days during the 121-day period that
began 60 days before the ex-dividend date. The ex-dividend
date is the first date following the declaration of a dividend on
which the purchaser of a stock isn't entitled to receive the
next dividend payment. When counting the number of days
the stock was held, include the day the estate or trust
disposed of the stock but not the day it acquired the stock.
However, you can't count certain days during which the
estate's or trust's risk of loss was diminished. See Pub. 550
for more details.
U.S. Treasury bills, notes, and bonds;
U.S. savings bonds;
Original issue discount; and
Income received as a regular interest holder of a real
estate mortgage investment conduit (REMIC).
For taxable bonds acquired after 1987, amortizable bond
premium is treated as an offset to the interest income instead
of as a separate interest deduction. See Pub. 550.
For the year of the decedent's death, Forms 1099-INT
issued in the decedent's name may include interest income
earned after the date of death that should be reported on the
income tax return of the decedent's estate. When preparing
the decedent's final income tax return, report on Schedule B
(Form 1040), line 1, the total interest shown on Form
1099-INT. Under the last entry on line 1, subtotal all the
interest reported on line 1. Below the subtotal, enter “Form
1041” and the name and address shown on Form 1041 for
the decedent's estate. Also, show the part of the interest
reported on Form 1041 and subtract it from the subtotal.
Dividends attributable to periods totaling more than 366
•
days that the estate or trust received on any share of
preferred stock held for less than 91 days during the 181-day
period that began 90 days before the ex-dividend date. When
counting the number of days the stock was held, include the
day the estate or trust disposed of the stock but not the day it
acquired the stock. However, you can't count certain days
during which the estate's or trust's risk of loss was
diminished. See Pub. 550 for more details. Preferred
dividends attributable to periods totaling less than 367 days
are subject to the 61-day holding period rule above.
21
Instructions for Form 1041 (2023)
Dividends on any share of stock to the extent that the
property other than capital assets and also from involuntary
conversions (other than casualty or theft).
•
estate or trust is under an obligation (including a short sale)
to make related payments with respect to positions in
substantially similar or related property.
Line 8—Other Income
Enter other items of income not included on lines 1, 2a, and 3
through 7. List the type and amount on an attached schedule
if the estate or trust has more than one item.
Payments in lieu of dividends, but only if you know or have
•
reason to know that the payments are not qualified dividends.
If you have an entry on line 2b(2), be sure you use
Schedule D (Form 1041), the Schedule D Tax
Worksheet, or the Qualified Dividends Tax
TIP
Items to be reported on line 8 include the following.
Unpaid compensation received by the decedent's estate
•
Worksheet, whichever applies, to figure the estate's or trust's
tax. Figuring the estate's or trust's tax liability in this manner
will usually result in a lower tax.
that is IRD.
Any part of a total distribution shown on Form 1099-R,
•
Distributions From Pensions, Annuities, Retirement or
Profit-Sharing Plans, IRAs, Insurance Contracts, etc., that is
treated as ordinary income. For more information, see Form
4972, Tax on Lump-Sum Distributions, and its instructions.
Line 3—Business Income or (Loss)
If the estate operated a business, report the income and
expenses on Schedule C (Form 1040), Profit or Loss From
Business. Enter the net profit or (loss) from Schedule C on
line 3.
Taxable contributions received during the tax year by an
•
Alaska Native Settlement Trust from an Alaska Native
Corporation. Report gain from taxable contributions of
noncash property on Schedule D (Form 1041).
The amount of payroll tax credit taken by an employer on
•
Line 4—Capital Gain or (Loss)
Enter the gain from Schedule D (Form 1041), Part III, line 19,
column (3), or the loss from Part IV, line 20.
its 2023 employment tax returns (Forms 941, 943, and 944)
for qualified paid sick and qualified paid family leave under
the Families First Coronavirus Response Act (FFCRA) and
the American Rescue Plan Act of 2021 (ARP) (both the
nonrefundable and refundable portions). These amounts
must be included in gross income for the tax year that
includes the last day of the calendar quarter with respect to
which the credit is allowed. A credit is available only if the
leave was taken sometime after March 31, 2020, and before
October 1, 2021, and only after the qualified leave wages
were paid, which might under certain circumstances not
occur until a quarter after September 30, 2021, including
quarters during 2022. Accordingly, all lines related to
qualified sick and family leave wages remain on the
employment tax returns for 2023.
If you deferred a capital gain into a QOF, you must file your
return with Schedule D, Form 8949, and Form 8997 attached.
You will need to file Form 8997 annually until you dispose of
the investment. See the Form 8997 instructions.
Don't substitute Schedule D (Form 1040) for
Schedule D (Form 1041).
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CAUTION
Line 5—Rents, Royalties, Partnerships, Other
Estates and Trusts, etc.
Use Schedule E (Form 1040), Supplemental Income and
Loss, to report the estate's or trust's share of income or
(losses) from rents, royalties, partnerships, S corporations,
other estates and trusts, and REMICs. Also use Schedule E
(Form 1040) to report farm rental income and expenses
based on crops or livestock produced by a tenant. Enter the
net profit or (loss) from Schedule E on line 5. See the
Instructions for Schedule E (Form 1040) for reporting
requirements.
Note. Beginning in tax year 2021, there is no current year
section 965(a) income inclusion reported on line 8. However,
see the instructions for Schedule G, Part I, line 8, later, for
information about a triggering event for a section 965(i) net
tax liability.
Deductions
Depreciation, Depletion, and Amortization
If the estate or trust received a Schedule K-1 from a
partnership, S corporation, or other flow-through entity, use
the corresponding lines on Form 1041 to report the interest,
dividends, capital gains, etc., from the flow-through entity.
A trust or decedent's estate is allowed a deduction for
depreciation, depletion, and amortization only to the extent
the deductions aren't apportioned to the beneficiaries. An
estate or trust isn't allowed to make an election under section
179 to expense depreciable business assets.
Line 6—Farm Income or (Loss)
If the estate or trust operated a farm, use Schedule F (Form
1040), Profit or Loss From Farming, to report farm income
and expenses. Enter the net profit or (loss) from Schedule F
on line 6.
The estate's or trust's share of depreciation, depletion,
and amortization is generally reported on the appropriate
lines of Schedule C, E, or F (Form 1040), the net income or
loss from which is shown on line 3, 5, or 6 of Form 1041. If
the deduction isn't related to a specific business or activity,
then report it on line 15a.
Depreciation. For a decedent's estate, the depreciation
deduction is apportioned between the estate and the heirs,
legatees, and devisees on the basis of the estate's income
allocable to each.
For a trust, the depreciation deduction is apportioned
between the income beneficiaries and the trust on the basis
of the trust income allocable to each, unless the governing
instrument (or local law) requires or permits the trustee to
maintain a depreciation reserve. If the trustee is required to
If an estate or trust has farm rental income and
expenses based on crops or livestock produced by a
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CAUTION
tenant, report the income and expenses on
Schedule E (Form 1040). Don't use Form 4835, Farm Rental
Income and Expenses, or Schedule F (Form 1040) to report
such income and expenses and don't include the net profit or
(loss) from such income and expenses on line 6.
Line 7—Ordinary Gain or (Loss)
Enter from line 17 of Form 4797, Sales of Business Property,
the ordinary gain or loss from the sale or exchange of
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Instructions for Form 1041 (2023)
maintain a reserve, the deduction is first allocated to the trust,
up to the amount of the reserve. Any excess is allocated
among the income beneficiaries and the trust in the same
manner as the trust's accounting income. See Regulations
section 1.167(h)-1(b).
Depletion. For mineral or timber property held by a
decedent's estate, the depletion deduction is apportioned
between the estate and the heirs, legatees, and devisees on
the basis of the estate's income from such property allocable
to each.
Accrued Expenses
Generally, an accrual basis taxpayer can deduct accrued
expenses in the tax year that (a) all events have occurred that
determine the liability, and (b) the amount of the liability can
be figured with reasonable accuracy. However, all the events
that establish liability are treated as occurring only when
economic performance takes place. There are exceptions for
recurring items. See section 461(h).
Limitations on Deductions
For mineral or timber property held in trust, the depletion
deduction is apportioned between the income beneficiaries
and the trust based on the trust income from such property
allocable to each, unless the governing instrument (or local
law) requires or permits the trustee to maintain a reserve for
depletion. If the trustee is required to maintain a reserve, the
deduction is first allocated to the trust, up to the amount of
the reserve. Any excess is allocated among the beneficiaries
and the trust in the same manner as the trust's accounting
income. See Regulations section 1.611-1(c)(4).
Amortization. The deduction for amortization is apportioned
between an estate or trust and its beneficiaries under the
same principles used to apportion the deductions for
depreciation and depletion.
At-Risk Loss Limitations
Generally, the amount the estate or trust has “at-risk” limits
the loss it can deduct for any tax year. Use Form 6198,
At-Risk Limitations, to figure the deductible loss for the year
and file it with Form 1041. For more information, see Pub.
925, Passive Activity and At-Risk Rules.
Passive Activity Loss and Credit Limitations
In general. Section 469 and the regulations thereunder
generally limit losses from passive activities to the amount of
income derived from all passive activities. Similarly, credits
from passive activities are generally limited to the tax
attributable to such activities. These limitations are first
applied at the estate or trust level.
Generally, an activity is a passive activity if it involves the
conduct of any trade or business, and the taxpayer does not
materially participate in the activity. Passive activities don't
include working interests in oil and gas properties. See
section 469(c)(3).
The deduction for the amortization of reforestation
expenditures under section 194 is allowed only to an estate.
Allocable share from a pass-through entity.
Depreciation, depletion, and amortization received from a
pass-through entity on a Schedule K-1 are apportioned and
reported in the same manner as discussed above. A section
179 expense received from a pass-through entity on a
Schedule K-1 isn't deductible by the estate or trust.
Note. Material participation standards for estates and trusts
haven't been established by regulations.
For a grantor trust, material participation is determined at
Allocation of Deductions for Tax-Exempt Income
the grantor level.
Generally, no deduction that would otherwise be allowable is
allowed for any expense (whether for business or for the
production of income) that is allocable to tax-exempt income.
Examples of tax-exempt income include:
If the estate or trust distributes an interest in a passive
activity, the basis of the property immediately before the
distribution is increased by the passive activity losses
allocable to the interest, and such losses can't be deducted.
See section 469(j)(12).
Certain death benefits (section 101),
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Interest on state or local bonds (section 103),
Compensation for injuries or sickness (section 104), and
Income from discharge of indebtedness in a title 11 case
Losses from passive activities are first subject to the
at-risk rules. When the losses are deductible under
TIP
the at-risk rules, the passive activity rules then apply.
(section 108).
Exception. State income taxes and business expenses that
Rental activities. Generally, rental activities are passive
activities, whether or not the taxpayer materially participates.
However, certain taxpayers who materially participate in real
property trades or businesses aren't subject to the passive
activity limitations on losses from rental real estate activities
in which they materially participate. For more details, see
section 469(c)(7).
are allocable to tax-exempt interest are deductible.
Expenses that are directly allocable to tax-exempt income
are allocated only to tax-exempt income. A reasonable
proportion of expenses indirectly allocable to both
tax-exempt income and other income must be allocated to
each class of income.
For tax years of an estate ending less than 2 years after
the decedent's date of death, up to $25,000 of deductions
and deduction equivalents of credits from rental real estate
activities in which the decedent actively participated are
allowed. Any excess losses or credits are suspended for the
year and carried forward.
Portfolio income. Portfolio income isn't treated as income
from a passive activity, and passive losses and credits
generally may not be applied to offset it. Portfolio income
generally includes interest, dividends, royalties, and income
from annuities. Portfolio income of an estate or trust must be
accounted for separately.
Deductions That May Be Allowable for Estate
Tax Purposes
Administration expenses and casualty and theft losses
deductible on Form 706 may be deducted, to the extent
otherwise deductible for income tax purposes, on Form 1041
if the fiduciary files a statement waiving the right to deduct
the expenses and losses on Form 706. The statement must
be filed before the expiration of the statutory period of
limitations for the tax year the deduction is claimed. See Pub.
559 for more information.
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Instructions for Form 1041 (2023)
2. Any qualified residence interest (see later), and
Forms to file. See Form 8582, Passive Activity Loss
Limitations, to figure the amount of losses allowed from
passive activities. See Form 8582-CR, Passive Activity Credit
Limitations, to figure the amount of credit allowed for the
current year.
3. Any interest payable under section 6601 on any unpaid
portion of the estate tax attributable to the value of a
reversionary or remainder interest in property for the period
during which an extension of time for payment of such tax is
in effect.
Business Interest
Business interest expense could be limited. For more
information about limitations on deductions for business
interest, see section 163(j) and Line 10—Interest, later.
Limitation on deduction of business interest. Business
interest expense is limited to the sum of business interest
income, 30% of the adjusted taxable income, and floor plan
financing interest. Business interest expense includes any
interest paid or accrued on indebtedness properly allocable
to a trade or business. A taxpayer, other than a tax shelter,
that meets the gross receipts test is not required to limit
business interest expense under section 163(j). A taxpayer
meets the gross receipts test if the taxpayer has average
annual gross receipts of $29 million or less for the 3 prior tax
years. Gross receipts include the aggregate gross receipts
from all persons treated as a single employer such as a
controlled group of corporations, commonly controlled
partnerships or proprietorships, and affiliated service groups.
If the taxpayer fails to meet the gross receipts test, Form
8990 is generally required.
Investment interest. Generally, investment interest is
interest (including amortizable bond premium on taxable
bonds acquired after October 22, 1986, but before January 1,
1988) that is paid or incurred on indebtedness that is properly
allocable to property held for investment. Investment interest
doesn't include any qualified residence interest, or interest
that is taken into account under section 469 in figuring
income or loss from a passive activity.
Generally, net investment income (NII) is the excess of
investment income over investment expenses. Investment
expenses (other than interest) are deductible only to the
extent they are allowable under section 67(e).
The amount of the investment interest deduction may be
limited. Use Form 4952, Investment Interest Expense
Deduction, to figure the allowable investment interest
deduction.
If you must complete Form 4952, check the box on line 10
of Form 1041 and attach Form 4952. Then, add the
deductible investment interest to the other types of
deductible interest and enter the total on line 10.
Transactions Between Related Taxpayers
Under section 267, a trust that uses the accrual method of
accounting may only deduct business expenses and interest
owed to a related party in the year the payment is included in
the income of the related party. For this purpose, a related
party includes:
1. A grantor and a fiduciary of any trust;
2. A fiduciary of a trust and a fiduciary of another trust, if
the same person is a grantor of both trusts;
3. A fiduciary of a trust and a beneficiary of such trust;
4. A fiduciary of a trust and a beneficiary of another trust,
if the same person is a grantor of both trusts;
5. A fiduciary of a trust and a corporation more than 50%
in value of the outstanding stock of which is owned, directly
or indirectly, by or for the trust or by or for a person who is a
grantor of the trust; and
6. An executor of an estate and a beneficiary of that
estate, except for a sale or exchange to satisfy a pecuniary
bequest (that is, a bequest of a sum of money).
Line 10—Interest
Enter the amount of interest (subject to limitations) paid or
incurred by the estate or trust on amounts borrowed by the
estate or trust, or on debt acquired by the estate or trust (for
example, outstanding obligations from the decedent) that
isn't claimed elsewhere on the return.
If the proceeds of a loan were used for more than one
purpose (for example, to purchase a portfolio investment and
to acquire an interest in a passive activity), the fiduciary must
make an interest allocation according to the rules in
Temporary Regulations section 1.163-8T.
Qualified residence interest. Interest paid or incurred by
an estate or trust on indebtedness secured by a qualified
residence of a beneficiary of an estate or trust is treated as
qualified residence interest if the residence would be a
qualified residence (that is, the principal residence or the
secondary residence selected by the beneficiary) if owned by
the beneficiary. The beneficiary must have a present interest
in the estate or trust or an interest in the residuary of the
estate or trust. See Pub. 936, Home Mortgage Interest
Deduction, for an explanation of the general rules for
deducting home mortgage interest.
Don't include interest paid on indebtedness incurred or
continued to purchase or carry obligations on which the
interest is wholly exempt from income tax.
Personal interest isn't deductible. Examples of personal
interest include interest paid on:
Revolving charge accounts used to purchase personal-use
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property;
Personal notes for money borrowed from a bank, a credit
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union, or other person;
Installment loans on personal-use property; and
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See section 163(h)(3) for a definition of qualified
Underpayments of federal, state, or local income taxes.
residence interest and for limitations on indebtedness.
Interest that is paid or incurred on indebtedness allocable
to a trade or business (including a rental activity) should be
deducted on the appropriate line of Schedule C, E, or F
(Form 1040), the net income or loss from which is shown on
line 3, 5, or 6 of Form 1041.
Line 11—Taxes
The deduction for state and local taxes is limited to
$10,000. The limitation applies to the total of your
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CAUTION
state and local income taxes (or general sales taxes,
Types of interest to include on line 10 are:
if elected instead of income taxes), real estate taxes, and
personal property taxes. The limitation does not apply to
foreign income taxes, and state and local taxes paid or
1. Any investment interest (subject to limitations—see
below),
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Instructions for Form 1041 (2023)
accrued in carrying on a trade or business or for the
production of income.
2. In return for the cash contribution, you received a state
or local tax credit.
3. You must reduce your charitable contribution
deduction by the amount of the state or local tax credit you
receive.
Enter any deductible taxes paid or incurred during the tax
year that aren't deductible elsewhere on Form 1041.
Deductible taxes include the following.
State and local income taxes. You can deduct state and
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If you meet these conditions, and to the extent you apply the
state or local tax credit to this or a prior year's state or local
tax liability, you may include this amount on line 11. To the
extent you apply a portion of the credit to offset your state or
local tax liability in a subsequent year (as permitted by law),
you may treat this amount as state or local tax paid in the
year the credit is applied. For more information about this
local income taxes unless you elect to deduct state and local
general sales taxes. You can't deduct both.
State and local general sales taxes. You can elect to
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deduct state and local general sales taxes instead of state
and local income taxes. Generally, you can elect to deduct
the actual state and local general sales taxes (including
compensating use taxes) you paid in 2023 if the tax rate was
the same as the general sales tax rate. However, sales taxes
on food, clothing, medical supplies, and motor vehicles are
deductible as a general sales tax even if the tax rate was less
than the general sales tax rate. Sales taxes on motor vehicles
are also deductible as a general sales tax if the tax rate was
more than the general sales tax rate, but the tax is deductible
only up to the amount of tax that would have been imposed at
the general sales tax rate. Motor vehicles include cars,
motorcycles, motor homes, recreational vehicles, sport utility
vehicles, trucks, vans, and off-road vehicles. Also include any
state and local general sales taxes paid for a leased motor
vehicle.
Line 12—Fiduciary Fees
Enter the deductible fees paid or incurred to the fiduciary for
administering the estate or trust during the tax year.
Fiduciary expenses include probate court fees and costs,
fiduciary bond premiums, legal publication costs of notices to
creditors or heirs, the cost of certified copies of the
decedent's death certificate, and costs related to fiduciary
accounts.
Fiduciary fees deducted on Form 706 can't be
deducted on Form 1041.
TIP
Do not include sales taxes paid on items used in a trade or
business. An estate or trust cannot use the Optional State
Sales Tax Tables for individuals in the Instructions for
Schedule A (Form 1040), Itemized Deductions, to figure its
deduction.
Note. Fiduciary fees are allowable under section 67(e) if
they are costs that are paid or incurred in connection with the
administration of an estate or a non-grantor trust that would
not have been incurred if the property were not held in such
Regulations section 1.67-4 for more information.
State and local real property taxes.
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Note. The deduction for foreign real property taxes is no
longer allowed.
Line 14—Attorney, Accountant, and Return
Preparer Fees
State and local personal property taxes.
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Foreign or U.S. territory income taxes. You may want to
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take a credit for the tax instead of a deduction. See the
instructions for Schedule G, Part I, line 2a, later, for more
details.
Expenses for preparation of fiduciary income tax returns, the
decedent's final individual income tax returns, and all estate
and GST tax returns are fully deductible. However, expenses
for preparing all other tax returns, including gift tax returns,
are considered costs commonly and customarily incurred by
individuals and are not deductible. For more information, see
Final Regulations - TD9918 and Regulations section 1.67-4.
The generation-skipping transfer (GST) tax imposed on
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income distributions.
Don't deduct:
Federal income taxes;
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Estate, inheritance, legacy, succession, and gift taxes;
Federal duties and excise taxes; or
Foreign real property taxes.
Line 15a—Other Deductions
Attach your own statement, listing by type and amount all
allowable deductions that aren't deductible elsewhere on
Form 1041.
Allowable deductions include all deductions listed in
section 67(b) (including estate taxes attributable to IRD under
section 691(c)), and other costs allowable under section
67(e) paid or incurred in connection with the administration of
the estate or trust that would not have been incurred if the
property were not held in the estate or trust.
Don't include any losses on worthless bonds and similar
obligations and nonbusiness bad debts. Report these losses,
as applicable, on Form 8949.
Do not deduct the estate's or trust's deduction for social
security and Medicare taxes by the amount claimed on its
employment tax returns for the nonrefundable and refundable
portions of the FFCRA and the ARP credits for qualified sick
and family leave wages. Instead, report this amount as
income on line 8.
Safe harbor for certain charitable contributions made in
exchange for a state or local tax credit. If you made a
charitable contribution in exchange for a state or local tax
credit and your charitable contribution deduction must be
reduced as a result of receiving or expecting to receive the
tax credit, you may qualify for a safe harbor that allows you to
treat some or all of the disallowed charitable contribution as a
payment of state and local taxes. The safe harbor applies if
you meet the following conditions.
Don't deduct medical or funeral expenses on Form 1041.
Medical expenses of the decedent paid by the estate may be
deductible on the decedent's income tax return for the year
incurred. See section 213(c). Funeral expenses are
deductible only on Form 706.
1. You made a cash contribution to an entity described in
section 170(c).
Other costs paid or incurred by estates and non-grantor
trusts. Under section 67(e), deductions are allowable for
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Instructions for Form 1041 (2023)
costs which are paid or incurred by an estate or non-grantor
trust in connection with the administration of the estate or
trust and would not have been incurred if the property were
not held in such estate or trust.
In determining whether a cost is deductible by an estate or
non-grantor trust, it must be determined whether the cost
would be “commonly or customarily” incurred by a
hypothetical individual owning the same property. If the cost
would be deductible by a hypothetical individual, it is not
deductible by the estate or non-grantor trust.
It is the type of product or service rendered to the estate or
non-grantor trust in exchange for the cost, rather than the
description of the cost of that product or service, that is
determinative.
Costs that are incurred commonly or customarily by
individuals include costs incurred in defense of a claim
against the estate, the decedent, or the non-grantor trust that
are unrelated to the existence, validity, or administration of
the estate or trust. These amounts are not allowable
deductions.
Ownership costs. Ownership costs are costs that are
chargeable to or incurred by an owner of property simply by
reason of being the owner of the property. These costs are
commonly or customarily incurred by a hypothetical
individual owner of such property and are not deductible by
an estate or non-grantor trust. Under section 67(b), they
include, but are not limited to, condominium fees, insurance
premiums, maintenance and lawn services, automobile
registration and insurance costs, and partnership costs
deemed to be passed through to and reportable by a partner.
Other expenses incurred merely by reason of the ownership
of property may be fully deductible under other provisions of
the Code.
commonly or customarily by individuals, then (except to the
extent provided otherwise by guidance published in the
Internal Revenue Bulletin) the single fee, commission, or
other expense (bundled fee) must be allocated between the
costs that are incurred commonly or customarily by
individuals, such costs not being deductible, and costs that
are not incurred commonly or customarily by individuals,
such costs being deductible.
There is an exception to the allocation rule if a bundled fee
is not computed on an hourly basis. In this situation, only the
portion of that fee that is attributable to investment advice is
not deductible. The remaining portion is deductible.
Out-of-pocket expenses billed to the estate or non-grantor
trust are treated as separate from the bundled fee and are not
subject to allocation.
Estates and non-grantor trusts cannot deduct payments
made from the bundled fee to third parties if such payments
would not have been deductible if they had been paid directly
by the estate or non-grantor trust.
Any reasonable method may be used to allocate a
bundled fee, including without limitation the allocation of a
portion of a fiduciary commission that is a bundled fee to
investment advice. For more information, see Regulations
section 1.67-4(c)(4).
Note. The reasonable method standard does not apply to
determine the portion of the bundled fee attributable to
payments made to third parties commonly or customarily
incurred by an individual or to any other separately assessed
expense commonly or customarily incurred by an individual,
because those payments and expenses are readily
identifiable without any discretion on the part of the fiduciary
or return preparer.
For more information, see Regulations section 1.67-4.
Appraisal fees. Appraisal fees incurred to determine the
FMV of assets as of the decedent's date of death (or the
alternate valuation date), to determine value for purposes of
making distributions, or as otherwise required to properly
prepare the estate's or trust's tax returns, or a GST tax return,
are not incurred commonly or customarily by an individual
and are deductible. The cost of appraisals for other purposes
(for example, insurance) is commonly or customarily incurred
by individuals and is not an allowable deduction.
Investment advisory fees. Fees for investment advice,
including any related services that would be provided to any
individual investor as part of an investment advisory fee, are
incurred commonly or customarily by a hypothetical
individual investor and are not deductible. However, certain
incremental costs of investment advice beyond the amount
that would normally be charged to an individual investor are
deductible.
An incremental cost is a special, additional charge that is
added solely because the investment advice is rendered to a
trust or estate rather than to an individual, including balancing
beyond the usual varying interests of current beneficiaries
and remaindermen. The deductible portion of the investment
advisory fees is limited to the amount of those fees, if any,
that exceeds the fees normally charged to an individual
investor. See Regulations section 1.67-4(b)(4).
Bundled fees. If an estate or non-grantor trust pays a single
fee, commission, or other expense, such as a fiduciary's
commission, attorney's fee, or accountant's fee for both costs
that are incurred commonly or customarily by individuals and
costs (other than a de minimis amount) that are not incurred
Other Deductions Reported on Line 15a
Bond premium(s). For taxable bonds acquired before
October 23, 1986, if the fiduciary elected to amortize the
premium, report the amortization on this line. If you made the
election to amortize the premium, the basis in the taxable
bond must be reduced by the amount of amortization.
For tax-exempt bonds, you can't deduct the premium that
is amortized. Although the premium can't be deducted, you
must amortize the tax-exempt bond by the amount of
premium amortized.
For more information, see section 171 and Pub. 550.
If you claim a bond premium deduction for the estate or
trust, figure the deduction on a separate sheet and attach it to
Form 1041.
Casualty and theft losses. Use Form 4684, Casualties and
Thefts, to figure any deductible casualty and theft losses.
Estate's or trust's share of amortization, depreciation,
and depletion not claimed elsewhere. If you can't deduct
the estate's or trust's apportioned share of amortization,
depreciation, and depletion as rent or royalty expenses on
Schedule E (Form 1040), or as business or farm expenses on
Schedule C or F (Form 1040), itemize the estate's or trust's
apportioned share of the deductions on an attached sheet
and include them on line 15a.
Note. Don't report the beneficiary's apportioned share of
depreciation, depletion, and amortization on line 15a. Report
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Instructions for Form 1041 (2023)
the beneficiary's apportioned share of deductions in box 9 of
Schedule K-1 (Form 1041).
Itemize each beneficiary's apportioned share of the
deductions and report them in the appropriate box of
Schedule K-1 (Form 1041).
Also, a deduction is allowed for the GST tax imposed as a
result of a taxable termination or a direct skip occurring as a
result of the death of the transferor. See section 691(c)(3).
Enter the estate's or trust's share of these deductions on
line 19.
Section 179D. Enter any applicable deduction under
section 179D for costs of energy efficient commercial
business property placed in service during the tax year.
Complete and attach Form 7205, Energy Efficient
Commercial Buildings Deduction.
Line 20—Qualified Business Income Deduction
To figure your QBI deduction, use Form 8995 or Form
8995-A, as applicable.
Use Form 8995 if:
You have QBI (loss), real estate investment trust (REIT)
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Line 15b—Net Operating Loss Deduction
An estate or trust is allowed an NOLD under section 172.
dividends, or PTP income (loss);
Your 2023 taxable income before the QBI deduction is less
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than or equal to $182,100; and
If you claim an NOLD for the estate or trust, figure the
deduction on a separate sheet and attach it to the return.
You aren’t a patron in a specified agricultural or
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horticultural cooperative.
Line 18—Income Distribution Deduction
If you don’t meet these requirements, use Form 8995-A.
Attach whichever form you use (Form 8995 or 8995-A) to
your return. Also attach Schedule C, E, or F (Form 1040),
whichever form you use to report information about your QBI.
See the instructions for Forms 8995 and 8995-A for more
information for figuring and reporting your QBI deduction.
If the estate or trust was required to distribute income
currently or if it paid, credited, or was required to distribute
any other amounts to beneficiaries during the tax year,
complete Schedule B to determine the estate's or trust's
income distribution deduction. However, if you are filing for a
pooled income fund, don't complete Schedule B. Instead,
attach a statement to support the computation of the income
distribution deduction. For more information, see Pooled
Income Funds, earlier.
Note. Report the beneficiary’s apportioned share of items of
QBI (loss) subject to beneficiary specific determinations, W-2
wages, unadjusted basis immediately after acquisition (UBIA)
of qualified property, qualified REIT dividends, and qualified
PTP income on a statement attached to Schedule K-1 (Form
1041). See the instructions for box 14, code I, of
If the estate or trust claims an income distribution
deduction, complete and attach:
Part I (through line 24) and Part II of Schedule I (Form
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Schedule K-1 (Form 1041), later.
1041) to refigure the deduction on a minimum tax basis, and
Schedule K-1 (Form 1041) for each beneficiary to which a
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Line 21—Exemption
distribution was made or required to be made.
Decedents' estates. A decedent's estate is allowed a $600
Cemetery perpetual care fund. On line 18, deduct the
amount, not more than $5 per gravesite, paid for
exemption.
Trusts required to distribute all income currently. A trust
whose governing instrument requires that all income be
distributed currently is allowed a $300 exemption, even if it
distributed amounts other than income during the tax year.
Qualified disability trusts. A qualified disability trust is
allowed a $4,700 exemption. This amount is not subject to
phaseout.
maintenance of cemetery property. To the right of the entry
space for line 18, enter the number of gravesites. Also enter
“Section 642(i) trust” in parentheses after the trust's name at
the top of Form 1041. You don't have to complete Schedule B
of Form 1041, and Schedule K-1 (Form 1041).
Don't enter less than zero on line 18.
Line 19—Estate Tax Deduction Including Certain
Generation-Skipping Transfer Taxes
A qualified disability trust is any trust:
1. Described in 42 U.S.C. 1396p(c)(2)(B)(iv) and
established solely for the benefit of an individual under 65
years of age who is disabled, and
2. All of the beneficiaries of which are determined by the
Commissioner of Social Security to have been disabled for
some part of the tax year within the meaning of 42 U.S.C.
1382c(a)(3).
If the estate or trust includes IRD in its gross income, and
such amount was included in the decedent's gross estate for
estate tax purposes, the estate or trust is allowed to deduct in
the same tax year that the income is included that portion of
the estate tax imposed on the decedent's estate that is
attributable to the inclusion of the IRD in the decedent's
estate. For an example of the computation, see Regulations
section 1.691(c)-1 and Pub. 559.
A trust will not fail to meet item 2 above just because the
trust's corpus may revert to a person who isn't disabled after
the trust ceases to have any disabled beneficiaries.
If any amount properly paid, credited, or required to be
distributed by an estate or trust to a beneficiary consists of
IRD received by the estate or trust, don't include such
amounts in determining the estate tax deduction for the
estate or trust. Figure the deduction on a separate sheet.
Attach the sheet to your return.
All other trusts. A trust not described above is allowed a
$100 exemption.
Tax and Payments
Line 23—Taxable Income
If you claim a deduction for estate tax attributable to
qualified dividends or capital gains, you may have to
!
Minimum taxable income. Line 23 can't be less than the
CAUTION
adjust the amount on Form 1041, page 1, line 2b(2);
larger of:
or Schedule D (Form 1041), line 22.
27
Instructions for Form 1041 (2023)
The inversion gain of the estate or trust, as figured under
•
Line 28—Tax Due
section 7874, if the estate or trust is an expatriated entity or a
partner in an expatriated entity; or
You must pay the tax in full when the return is filed. You may
pay by EFTPS. For more information about EFTPS, see
Electronic Deposits, earlier. Also, you may pay by check or
money order or by credit or debit card.
The sum of the excess inclusions of the estate or trust from
•
Schedule Q (Form 1066), Quarterly Notice to Residual
Interest Holder of REMIC Taxable Income or Net Loss
Allocation, line 2c.
To pay by check or money order. If you pay by check or
money order:
Net operating loss (NOL). If line 23 (figured without regard
to the minimum taxable income rule stated above) is a loss,
the estate or trust may have an NOL. Don't include the
deductions claimed on lines 13, 18, and 21 when figuring the
amount of the NOL.
Generally, an NOL can only be carried forward to
subsequent years and cannot be carried back. The 2-year
carryback period only applies to the portion of an NOL
attributable to a farming loss. For more information, see Pub.
536.
Complete Schedule A of Form 1045, Application for
Tentative Refund, to figure the amount of the NOL that is
available for carryback or carryover. Use Form 1045 or file an
amended return to apply for a refund based on an NOL
carryback. For more information, see the Instructions for
Form 1045.
Make it payable to “United States Treasury”;
•
Make sure the name of the estate or trust appears on the
•
payment;
Write the estate’s or trust’s EIN and “2023 Form 1041” on
•
the payment;
Consider completing the 2023 Form 1041-V; and
•
•
Enclose, but don't attach, the payment (and Form 1041-V,
if completed) with Form 1041.
Note. The IRS can't accept a single check (including a
cashier's check) for amounts of $100,000,000 ($100 million)
or more. If you're sending $100 million or more by check,
you'll need to spread the payments over two or more checks
with each check made out for an amount less than $100
million. The $100 million or more amount limit doesn't apply
to other methods of payment (such as electronic payments),
so please consider paying by means other than checks.
On the termination of the estate or trust, any unused NOL
carryover that would be allowable to the estate or trust in a
later tax year but for the termination is allowed to the
beneficiaries succeeding to the property of the estate or trust.
See the instructions for box 11, codes E and F, of
Schedule K-1 (Form 1041), later.
Excess deductions on termination. If the estate or trust
has for its final year deductions (excluding the charitable
deduction and personal exemption) in excess of its gross
income, the excess deductions are allowed to the
To pay by credit or debit card. For information on paying
your taxes electronically, including by credit or debit card, go
Line 30a—Credited to 2024 Estimated Tax
Enter the amount from line 29 that you want applied to the
estate's or trust's 2024 estimated tax.
Schedule A—Charitable Deduction
beneficiaries succeeding to the property of the estate or trust
and retain their separate character as an amount allowed in
arriving at AGI, a non-miscellaneous itemized deduction, or a
miscellaneous itemized deduction. In general, an unused
NOL carryover that is allowed to beneficiaries (as explained
above) can't also be treated as an excess deduction.
However, if the final year of the estate or trust is also the last
year of the NOL carryover period, the NOL carryover not
absorbed in that tax year by the estate or trust is included as
an excess deduction. See the instructions for box 11, codes
A and B, of Schedule K-1 (Form 1041), later.
General Instructions
Generally, any part of the gross income of an estate or trust
(other than a simple trust) that, under the terms of the will or
governing instrument, is paid (or treated as paid) during the
tax year for a charitable purpose specified in section 170(c) is
allowed as a deduction to the estate or trust. It isn't
necessary that the charitable organization be created or
organized in the United States.
A pooled income fund or a section 4947(a)(1) nonexempt
charitable trust treated as a private foundation must attach a
separate sheet to Form 1041 instead of using Schedule A of
Form 1041 to figure the charitable deduction.
Additional return to be filed by trusts. Trusts, other than
split-interest trusts or nonexempt charitable trusts, that claim
a charitable deduction also file Form 1041-A unless the trust
is required to distribute currently to the beneficiaries all the
income for the year determined under section 643(b) and
related regulations.
Pooled income funds and charitable lead trusts also file
Form 5227. See Form 5227 for information about any
exceptions.
Election to treat contributions as paid in the prior tax
year. The fiduciary of an estate or trust may elect to treat as
paid during the tax year any amount of gross income
received during that tax year or any prior tax year that was
paid in the next tax year for a charitable purpose.
Line 25—Current Payment on Deferred Net 965
Tax Liability
If you made a payment with respect to a current net 965 tax
liability, enter the amount of the payment from Form 965-A,
Part II, column (k).
Line 27—Estimated Tax Penalty
If line 28 is at least $1,000 and more than 10% of the tax
shown on Form 1041, or the estate or trust underpaid its
2023 estimated tax liability for any payment period, it may
owe a penalty. See Form 2210 to determine whether the
estate or trust owes a penalty and to figure the amount of the
penalty.
Note. The penalty may be waived or reduced under certain
conditions. See Pub. 505, Tax Withholding and Estimated
Tax, and the Instructions for Form 2210 for details.
For example, if a calendar year estate or trust makes a
qualified charitable contribution on February 7, 2024, from
28
Instructions for Form 1041 (2023)
income earned in 2023 or prior, then the fiduciary can elect to
treat the contribution as paid in 2023.
To make the election, the fiduciary must file a statement
with Form 1041 for the tax year in which the contribution is
treated as paid. This statement must include:
Don't include any capital gains for the tax year allocated to
corpus and paid or permanently set aside for charitable
purposes. Instead, enter these amounts on line 4.
Line 2—Tax-Exempt Income Allocable to
Charitable Contributions
1. The name and address of the fiduciary;
2. The name of the estate or trust;
Any estate or trust that pays or sets aside any part of its
income for a charitable purpose must reduce the deduction
by the portion allocable to any tax-exempt income. If the
governing instrument specifically provides as to the source
from which amounts are paid, permanently set aside, or to be
used for charitable purposes, the specific provisions control.
In all other cases, determine the amount of tax-exempt
income allocable to charitable contributions by multiplying
line 1 by a fraction, the numerator of which is the total
tax-exempt income of the estate or trust, and the
denominator of which is the gross income of the estate or
trust. Don't include in the denominator any losses allocated to
corpus.
3. An indication that the fiduciary is making an election
under section 642(c)(1) for contributions treated as paid
during such tax year;
4. The name and address of each organization to which
any such contribution is paid; and
5. The amount of each contribution and date of actual
payment or, if applicable, the total amount of contributions
paid to each organization during the next tax year, to be
treated as paid in the prior tax year.
The election must be filed by the due date (including
extensions) for Form 1041 for the next tax year. If the original
return was filed on time, you may make the election on an
amended return filed no later than 6 months after the due
date of the return (excluding extensions). Enter “Filed
pursuant to section 301.9100-2” at the top of the amended
return and file it at the same address you used for your
original return.
Line 4—Capital Gains for the Tax Year Allocated to
Corpus and Paid or Permanently Set Aside for
Charitable Purposes
For more information about the charitable deduction, see
Enter the total of all capital gains for the tax year that are:
section 642(c) and the related regulations.
Allocated to corpus, and
•
Paid or permanently set aside for charitable purposes.
•
Specific Instructions
Line 6—Section 1202 Exclusion Allocable to
Capital Gains Paid or Permanently Set Aside for
Charitable Purposes
Line 1—Amounts Paid or Permanently Set Aside
for Charitable Purposes From Gross Income
Enter amounts that were paid for a charitable purpose out of
the estate's or trust's gross income, including any capital
gains that are attributable to income under the governing
instrument or local law. Include amounts paid during the tax
year from gross income received in a prior tax year, but only if
no deduction was allowed for any prior tax year for these
amounts.
If the exclusion of gain from the sale or exchange of qualified
small business (QSB) stock was claimed, enter the part of
the gain included on Schedule A, lines 1 and 4, that was
excluded under section 1202.
Schedule B—Income Distribution
Deduction
General Instructions
If the estate or trust was required to distribute income
currently or if it paid, credited, or was required to distribute
any other amounts to beneficiaries during the tax year,
complete Schedule B to determine the estate's or trust's
income distribution deduction.
Estates, and certain trusts, may claim a deduction for
amounts permanently set aside for a charitable purpose from
gross income. Such amounts must be permanently set aside
during the tax year to be used exclusively for religious,
charitable, scientific, literary, or educational purposes, or for
the prevention of cruelty to children or animals, or for the
establishment, acquisition, maintenance, or operation of a
public cemetery not operated for profit.
For a trust to qualify, the trust may not be a simple trust,
and the set-aside amounts must be required by the terms of a
trust instrument that was created on or before October 9,
1969.
Note. Use Schedule I (Form 1041) to compute the DNI and
income distribution deduction on a minimum tax basis.
Pooled income funds. Don't complete Schedule B for
these funds. Instead, attach a separate statement to support
the computation of the income distribution deduction. See
Pooled Income Funds, earlier, for more information.
Separate share rule. If a single trust or an estate has more
than one beneficiary, and if different beneficiaries have
substantially separate and independent shares, their shares
are treated as separate trusts or estates for the sole purpose
of determining the DNI allocable to the respective
beneficiaries.
Further, the trust instrument must provide for an
irrevocable remainder interest to be transferred to or for the
use of an organization described in section 170(c) or the trust
must have been created by a grantor who was at all times
after October 9, 1969, under a mental disability to change the
terms of the trust.
Also, certain testamentary trusts that were established by
a will that was executed on or before October 9, 1969, may
qualify. See Regulations section 1.642(c)-2(b).
If the separate share rule applies, figure the DNI allocable
to each beneficiary on a separate sheet and attach the sheet
29
Instructions for Form 1041 (2023)
to this return. Any deduction or loss that is applicable solely
to one separate share of the trust or estate isn't available to
any other share of the same trust or estate.
If the exclusion of gain from the sale or exchange of QSB
stock was claimed, don't reduce the gain on line 3 by any
amount excluded under section 1202.
For more information, see section 663(c) and related
Line 5
regulations.
Withholding of tax on foreign persons. The fiduciary may
be liable for withholding tax on distributions to beneficiaries
who are foreign persons. For more information, see Pub. 515,
and Forms 1042 and 1042-S.
In figuring the amount of long-term and short-term capital
gain for the tax year included on Schedule A, line 1, the
specific provisions of the governing instrument control if the
instrument specifically provides as to the source from which
amounts are paid, permanently set aside, or to be used for
charitable purposes.
Specific Instructions
Line 1—Adjusted Total Income
In all other cases, determine the amount to enter by
multiplying line 1 of Schedule A by a fraction, the numerator
of which is the amount of net capital gains that are included in
the accounting income of the estate or trust (that is, not
allocated to corpus) and are distributed to charities, and the
denominator of which is all items of income (including the
amount of such net capital gains) included in the DNI.
Generally, enter on Schedule B, line 1, the amount from
line 17 on page 1 of Form 1041. However, if both line 4 and
line 17 on page 1 of Form 1041 are losses, enter on
Schedule B, line 1, the smaller of those losses. If line 4 is
zero or a gain and line 17 is a loss, enter zero on line 1 of
Schedule B.
If you are filing for a simple trust, subtract from adjusted
total income any extraordinary dividends or taxable stock
dividends included on page 1, line 2, and determined under
the governing instrument and applicable local law to be
allocable to corpus.
Reduce the amount on line 5 by any allocable section
1202 exclusion.
Line 8—Accounting Income
If you are filing for a decedent's estate or a simple trust, skip
this line. If you are filing for a complex trust, enter the income
for the tax year determined under the terms of the governing
instrument and applicable local law. Don't include
extraordinary dividends or taxable stock dividends
determined under the governing instrument and applicable
local law to be allocable to corpus.
Line 2—Adjusted Tax-Exempt Interest
To figure the adjusted tax-exempt interest, follow the steps
below.
Step 1. Add tax-exempt interest income on line 2 of
Schedule A, any expenses allowable under section 212
allocable to tax-exempt interest, and any interest expense
allocable to tax-exempt interest.
Lines 9 and 10
Don't include any:
Step 2. Subtract the Step 1 total from the amount of
tax-exempt interest (including exempt-interest dividends)
received.
Amount that was deducted on the prior year's return that
•
was required to be distributed in the prior year,
Amount that is paid or permanently set aside for charitable
•
purposes or otherwise qualifying for the charitable deduction,
or
Section 212 expenses that are directly allocable to
tax-exempt interest are allocated only to tax-exempt interest.
A reasonable proportion of section 212 expenses that are
indirectly allocable to both tax-exempt interest and other
income must be allocated to each class of income.
Amount that is properly paid or credited as a gift or
•
bequest of a specific amount of money or specific property.
Note. An amount that can be paid or credited only from
income isn't considered a gift or bequest. Also, to qualify as a
gift or bequest, the amount must be paid in three or fewer
installments.
Figure the interest expense allocable to tax-exempt
interest according to the guidelines in Rev. Proc. 72-18,
1972-1 C.B. 740.
Line 9—Income Required To Be Distributed
Currently
See Regulations sections 1.643(a)-5 and 1.265-1 for more
information.
Line 9 is to be completed by all simple trusts as well as
complex trusts and decedents’ estates that are required to
distribute income currently, whether it is distributed or not.
The determination of whether trust income is required to be
distributed currently depends on the terms of the governing
instrument and the applicable local law.
Line 3
Include all capital gains, whether or not distributed, that are
attributable to income under the governing instrument or local
law. For example, if the trustee distributed 50% of the current
year's capital gains to the income beneficiaries (and reflects
this amount on Schedule D (Form 1041), line 19, column (1)),
but under the governing instrument all capital gains are
attributable to income, then include 100% of the capital gains
on line 3. If the amount on Schedule D (Form 1041), line 19,
column (1), is a net loss, enter zero.
The line 9 distributions are referred to as “first-tier
distributions” and are deductible by the estate or trust to the
extent of the DNI. The beneficiary includes such amounts in
their income to the extent of their proportionate share of the
DNI.
30
Instructions for Form 1041 (2023)
distribution that is less than the DNI), then figure the
adjustment by multiplying line 2 by a fraction, the numerator
of which is the total distributions (line 11), and the
denominator of which is the DNI (line 7). Enter the result on
line 12.
Line 10—Other Amounts Paid, Credited, or
Otherwise Required To Be Distributed
Line 10 is to be completed only by a decedent's estate or
complex trust. These distributions consist of any other
amounts paid, credited, or required to be distributed and are
referred to as “second-tier distributions.” Such amounts
include annuities to the extent not paid out of income,
mandatory and discretionary distributions of corpus, and
distributions of property in kind.
If line 11 includes tax-exempt income other than
tax-exempt interest, figure line 12 by subtracting the total of
the following from tax-exempt income included on line 11.
1. The charitable contribution deduction allocable to such
tax-exempt income.
If Form 1041-T was timely filed to elect to treat estimated
tax payments as made by a beneficiary, the payments are
treated as paid or credited to the beneficiary on the last day
of the tax year and must be included on line 10.
2. Expenses allocable to tax-exempt income.
Expenses that are directly allocable to tax-exempt income
are allocated only to tax-exempt income. A reasonable
proportion of expenses indirectly allocable to both
tax-exempt income and other income must be allocated to
each class of income.
Unless a section 643(e)(3) election is made, the value of
all noncash property actually paid, credited, or required to be
distributed to any beneficiaries is the smaller of:
1. The estate's or trust's adjusted basis in the property
immediately before distribution, plus any gain or minus any
loss recognized by the estate or trust on the distribution
(basis of beneficiary); or
Schedule G—Tax Computation and
Payments
2. The FMV of such property.
Part I—Tax Computation
If a section 643(e)(3) election is made by the fiduciary, then
the amount entered on line 10 will be the FMV of the property.
Line 1a
2023 Tax Rate Schedule. For tax years beginning in 2023,
figure the tax using the following Tax Rate Schedule and
enter the tax on line 1a. However, see the Instructions for
Schedule D (Form 1041) and the Qualified Dividends Tax
Worksheet, later.
A fiduciary of a complex trust or a decedent's estate may
elect to treat any amount paid or credited to a beneficiary
within 65 days following the close of the tax year as being
paid or credited on the last day of that tax year. To make this
election, see Question 6 under Other Information, later.
2023 Tax Rate Schedule
The beneficiary includes the amounts on line 10 in their
income only to the extent of their proportionate share of the
DNI.
Complex trusts. If the second-tier distributions exceed the
DNI allocable to the second tier, the trust may have an
accumulation distribution. See the line 11 instructions below.
If taxable
income is:
Of the
But not over
Over—
Its tax is: amount over
—
—
$0
2,900
10,550
14,450
$2,900
10%
$290 + 24%
$2,126 + 35%
$3,491 + 37%
$0
2,900
10,550
14,450
10,550
14,450
-----
Line 11—Total Distributions
If line 11 is more than line 8, and you are filing for a complex
trust that has previously accumulated income, see the
instructions for Schedule J, later, to see if you must complete
Schedule J (Form 1041), Accumulation Distribution for
Certain Complex Trusts.
Schedule D (Form 1041) and Schedule D Tax Work-
sheet. Use Part V of Schedule D (Form 1041), or the
Schedule D Tax Worksheet, whichever is applicable, to figure
the estate's or trust's tax if the estate or trust files Schedule D
(Form 1041) and has:
A net capital gain and any taxable income, or
•
Line 12—Adjustment for Tax-Exempt Income
Qualified dividends on line 2b(2) of Form 1041 and any
•
taxable income.
In figuring the income distribution deduction, the estate or
trust isn't allowed a deduction for any item of the DNI that isn't
included in the gross income of the estate or trust. Thus, for
purposes of figuring the allowable income distribution
deduction, the DNI (line 7) is figured without regard to any
tax-exempt interest.
Qualified Dividends Tax Worksheet. If you don't have to
complete Part I or Part II of Schedule D and the estate or trust
has an amount entered on line 2b(2) of Form 1041 and any
taxable income (line 23), then figure the estate's or trust's tax
using the worksheet, later, and enter the tax on line 1a.
If tax-exempt interest is the only tax-exempt income
included in the total distributions (line 11), and the DNI
(line 7) is less than or equal to line 11, then enter on line 12
the amount from line 2.
Note. You must reduce the amount you enter on line 2b(2) of
Form 1041 by the portion of the section 691(c) deduction
claimed on line 19 of Form 1041 if the estate or trust received
qualified dividends that were IRD.
Line 1c—Alternative minimum tax. Attach Schedule I
If tax-exempt interest is the only tax-exempt income
included in the total distributions (line 11), and the DNI is
more than line 11 (that is, the estate or trust made a
(Form 1041) if any of the following apply.
The estate or trust must complete Schedule B.
•
31
Instructions for Form 1041 (2023)
Keep for Your Records
Qualified Dividends Tax Worksheet—Schedule G, Part I, Line 1a
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.
6.
7.
5. Subtract line 4 from line 1. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . .
6. Enter the smaller of the amount on line 1 or $3,000 . . . . . . . . . . . . . . . . . . . .
7. Enter the smaller of the amount on line 5 or line 6 . . . . . . . . . . . . . . . . . . . . . .
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10. Subtract line 8 from line 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11. Enter the smaller of line 1 or $14,650 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12. Add lines 5 and 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13. Subtract line 12 from line 11. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . .
14. Enter the smaller of line 10 or line 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.
10.
11.
12.
13.
14.
15. Multiply line 14 by 15% (0.15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15.
16. Enter the amount from line 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17. Add lines 8 and 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18. Subtract line 17 from line 16. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . .
16.
17.
18.
19. Multiply line 18 by 20% (0.20) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20. Figure the tax on the amount on line 5. Use the 2023 Tax Rate Schedule . . . . . . . . . . . . . . . . . . . . . .
21. Add lines 15, 19, and 20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22. Figure the tax on the amount on line 1. Use the 2023 Tax Rate Schedule . . . . . . . . . . . . . . . . . . . . . .
23. Tax on all taxable income. Enter the smaller of line 21 or line 22 here and on
19.
20.
21.
22.
Schedule G, line 1a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.
The estate or trust claims a credit on line 2b, 2c, or 2d of
•
Line 2b—General Business Credit
Schedule G.
Don't include any amounts that are allocated to a
beneficiary. Credits that are allocated between the
estate or trust and the beneficiaries are listed in the
The estate's or trust's share of alternative minimum taxable
•
income (line 27 of Schedule I (Form 1041)) exceeds $28,400.
Enter the amount from line 54 of Schedule I (Form 1041) on
line 1c.
!
CAUTION
instructions for box 13 of Schedule K-1, later. Generally,
these credits are apportioned on the basis of the income
allocable to the estate or trust and the beneficiaries.
Line 1d—Total. If the amount from line 14 of Form 8978 is a
positive amount, include it in the total reported on line 1d. On
the dotted line next to line 1d, enter “From Form 8978” and
the amount. Attach Form 8978.
Enter on line 2b the estate's or trust's total general
business credit allowed for the current year from Form 3800.
The estate or trust must file Form 3800 to claim any of the
general business credits. Generally, if the estate's or trust's
only source of a credit is from a pass-through entity and the
beneficiary isn't entitled to an allocable share of a credit, you
aren't required to complete the source form for that credit.
However, certain credits have limitations and special
computations that may require you to complete the source
form. See the Instructions for Form 3800 for more
information.
Line 2a—Foreign Tax Credit
Attach Form 1116, Foreign Tax Credit (Individual, Estate, or
Trust), if you elect to claim credit for income or profits taxes
paid or accrued to a foreign country or a U.S. territory. The
estate or trust may claim credit for that part of the foreign
taxes not allocable to the beneficiaries (including charitable
beneficiaries). Enter the estate's or trust's share of the credit
on line 2a. See Pub. 514, Foreign Tax Credit for Individuals,
for details.
Line 2c—Credit for Prior Year Minimum Tax
An estate or trust that paid AMT in a previous year may be
eligible for a minimum tax credit in 2023. See Form 8801,
32
Instructions for Form 1041 (2023)
Keep for Your Records
ESBT Tax Worksheet—Schedule G, Part I, Line 4
ESBT Tax Computation
1.
Ordinary income (loss) from Schedule K-1 (Form 1120-S) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.
2a. Total ordinary dividends from Schedule K-1 (Form 1120-S) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2a.
2b. Qualified dividends from Schedule K-1 (Form 1120-S) . . . . . . . . . . . . . . . . . . .
2b.
3. Capital gain. See instructions and attach Schedule D (Form 1041) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4. Other income (loss) reported on Schedule K-1 (Form 1120-S) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5. Total income. Add lines 1, 2a, 3, and 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6. Other allowable deductions from Schedule K-1 (Form 1120-S) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7. Administrative expenses (allocated to the S portion) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8. State and local income taxes (allocated to the S portion) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9. Interest expense on indebtedness to acquire S corporation stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.
4.
5.
6.
7.
8.
9.
10. Charitable contribution deduction. Check here if deduction includes prior year carryover [
]
. . . . . .
10.
11.
12.
13.
11. Qualified business income deduction (S portion). Attach Form 8995 or 8995-A . . . . . . . . . . . . . . . . .
12. Total deductions. Add lines 6 through 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13. Taxable income (S portion). Subtract line 12 from line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14a. Tax. Tax on taxable income. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . .
14b. Alternative minimum tax (S portion). Attach Schedule I (Form 1041) . . . . . . .
14a.
14b.
14c. Total. Add lines 14a and 14b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14c.
15a. Foreign tax credit (S portion). Attach Form 1116 . . . . . . . . . . . . . . . . . . . . . . . .
15b. General business credit (S portion). Attach Form 3800 . . . . . . . . . . . . . . . . . .
15c. Credit for prior year minimum tax (S portion). Attach Form 8801 . . . . . . . . . . .
15d. Bond credits (S portion). Attach Form 8912 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15a.
15b.
15c.
15d.
15e. Total credits. Add lines 15a through 15d . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15e.
16. Recapture taxes (S portion). Check if from: Form 4255 [ ] or Form 8611 [
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.
]
. . . . . . . . . . . . . . . . . .
16.
Credit for Prior Year Minimum Tax—Individuals, Estates, and
Trusts.
Line 4—Tax on the ESBT Portion of the Trust
Enter the amount from line 17 of the ESBT Tax Worksheet on
line 4.
Line 2d—Bond Credits
Complete and attach Form 8912, Credit to Holders of Tax
Credit Bonds, if the estate or trust claims a credit for holding
a tax credit bond. Also, be sure to include the credit in
interest income.
See Electing Small Business Trusts (ESBTs), earlier, for
the special tax computation rules that apply to the portion of
an ESBT consisting of stock in one or more S corporations.
Line 5—Net Investment Income Tax (NIIT)
Line 2e—Total Credits
Enter the amount of NIIT calculated and attach Form 8960.
See the Instructions for Form 8960 to calculate the tax, and
Net Investment Income Tax (NIIT), later, for more information.
To claim a credit allowable to the estate or trust other than the
credits entered on lines 2a through 2d, include the allowable
credit in the total for line 2e. Complete and attach the
appropriate form and enter the form number and amount of
the allowable credit on the dotted line to the left of the entry
space.
Line 6a—Recapture of Investment Credit
If the estate or trust disposed of investment credit property or
changed its use before the end of the recapture period, see
Form 4255, Recapture of Investment Credit, to figure the
recapture tax allocable to the estate or trust. Include the tax
on line 6a and enter “ICR” on the dotted line to the left of the
entry space.
If the amount from line 14 of Form 8978 is a negative
amount, treat it as a positive amount and add it to the total
reported on line 2e. On the dotted line next to line 2e, enter
“From Form 8978” and the amount. Attach Form 8978.
33
Instructions for Form 1041 (2023)
Enter on line 7 any household employment taxes owed
from Schedule H (Form 1040), Part I, line 8d, or Part III,
line 26.
Line 6b—Recapture of Low-Income Housing
Credit
If the estate or trust disposed of property (or there was a
reduction in the qualified basis of the property) on which the
low-income housing credit was claimed, see Form 8611,
Recapture of Low-Income Housing Credit, to figure any
recapture tax allocable to the estate or trust. Include the tax
on line 6b and enter “LIHCR” on the dotted line to the left of
the entry space.
Note. See Amended Schedule H (Form 1040 ) under F.
Initial Return, Amended Return, etc., earlier, for information
on filing an amended Schedule H (Form 1040) for a Form
1041.
Line 8—Other Taxes and Amounts Due
Triggering event under section 965(i). If you had a
triggering event under section 965(i) during the year, enter on
line 8 the current year tax liability from the triggered deferred
net 965 tax liability from Form 965-A, Part IV, column (f).
ESBTs. If a triggering event occurred in the S portion of
the ESBT, also include on the attachment that shows the
amount of the net 965 tax liability attributable to the S portion
of the trust the triggered deferred net 965 tax liability from
Form 965-A, Part IV, column (f).
Interest on deferred tax attributable to installment sales
of certain timeshares and residential lots and certain
nondealer real property installment obligations. If an
obligation arising from the disposition of real property to
which section 453(l) or 453A applies is outstanding at the
close of the year, the estate or trust must include the interest
due under section 453(l)(3)(B) or 453A(c), whichever is
applicable, in the amount to be entered on Form 1041,
Schedule G, line 8, with the notation “Section 453(l) interest”
or “Section 453A(c) interest,” whichever is applicable. Attach
a schedule showing the computation.
Form 4970, Tax on Accumulation Distribution of Trusts.
Include on this line any tax due on an accumulation
distribution from a trust. To the left of the entry space, enter
“From Form 4970” and the amount of the tax.
Form 8697, Interest Computation Under the Look-Back
Method for Completed Long-Term Contracts. Include the
interest due under the look-back method of section 460(b)
(2). To the left of the entry space, enter “From Form 8697”
and the amount of interest due.
Form 8866, Interest Computation Under the Look-Back
Method for Property Depreciated Under the Income
Forecast Method. Include the interest due under the
look-back method of section 167(g)(2). To the left of the entry
space, enter “From Form 8866” and the amount of interest
due.
Interest on deferral of gain from certain constructive
ownership transactions. Include the interest due under
section 1260(b) on any deferral of gain from certain
constructive ownership transactions. To the left of the entry
space, enter “1260(b)” and the amount of interest due.
Form 5329, Additional Taxes on Qualified Plans (Includ-
ing IRAs) and Other Tax-Favored Accounts. If the estate
or trust fails to receive the minimum distribution under section
4974, use Form 5329 to pay the excise tax. To the left of the
entry space, enter “From Form 5329” and the amount of the
tax.
Additional tax on the early disposition of noncash prop-
erty for which a section 247(g)(3) election was made by
an Alaska Native Settlement Trust. This additional 10%
tax only should be shown on an amended return filed by a
Settlement Trust for the year in which the Settlement Trust
received a contribution of noncash property from an Alaska
Native Corporation and elected to defer the recognition of
Line 6c—Other Recapture Taxes
Recapture of qualified electric vehicle credit. If the
estate or trust claimed the qualified electric vehicle credit in a
prior tax year for a vehicle that ceased to qualify for the credit,
part or all of the credit may have to be recaptured. See
Regulations section 1.30-1(b) for details. If the estate or trust
owes any recapture tax, include it on line 6c and enter
“QEVCR” on the dotted line to the left of the entry space.
Recapture of the new markets credit. If the estate or trust
owes any new markets recapture tax, include it on line 6c and
enter “NMCR” on the dotted line to the left of the entry space.
For more information, including how to figure the recapture
amount, see section 45D(g).
Recapture of the credit for employer-provided childcare
facilities and services. If the facility ceased to operate as a
qualified childcare facility or there was a change in
ownership, part or all of the credit may have to be recaptured.
See Form 8882, Credit for Employer-Provided Childcare
Facilities and Services, for details. If the estate or trust owes
any recapture tax, include it on line 6c and enter “ECCFR” on
the dotted line to the left of the entry space.
Recapture of the alternative motor vehicle credit. See
section 30B(h)(8) for details. Include the tax on line 6c and
enter “AMVCR” on the dotted line to the left of the entry
space.
Recapture of the alternative fuel vehicle refueling prop-
erty credit. See section 30C(e)(5) for details. Include the tax
on line 6c and enter “ARPCR” on the dotted line to the left of
the entry space.
Recapture of the section 45Q carbon oxide sequestra-
tion credit. See Form 8933, Part III, line 22. Include the
section 45Q recapture amount on line 6c and enter “COSCR”
on the dotted line to the left of the entry space.
Line 7—Household Employment Taxes
If any of the following apply, get Schedule H (Form 1040) and
its instructions to see if the estate or trust owes these taxes.
1. The estate or trust paid any one household employee
cash wages of $2,600 or more in 2023. Cash wages include
wages paid by checks, money orders, etc. When figuring the
amount of cash wages paid, combine cash wages paid by
the estate or trust with cash wages paid to the household
employee in the same calendar year by the household of the
decedent or beneficiary for whom the administrator, executor,
or trustee of the estate or trust is acting.
2. The estate or trust withheld federal income tax during
2023 at the request of any household employee.
3. The estate or trust paid total cash wages of $1,000 or
more in any calendar quarter of 2022 or 2023 to household
employees.
34
Instructions for Form 1041 (2023)
Keep for Your Records
Form 8978 Worksheet—Schedule G, Part I, Line 8
Use this worksheet if (a) Schedule G, line 3, is zero; (b) after line 3 was reduced to zero, you have a negative
amount from Form 8978, line 14, that was not used to reduce line 3 to zero; and (c) you have chapter 1 taxes
entered on Schedule G, line 4; Schedule G, lines 6a–6c; Schedule G, line 8; and/or tax and interest from Form
8621.
1. Enter the total amount of chapter 1 taxes from Schedule G, line 4; Schedule G, lines 6a–6c;
Schedule G, line 8; and tax and interest from Form 8621 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.
2. Enter the negative amount from Form 8978, line 14, that has not already been used to reduce
(
(
)
)
Schedule G, line 3, to zero . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.
3. Combine line 1 and line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4. Enter the amount of non-chapter 1 taxes included on Schedule G, line 8 . . . . . . . . . . . . . . . . . . . . .
5. If line 3 is negative, enter as a negative the amount from line 1. Otherwise, enter the amount from
3.
4.
line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.
6. Combine line 4 and line 5. Enter the result on Schedule G, line 8. This amount may be a negative
number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.
income related to such property, but disposed of the property
within the first tax year subsequent to the tax year the
Settlement Trust received the property. Determine the
increase in tax due to the inclusion of the deferred income
and include on this line the additional tax due, equal to 10%
of the increase in tax due to the inclusion of the deferred
income. The increase in tax due to the inclusion of the
deferred income, which is the base amount for the
Don't include on Form 1041 estimated tax paid by an
individual before death. Instead, include those
payments on the decedent's final income tax return.
!
CAUTION
Line 11—Estimated Tax Payments Allocated to
Beneficiaries (From Form 1041-T)
The trustee (or executor, for the final year of the estate) may
elect under section 643(g) to have any portion of its
estimated tax treated as a payment of estimated tax made by
a beneficiary or beneficiaries. The election is made on Form
1041-T, which must be filed by the 65th day after the close of
the trust's tax year. Form 1041-T shows the amounts to be
allocated to each beneficiary. This amount is reported in
box 13, code A, of the beneficiary's Schedule K-1 (Form
1041).
computation of the additional 10% tax shown on this line,
should be shown elsewhere on Schedule G. If the amended
return also shows changes to income, deductions, or credits
unrelated to the inclusion of the deferred income, attach a
schedule showing the computation of the additional tax due
only to the inclusion of the deferred income. To the left of the
entry space, enter “Section 247(g)(3) tax.”
Form 8978 Worksheet. If you have a negative amount from
Form 8978, line 14, that was not used to reduce Schedule G,
line 3, to zero, and you have chapter 1 taxes and/or tax and
interest from Form 8621, Information Return by a
Shareholder of a Passive Foreign Investment Company or
Qualified Electing Fund, then complete the Form 8978
Worksheet—Schedule G, Part I, Line 8 to figure the amount
to enter on line 8.
Attach Form 1041-T to your return only if you haven't yet
filed it; however, attaching Form 1041-T to Form 1041 doesn't
extend the due date for filing Form 1041-T. If you have
already filed Form 1041-T, don't attach a copy to your return.
Failure to file Form 1041-T by the due date (March 5,
2024, for calendar year estates and trusts) will result
!
CAUTION
in an invalid election. An invalid election will require
the filing of an amended Schedule K-1 for each beneficiary
who was allocated a payment of estimated tax.
Line 9—Total Tax
Add Schedule G, Part I, lines 3 through 8. Enter the total on
Schedule G, Part I, line 9; and page 1 of Form 1041, line 24.
Line 13—Tax Paid With Form 7004
If you filed Form 7004 to request an extension of time to file
Form 1041, enter the amount that you paid with the extension
request.
Part II—Payments
Line 10—2023 Estimated Tax Payments and
Amount Applied From 2022 Return
Enter the amount of any estimated tax payment you made
with Form 1041-ES for 2023 plus the amount of any
overpayment from the 2022 return that was applied to the
2023 estimated tax.
Line 14—Federal Income Tax Withheld
Use line 14 to claim a credit for any federal income tax
withheld (and not repaid) by (a) an employer on wages and
salaries of a decedent received by the decedent's estate; (b)
a payer of certain gambling winnings (for example, state
lottery winnings); or (c) a payer of distributions from
pensions, annuities, retirement or profit-sharing plans, IRAs,
insurance contracts, etc., received by a decedent's estate or
trust. Attach a copy of Form W-2, Form W-2G, or Form
1099-R to the front of the return.
If the estate or trust is the beneficiary of another trust and
received a payment of estimated tax that was credited to the
trust (as reflected on the Schedule K-1 issued to the trust),
then report this amount separately with the notation “Section
643(g)” in the space next to line 10 and include this amount in
the amount entered on line 10.
35
Instructions for Form 1041 (2023)
Except for backup withholding (as explained below),
withheld income tax can't be passed through to
beneficiaries on either Schedule K-1 or Form 1041-T.
Calculation of NII. In general, an estate’s or trust’s NII is
calculated in the same way as an individual's. However, there
are special rules for the calculation of NII in the case of an
ESBT. See the Instructions for Form 8960 and Regulations
section 1.1411-3(e) for information on the calculation (and
Regulations section 1.1411-3(c)(1) for information on the
ESBT calculation).
Distributions on NII. The NIIT is imposed on estates and
trusts to the extent they have undistributed NII. In order to
arrive at the estate’s or trust’s undistributed NII, the estate’s
or trust’s NII is reduced for (1) distributions of NII to
beneficiaries, and (2) NII allocable to charities when the
estate or trust is allowed a deduction under section 642(c).
The instructions for Form 8960, line 18b, provide more
information on the calculation of undistributed NII.
NII allocable to the deduction under section 642(c). An
estate’s, trust’s, or pooled income fund’s NII is reduced by the
amount of NII allocable to the charitable deduction allowed
under section 642(c). In the case of an estate, trust, or
pooled income fund that has NII and non-NII income in a year
when a section 642(c) deduction is claimed, the amount of
the NII deduction allocable to the section 642(c) deduction
will be less than the amount reported on Form 1041,
Schedule A, line 7 (or on the separate calculation in the case
of a pooled income fund).
!
CAUTION
Backup withholding. If the estate or trust received a 2023
Form 1099 showing federal income tax withheld (that is,
backup withholding) on interest income, dividends, or other
income, check the box and include the amount withheld on
income retained by the estate or trust in the total for line 14.
Report in box 13, code B, of Schedule K-1 (Form 1041)
any credit for backup withholding on income distributed to the
beneficiary.
Line 15—Current Net 965 Tax Liability—Eligible
for Installment Payment Election
If you have a section 965(i) net tax liability for which a
triggering event has occurred in the current year and you are
making a section 965(h) election with respect to that section
965 net tax liability, enter this amount from Form 965-A, Part
I, column (f).
Line 16—Credit for Tax Paid on Undistributed
Capital Gains
Attach Copy B of Form 2439, Notice to Shareholder of
Undistributed Long-Term Capital Gains.
Beneficiary reporting. In general, the amount of the
income distribution deduction (from Form 1041, Schedule B,
line 15) that reduces the estate’s or trust’s NII will be the
amount of NII that will be taxable to the beneficiaries on their
Schedules K-1 (Form 1041).
Line 17—Credit for Federal Tax on Fuels
Enter any credit for federal excise taxes paid on fuels that are
ultimately used for nontaxable purposes (for example, an
off-highway business use). Attach Form 4136, Credit for
Federal Tax Paid on Fuels. See Pub. 510, Excise Taxes, for
more information.
The Schedule K-1 has code H in box 14 to report the
amount of NII distributed to the beneficiary. The amount
reported in code H represents an adjustment (either positive
or negative) that the beneficiary must use in completing its
Form 8960 (if necessary). In the case where the trust’s
income distribution deduction allowed in calculating
undistributed NII is less than the amount on Schedule B,
line 15, then code H will show a negative number that is the
difference between the two amounts. In the case of an estate
or trust that issues more than one Schedule K-1 for a year,
the sum of the amounts reported in code H on all of the
Schedules K-1 will be the difference between Schedule B,
line 15, and the amount deducted on Form 8960, line 18b, for
amounts of NII distributed to a beneficiary.
Line 18a—Elective Payment Election Amount
From Form 3800
Enter any elective payment election amount from Form 3800,
Part III, line 6, column (i).
Line 18b—Other Credits or Payments
Enter the refundable portion of the qualified sick and family
leave credit from Schedule H (Form 1040), Part I, lines 8e
and 8f, on line 18b only if qualified sick and family leave
wages were paid in 2023 for leave taken before April 1, 2021,
or for leave taken after March 31, 2021, and before October
1, 2021.
The beneficiary's NII will equal all taxable amounts
reported on the Schedule K-1, adjusted by the
amount reported in box 14, code H.
TIP
Net Investment Income Tax (NIIT)
Certain estates and trusts may be subject to the NIIT. Estates
and trusts use Form 8960 to report their NII and calculate the
tax. The amount of NIIT payable by the estate or trust is
reported on Form 1041, Schedule G, line 5.
The only instance where code H will be a positive
number is when:
TIP
The estate or trust owns directly, or indirectly, an (a)
•
The NIIT is imposed on estates and trusts to the extent
that they have undistributed NII and AGI exceeding $14,450.
See Definitions, earlier, for the calculation of an estate’s or
trust’s AGI. The following types of estates and trusts may owe
the NIIT in addition to their regular income tax liability.
interest in a section 1291 fund, or (b) interest in a controlled
foreign corporation or qualified electing fund and no election
under Regulations section 1.1411-10(g) has been made with
respect to that interest; and
The distribution from one of the entities described above is
•
Decedents’ estates.
Simple and complex trusts.
ESBTs.
•
•
•
•
•
(a) NII to the estate or trust, but not included in its taxable
income; and (b) the distributions from the estate or trust to
the beneficiary(ies) in the year exceed the amount of the
income distribution deduction allowed for regular tax
purposes (from Schedule B, line 15).
Pooled income funds.
Bankruptcy estates.
However, in the case of bankruptcy estates, the AGI
threshold is $125,000.
36
Instructions for Form 1041 (2023)
If you are required to file FinCEN Form 114 but don't,
you may have to pay a penalty of up to $10,000 (or
more in some cases).
Special rules. In the final year of an estate or trust,
deductions in excess of income may be reported to the
beneficiary in box 11 of Schedule K-1. These deductions
may also be deductible by the beneficiary for NIIT purposes.
In this situation, the terminating estate or trust should provide
the beneficiary information regarding whether the amounts
reported in box 11, codes A through E, include any amounts
that are deductible for NIIT purposes. See Regulations
section 1.1411-4(g)(4).
!
CAUTION
Question 4
The estate or trust may be required to file Form 3520, Annual
Return To Report Transactions With Foreign Trusts and
Receipt of Certain Foreign Gifts, if:
It directly or indirectly transferred property or money to a
•
foreign trust—for this purpose, any U.S. person who created
a foreign trust is considered a transferor;
Other Information
Question 1
If the estate or trust received tax-exempt income, figure the
allocation of expenses between tax-exempt and taxable
income on a separate sheet and attach it to the return. Enter
only the deductible amounts on the return. Don't figure the
allocation on the return itself. For more information, see
Allocation of Deductions for Tax-Exempt Income, earlier.
It is treated as the owner of any part of the assets of a
•
foreign trust under the grantor trust rules; or
It received a distribution from a foreign trust.
•
An owner of a foreign trust must ensure that the trust
files an annual information return on Form 3520-A.
TIP
Question 5
An estate or trust claiming an interest deduction for qualified
residence interest (as defined in section 163(h)(3)) on
seller-provided financing must include on an attachment to
the 2023 Form 1041 the name, address, and TIN of the
person to whom the interest was paid or accrued (that is, the
seller).
Report the amount of tax-exempt interest income received
or accrued in the space provided below Question 1.
Also, include any exempt-interest dividends the estate or
trust received as a shareholder in a mutual fund or other
regulated investment company (RIC).
If the estate or trust received or accrued such interest, it
must provide identical information on the person liable for
such interest (that is, the buyer). This information doesn't
need to be reported if it duplicates information already
reported on Form 1098.
Question 2
All salaries, wages, and other compensation for personal
services must be included on the return of the person who
earned the income, even if the income was irrevocably
assigned to a trust by a contract assignment or similar
arrangement.
Question 6
The grantor or person creating the trust is considered the
owner if they keep “beneficial enjoyment” of or substantial
control over the trust property. The trust's income,
deductions, and credits are allocable to the owner.
To make the section 663(b) election to treat any amount paid
or credited to a beneficiary within 65 days following the close
of the tax year as being paid or credited on the last day of
that tax year, check the box. This election can be made by
the fiduciary of a complex trust or the executor of a
decedent's estate. For the election to be valid, you must file
Form 1041 by the due date (including extensions). Once
made, the election is irrevocable.
If you checked “Yes” for Question 2, see Special Reporting
Instructions, earlier.
Question 3
Check the “Yes” box and enter the name of the foreign
Question 7
country if either (1) or (2) below applies.
To make the section 643(e)(3) election to recognize gain on
property distributed in kind, check the box and see the
Instructions for Schedule D (Form 1041).
1. The estate or trust owns more than 50% of the stock in
any corporation that owns one or more foreign bank
accounts.
2. At any time during the year, the estate or trust had an
interest in or signature or other authority over a bank,
securities, or other financial account in a foreign country.
Question 9
Generally, a beneficiary is a skip person if the beneficiary is in
a generation that is 2 or more generations below the
generation of the transferor to the trust.
Exception. Check “No” if either of the following applies to
To determine if a beneficiary that is a trust is a skip person,
and for exceptions to the general rules, see the definition of a
skip person in the instructions for Schedule R of Form 706.
the estate or trust.
The combined value of the accounts was $10,000 or less
•
during the whole year.
The accounts were with a U.S. military banking facility
•
Question 10
operated by a U.S. financial institution.
A domestic trust that is a specified domestic entity must file
Form 8938 along with Form 1041 for the tax year. Form 8938
must be filed each year the value of the trust's specified
foreign financial assets meets or exceeds the reporting
threshold. A trust exceeds the threshold amount if the total
value of the specified foreign financial assets is more than
$50,000 on the last day of the tax year or more than $75,000
at any time during the tax year. For more information on
domestic trusts that are specified domestic entities, the filing
If you checked “Yes” for Question 3, electronically file
FinCEN Form 114, Report of Foreign Bank and Financial
Accounts (FBAR), with the Department of the Treasury using
FinCEN's BSA E-Filing System. Because FinCEN Form 114
isn't a tax form, don't file it with Form 1041.
37
Instructions for Form 1041 (2023)
threshold, and the types of foreign financial assets that must
be reported, see the Instructions for Form 8938.
or trust must report the transfer in of that liability on Part IV of
Form 965-A. See the Instructions for Form 965-A for
additional information.
A domestic trust that is required to file Form 8938 along
with Form 1041 for the tax year must check “Yes” to Question
10.
Question 13
Digital assets are any digital representations of value that are
recorded on a cryptographically secured distributed ledger or
any similar technology. For example, digital assets include
non-fungible tokens (NFTs) and virtual currencies, such as
cryptocurrencies and stablecoins. If a particular asset has the
characteristics of a digital asset, it will be treated as a digital
asset for federal income tax purposes.
Question 11a
A distribution of S corporation stock by an estate or trust that
results in a change of ownership for federal income tax
purposes is a triggering event described in Regulations
section 1.965-7(c)(3). If the estate or trust transfers less than
all of its shares of stock of the S corporation, the transfer will
be a triggering event only with respect to the portion of the
estate’s or trust’s section 965(i) net tax liability that is properly
allocable to the transferred shares. If the person who
received the distribution of S corporation stock is an eligible
section 965(i) transferee, the estate or trust may enter into a
transfer agreement with the eligible section 965(i) transferee
to prevent the assessment of the estate’s or trust’s section
965(i) net tax liability in the tax year that includes the
triggering event.
Check the “Yes” box next to the question on digital assets
if at any time during 2023, you (a) received (as a reward,
award, or payment for property or services); or (b) sold,
exchanged, or otherwise disposed of a digital asset (or any
financial interest in any digital asset).
For example, check “Yes” if at any time during 2023 you:
Received digital assets as payment for property or
•
services provided;
Received digital assets as a result of a reward or award;
Received new digital assets as a result of mining, staking,
•
•
The estate or trust must report in Part IV, column (g), of
Form 965-A the transfer out of the section 965 tax liability
properly allocable to S corporation shares for which the
estate or trust entered into a transfer agreement with an
eligible section 965(i) transferee. See the Instructions for
Form 965-A for additional information.
and similar activities;
Received digital assets as a result of a hard fork;
Disposed of digital assets in exchange for property or
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•
services;
Disposed of a digital asset in exchange or trade for another
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digital asset;
The transfer agreement must be filed within 30 days
Sold a digital asset; or
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•
of the triggering event. See Form 965-D, Transfer
!
Otherwise disposed of any other financial interest in a
CAUTION
Agreement Under Section 965(i)(2), and the related
digital asset.
instructions for additional information.
You have a financial interest in a digital asset if you are the
owner of record of a digital asset, or have an ownership stake
in an account that holds one or more digital assets, including
the rights and obligations to acquire a financial interest, or
you own a wallet that holds digital assets.
Question 11b
If the estate or trust distributed S corporation shares and the
estate or trust did not enter into a timely transfer agreement
for all shares transferred during the tax year, the transfer of
shares not covered by a transfer agreement is a triggering
event. See Triggering event under section 965(i), earlier.
The following actions or transactions in 2023, alone,
generally don’t require you to check “Yes”:
Holding a digital asset in a wallet or account;
•
The estate or trust may file a consent agreement under
section 965(i)(4)(D) to make the election under section
965(h) to pay in installments the triggered section 965(i) net
tax liability. See Form 965-E, Consent Agreement Under
Section 965(i)(4)(D), and the related instructions for how to
file the consent agreement. See Triggered deferred S
corporation-related net 965 tax liability under Part I in the
Instructions for Form 965-A for how to make the installment
election.
Transferring a digital asset from one wallet or account you
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own or control to another wallet or account that you own or
control; or
Purchasing digital assets using U.S. or other real currency,
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including through the use of electronic platforms such as
PayPal and Venmo.
Do not leave the question unanswered. You must answer
“Yes” or “No” checking the appropriate box. For more
How to report digital asset transactions. If, in 2023, you
disposed of any digital asset, which you held as a capital
asset, through a sale, trade, exchange, payment, or other
transfer, check “Yes” and use Form 8949 to calculate your
capital gain or loss and report that gain or loss on
Schedule D (Form 1041).
If you received any digital asset as compensation for
services or disposed of any digital asset that you held for sale
to customers in a trade or business, you must report the
income as you would report other income of the same type.
The due date of the original Form 965-E is within 30
days of the triggering event.
!
CAUTION
The due date of the election to pay in installments is
the due date of the return for the tax year, including
!
CAUTION
extensions. The actual payment of the first
installment is due no later than the due date of the return for
the tax year without extensions, even if the election is made
on a return filed by the extended due date.
Question 12
Check the “Yes” box if the estate or trust entered into a
transfer agreement as an eligible 965(i) transferee.
Question 14
If the deemed owner of a grantor portion of the ESBT is a
nonresident alien, the items of income, deduction, and credit
from that grantor portion must be reallocated to the S portion.
If, during the tax year, the estate or trust entered into a
transfer agreement as an eligible 965(i) transferee, the estate
38
Instructions for Form 1041 (2023)
See Schedule G, Part I, line 4, Tax on the ESBT Portion of the
Trust, earlier, for how to figure the tax on the S portion of the
trust.
Generally, amounts accumulated before a beneficiary
reaches age 21 may be excluded by the beneficiary. See
sections 665 and 667(c) for exceptions relating to multiple
trusts. The trustee reports to the IRS the total amount of the
accumulation distribution before any reduction for income
accumulated before the beneficiary reaches age 21. If the
multiple trust rules don't apply, the beneficiary claims the
exclusion when filing Form 4970, as you may not be aware
that the beneficiary may be a beneficiary of other trusts with
other trustees.
Question 15
The S portion of the ESBT must take into account the
qualified items of income, gain, deduction, and loss and other
items from any S corporation owned by the ESBT, and any
qualified items of income, gain, deduction, and loss and other
items reallocated to the S portion. See Question 14, earlier.
For purposes of determining whether the taxable income of
an ESBT exceeds the threshold amount, the S portion and
the non-S portion of an ESBT are treated as a single trust.
See Regulations section 1.199A-6(d)(3)(vi).
For examples of accumulation distributions that include
payments from one trust to another trust, and amounts
distributed for a dependent's support, see Regulations
section 1.665(b)-1A(b).
Schedule J (Form
1041)—Accumulation Distribution for
Certain Complex Trusts
Part II—Ordinary Income Accumulation
Distribution
Enter the applicable year at the top of each column for each
throwback year.
General Instructions
Line 6—DNI for Earlier Years
Use Schedule J (Form 1041) to report an accumulation
distribution for a domestic complex trust that was:
Enter the applicable amounts as follows:
Previously treated at any time as a foreign trust (unless an
•
exception is provided in future regulations); or
Throwback year(s)
Amount from line
Created before March 1, 1984, unless that trust would not
•
1969–1977
1978–1979
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Form 1041, Schedule C, line 5
Form 1041, line 61
be aggregated with other trusts under the rules of section
643(f) if that section applied to the trust.
1980
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Form 1041, line 60
Form 1041, line 58
1981–1982
1983–1996
1997–2022
An accumulation distribution is the excess of amounts
properly paid, credited, or required to be distributed (other
than income required to be distributed currently) over the DNI
of the trust reduced by income required to be distributed
currently. To have an accumulation distribution, the
Form 1041, Schedule B, line 9
Form 1041, Schedule B, line 7
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For information about throwback years, see the
instructions for line 13. For purposes of line 6, in figuring the
DNI of the trust for a throwback year, subtract any estate tax
deduction for IRD if the income is includible in figuring the
DNI of the trust for that year.
distribution must exceed the accounting income of the trust.
Specific Instructions
Part I—Accumulation Distribution in 2023
Line 7—Distributions Made During Earlier Years
Line 1—Distribution Under Section 661(a)(2)
Enter the applicable amounts as follows:
Enter the amount from Form 1041, Schedule B, line 10, for
2023. This is the amount properly paid, credited, or required
to be distributed other than the amount of income for the
current tax year required to be distributed currently.
Throwback year(s)
Amount from line
1969–1977
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Form 1041, Schedule C, line 8
Form 1041, line 64
1978
1979
1980
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Form 1041, line 65
Form 1041, line 64
Line 2—Distributable Net Income
1981–1982
1983–1996
1997–2022
Form 1041, line 62
Form 1041, Schedule B, line 13
Form 1041, Schedule B, line 11
Enter the amount from Form 1041, Schedule B, line 7, for
2023. This is the amount of DNI for the current tax year
determined under section 643(a).
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Line 3—Distribution Under Section 661(a)(1)
Line 11—Prior Accumulation Distribution Thrown
Back to Any Throwback Year
Enter the amount from Form 1041, Schedule B, line 9, for
2023. This is the amount of income for the current tax year
required to be distributed currently.
Enter the amount of prior accumulation distributions thrown
back to the throwback years. Don't enter distributions
excluded under section 663(a)(1) for gifts, bequests, etc.
Line 5—Accumulation Distribution
Line 13—Throwback Years
If line 11 of Form 1041, Schedule B, is more than line 8 of
Form 1041, Schedule B, complete the rest of Schedule J and
file it with Form 1041, unless the trust has no previously
accumulated income.
Allocate the amount on line 5 that is an accumulation
distribution to the earliest applicable year first, but don't
allocate more than the amount on line 12 for any throwback
39
Instructions for Form 1041 (2023)
year. An accumulation distribution is thrown back first to the
earliest preceding tax year in which there is undistributed net
income (UNI). Then, it is thrown back beginning with the next
earliest year to any remaining preceding tax years of the
trust. The portion of the accumulation distribution allocated to
the earliest preceding tax year is the amount of the UNI for
that year. The portion of the accumulation distribution
allocated to any remaining preceding tax year is the amount
by which the accumulation distribution is larger than the total
of the UNI for all earlier preceding tax years.
Throwback year(s)
Amount from line
1969–1976
1977
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Form 1041, page 1, line 24
Form 1041, page 1, line 26
Form 1041, line 27
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1978–1979
1980–1984
1985–1986
Form 1041, line 26c
Form 1041, line 25c
1987
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Form 1041, line 22c
1988–2022
Form 1041, Schedule G, line 1a
Line 19—Trust's Share of Net Short-Term Gain
A tax year of a trust during which the trust was a simple
trust for the entire year isn't a preceding tax year unless (a)
during that year, the trust received outside income; or (b) the
trustee didn't distribute all of the trust's income that was
required to be distributed currently for that year. In this case,
UNI for that year must not be more than the greater of the
outside income or income not distributed during that year.
For each throwback year, enter the smaller of the capital gain
from the two lines indicated. If there is a capital loss or a zero
on either or both of the two lines indicated, enter zero on
line 19.
Throwback year(s)
Amount from line
1969–1970
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Schedule D, line 10, column 2, or
Schedule D, line 12, column 2
Schedule D, line 14, column 2, or
Schedule D, line 16, column 2
Schedule D, line 18, column (b), or
Schedule D, line 20, column (b)
Schedule D, line 14, column (b), or
Schedule D, line 16, column (b)
Schedule D, line 16, column (b), or
Schedule D, line 18, column (b)
Schedule D, line 15, column (b), or
Schedule D, line 17, column (b)
The term “outside income” means amounts that are
included in the DNI of the trust for that year but that aren't
“income” of the trust as defined in Regulations section
1.643(b)-1. Some examples of outside income are (a)
income taxable to the trust under section 691, (b) unrealized
accounts receivable that were assigned to the trust, and (c)
distributions from another trust that include the DNI or UNI of
the other trust.
1971–1978
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1979
1980–1981
1982
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1983–1996
1997–2002
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Schedule D, line 14, column (2), or
Schedule D, line 16, column (2)
Schedule D, line 14a, column (2), or
Schedule D, line 16a, column (2)
Schedule D, line 13, column (2), or
Schedule D, line 15, column (2)
Schedule D, line 17, column (2), or
Schedule D, line 19, column (2)
Line 16—Tax-Exempt Interest Included on Line 13
2003
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For each throwback year, divide line 15 by line 6 and multiply
the result by the following:
2004–2012
2013–2022
Throwback year(s)
Amount from line
1969–1977
1978–1979
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Form 1041, Schedule C, line 2(a)
Form 1041, line 58(a)
1980
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Form 1041, line 57(a)
1981–1982
1983–2022
Form 1041, line 55(a)
Form 1041, Schedule B, line 2
Line 20—Trust's Share of Net Long-Term Gain
Enter the applicable amounts as follows:
Part III—Taxes Imposed on Undistributed Net
Income
Throwback year(s)
Amount from line
1969–1970
1971–1977
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50% of Schedule D, line 13(e)
50% of Schedule D, line 17(e)
For the regular tax computation, if there is a capital gain,
complete lines 18 through 25 for each throwback year. If the
trustee elected the alternative tax on capital gains, complete
lines 26 through 31 instead of lines 18 through 25 for each
applicable year. If there is no capital gain for any year, or
there is a capital loss for every year, enter on Part II, line 9,
the amount of the tax for each year identified in the
instruction for line 18 and don't complete Part III. If the trust
received an accumulation distribution from another trust, see
Regulations section 1.665(b)-1A.
1978
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Schedule D, line 17(e) or line
31, whichever is applicable,
less Form 1041, line 23
Schedule D, line 25 or line 27,
whichever is applicable, less
Form 1041, line 23
1979
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1980–1981
1982
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Schedule D, line 21, less
Schedule D, line 22
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Schedule D, line 23, less
Schedule D, line 24
1983–1986
1987–1996
Schedule D, line 22, less
Schedule D, line 23
Note. The alternative tax on capital gains was repealed for
tax years beginning after December 31, 1978. The maximum
rate on net capital gain for 1981, 1987, and 1991 through
2022 isn't an alternative tax for this purpose.
Schedule D, the smaller
of any gain on line 16
or line 17, column (b)
1997–2001
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Schedule D, the smaller
of any gain on line 15c or
line 16, column (2)
Line 18—Regular Tax
2002
2003
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Schedule D, the smaller
of any gain on line 15a or
line 16, column (2)
Enter the applicable amounts as follows:
Schedule D, the smaller
40
Instructions for Form 1041 (2023)
Part IV—Allocation to Beneficiary
Throwback year(s)
Amount from line
of any gain on line 15a or
line 16a, column (2)
Schedule D, the smaller
of any gain on line 14a
or line 15, column (2)
Complete Part IV for each beneficiary. If the accumulation
distribution is allocated to more than one beneficiary, attach
an additional copy of Schedule J with Part IV completed for
each additional beneficiary. Give each beneficiary a copy of
their respective Part IV information. If more than 5 throwback
years are involved, use another Schedule J, completing Parts
II and III for each additional throwback year.
2004–2012
2013–2022
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Schedule D, the smaller
of any gain on line 18a or
line 19, column (2)
If the beneficiary is a nonresident alien individual or a
foreign corporation, see section 667(e) about retaining the
character of the amounts distributed to determine the amount
of the U.S. withholding tax.
Line 22—Taxable Income
Enter the applicable amounts as follows:
The beneficiary uses Form 4970 to figure the tax on the
distribution. The beneficiary also uses Form 4970 for the
section 667(b)(6) tax adjustment if an accumulation
distribution is subject to estate or GST tax. This is because
the trustee can't be the estate or GST tax return filer.
Throwback year(s)
Amount from line
1969–1976
1977
1978–1979
1980–1984
1985–1986
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Form 1041, page 1, line 23
Form 1041, page 1, line 25
Form 1041, line 26
Form 1041, line 25
Form 1041, line 24
Form 1041, line 21
Form 1041, line 22
Form 1041, line 23
Form 1041, line 22
Form 1041, line 23
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1987
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Schedule K-1 (Form
1041)—Beneficiary's Share of
Income, Deductions, Credits, etc.
1988–1996
1997
1998–2018
2019–2022
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General Instructions
Use Schedule K-1 (Form 1041) to report the beneficiary's
share of income, deductions, and credits from a trust or a
decedent's estate.
Line 26—Tax on Income Other Than Long-Term
Capital Gain
Grantor type trusts don't use Schedule K-1 (Form
Enter the applicable amounts as follows:
1041) to report the income, deductions, or credits of
!
CAUTION
the grantor (or other person treated as owner). See
Throwback year(s)
Amount from line
Grantor Type Trusts, earlier.
1969
1970
1971
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Schedule D, line 20
Schedule D, line 19
Schedule D, line 50
Schedule D, line 48
Schedule D, line 27
Who Must File
1972–1975
1976–1978
The fiduciary (or one of the joint fiduciaries) must file
Schedule K-1. A copy of each beneficiary's Schedule K-1 is
attached to the Form 1041 filed with the IRS, and each
beneficiary is given a copy of their respective Schedule K-1.
One copy of each Schedule K-1 must be retained for the
fiduciary's records.
Line 27—Trust's Share of Net Short-Term Gain
If there is a loss on any of the following lines, enter zero on
line 27 for the applicable throwback year. Otherwise, enter
the applicable amounts as follows:
Beneficiary's Identifying Number
Throwback year(s)
Amount from line
As a payer of income, you are required to request and
provide a proper identifying number for each recipient of
income. Enter the beneficiary's number on the respective
Schedule K-1 when you file Form 1041. Individuals and
business recipients are responsible for giving you their TINs
upon request. You may use Form W-9 to request the
beneficiary's identifying number.
Penalty. You may be charged a $50 penalty for each failure
to provide a required TIN, unless reasonable cause is
established for not providing it. Explain any reasonable cause
in a signed affidavit and attach it to this return.
1969–1970
1971–1978
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Schedule D, line 10, column 2
Schedule D, line 14, column 2
Line 28—Trust's Share of Taxable Income Less
Section 1202 Deduction
Enter the applicable amounts as follows:
Throwback year(s)
Amount from line
Truncating recipient's identification number on benefi-
ciary's statement. The estate or trust can truncate a
beneficiary’s identifying number on the Schedule K-1 the
estate or trust sends to the beneficiary. Truncation isn't
allowed on the Schedule K-1 the estate or trust files with the
IRS. Also, the estate or trust can't truncate its own
identification number on any form.
1969
1970
1971
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Schedule D, line 19
Schedule D, line 18
Schedule D, line 38
Schedule D, line 39
Schedule D, line 21
1972–1975
1976–1978
41
Instructions for Form 1041 (2023)
To truncate, where allowed, replace the first five digits of
the nine-digit number with asterisks (*) or Xs (for example, an
SSN xxx-xx-xxxx would appear as ***-**-xxxx or
XXX-XX-xxxx). For more information, see Regulations
section 301.6109-4.
Past years. Don't include in the beneficiary's income any
amounts deducted on Form 1041 for an earlier year that were
credited or required to be distributed in that earlier year.
Character of income. The beneficiary's income is
considered to have the same proportion of each class of
items entering into the computation of DNI that the total of
each class has to the DNI (for example, half dividends and
half interest if the income of the estate or trust is half
dividends and half interest).
Allocation of deductions. Generally, items of deduction
that enter into the computation of DNI are allocated among
the items of income to the extent such allocation isn't
inconsistent with the rules set out in section 469 and its
regulations, relating to passive activity loss limitations, in the
following order.
Substitute Forms
You don't need IRS approval to use a substitute Schedule K-1
if it is an exact copy of the IRS schedule. The boxes must use
the same numbers and titles and must be in the same order
and format as on the comparable IRS Schedule K-1. The
substitute schedule must include the OMB number and the
six-digit form ID code in the upper right-hand corner of the
schedule.
First, all deductions directly attributable to a specific class
of income are deducted from that income. For example,
rental expenses, to the extent allowable, are deducted from
rental income.
You must provide each beneficiary with the Instructions for
Schedule K-1 (Form 1041) for a Beneficiary Filing Form 1040
or 1040-SR, or other prepared specific instructions for each
item reported on the beneficiary's Schedule K-1.
Second, deductions that aren't directly attributable to a
specific class of income may generally be allocated to any
class of income, as long as a reasonable portion is allocated
to any tax-exempt income. Deductions considered not
directly attributable to a specific class of income under this
rule include fiduciary fees, and state income and personal
property taxes. The charitable deduction, however, must be
ratably apportioned among each class of income included in
DNI.
Finally, any excess deductions that are directly attributable
to a class of income may be allocated to another class of
income. However, in no case can excess deductions from a
passive activity be allocated to income from a nonpassive
activity, or to portfolio income earned by the estate or trust.
Excess deductions attributable to tax-exempt income can't
offset any other class of income.
Inclusion of Amounts in Beneficiaries' Income
Simple trust. The beneficiary of a simple trust must include
in their gross income the amount of the income required to be
distributed currently, whether or not distributed, or if the
income required to be distributed currently to all beneficiaries
exceeds the DNI, their proportionate share of the DNI. The
determination of whether trust income is required to be
distributed currently depends on the terms of the trust
instrument and applicable local law. See Regulations section
1.652(c)-4 for a comprehensive example.
Estates and complex trusts. The beneficiary of a
decedent's estate or complex trust must include in their gross
income the sum of:
1. The amount of the income required to be distributed
currently, or if the income required to be distributed currently
to all beneficiaries exceeds the DNI (figured without taking
into account the charitable deduction), their proportionate
share of the DNI (as so figured); and
In no case can deductions be allocated to an item of
income that isn't included in the computation of DNI, or
attributable to corpus.
You can't show any negative amounts for any class of
income shown in boxes 1 through 8 of Schedule K-1.
However, for the final year of the estate or trust, certain
deductions or losses can be passed through to the
beneficiary(ies). See the instructions for box 11 for more
information on these deductions and losses. Also, the
beneficiary's share of depreciation and depletion is
apportioned separately. These deductions may be allocated
to the beneficiary(ies) in amounts greater than their income.
See Depreciation, Depletion, and Amortization, earlier, and
Rev. Rul. 74-530, 1974-2 C.B. 188.
2. All other amounts properly paid, credited, or required
to be distributed, or if the sum of the income required to be
distributed currently and other amounts properly paid,
credited, or required to be distributed to all beneficiaries
exceeds the DNI, their proportionate share of the excess of
DNI over the income required to be distributed currently.
See Regulations section 1.662(c)-4 for a comprehensive
example.
For complex trusts that have more than one beneficiary,
and if different beneficiaries have substantially separate and
independent shares, their shares are treated as separate
trusts for the sole purpose of determining the amount of DNI
allocable to the respective beneficiaries. A similar rule
applies to treat substantially separate and independent
shares of different beneficiaries of an estate as separate
estates. For examples of the application of the separate
share rule, see the regulations under section 663(c).
Gifts and bequests. Don't include in the beneficiary's
income any gifts or bequests of a specific sum of money or of
specific property under the terms of the governing instrument
that are paid or credited in three installments or less.
Beneficiary's Tax Year
The beneficiary's income from the estate or trust must be
included in the beneficiary's tax year during which the tax
year of the estate or trust ends. See Pub. 559 for more
information, including the effect of the death of a beneficiary
during the tax year of the estate or trust.
General Reporting Information
If the return is for a fiscal year or a short tax year, fill in the tax
year space at the top of each Schedule K-1. On each
Schedule K-1, enter the information about the estate or trust
and the beneficiary in Parts I and II (items A through H). In
Part III, enter the beneficiary's share of each item of income,
Amounts that can be paid or credited only from income of
the estate or trust don't qualify as a gift or bequest of a
specific sum of money.
42
Instructions for Form 1041 (2023)
deduction, credit, and any other information the beneficiary
needs to file their income tax return.
Codes. In box 9 and boxes 11 through 14, identify each item
by entering a code in the column to the left of the entry space
for the dollar amount. These codes are identified in these
instructions and on the back of the Schedule K-1.
Part III. Beneficiary's Share of Current Year
Income, Deductions, Credits, and Other Items
Box 1—Interest
Enter the beneficiary's share of the taxable interest income
minus allocable deductions.
Attached statements. Enter an asterisk (*) after the code, if
any, in the column to the left of the dollar amount entry space
for each item for which you have attached a statement
providing additional information. For those informational
items that can't be reported as a single dollar amount, enter
the code and asterisk (*) in the left-hand column and enter
“STMT” in the entry space to the right to indicate that the
information is provided on an attached statement. More than
one attached statement can be placed on the same sheet of
paper and should be identified in alphanumeric order by box
number followed by the letter code (if any). For example: “Box
9, Code A—Depreciation” (followed by the information the
beneficiary needs).
Box 2a—Total Ordinary Dividends
Enter the beneficiary's share of ordinary dividends minus
allocable deductions.
Box 2b—Total Qualified Dividends
Enter the beneficiary's share of qualified dividends minus
allocable deductions.
Box 3—Net Short-Term Capital Gain
Enter the beneficiary's share of the net short-term capital
gain from Schedule D (Form 1041), line 17, column (1),
minus allocable deductions. Don't enter a loss in box 3. If, for
the final year of the estate or trust, there is a capital loss
carryover, enter in box 11, code C, the beneficiary's share of
short-term capital loss carryover. However, if the beneficiary
is a corporation, enter in box 11, code C, the beneficiary's
share of all short- and long-term capital loss carryovers as a
single item. See section 642(h) and related regulations for
more information.
Too few entry spaces on Schedule K-1? If the estate or
trust has more coded items than the number of spaces in
box 9 or boxes 11 through 14, don't enter a code or dollar
amount in the last entry space of the box. In the last entry
space, enter an asterisk (*) in the left column and enter
“STMT” in the entry space to the right. Report the additional
items on an attached statement and provide the box number,
code, description, and dollar amount or information for each
additional item. For example: “Box 13, Code H—Biofuel
Producer Credit, $500.00.”
Specific Instructions
Boxes 4a Through 4c—Net Long-Term Capital Gain
Part I. Information About the Estate or Trust
Enter the beneficiary's share of the net long-term capital gain
from Schedule D (Form 1041), lines 18a through 18c, column
(1), minus allocable deductions.
On each Schedule K-1, enter the name, address, and
identifying number of the estate or trust. Also, enter the name
and address of the fiduciary.
Don't enter a loss in boxes 4a through 4c. If, for the final
year of the estate or trust, there is a capital loss carryover,
enter in box 11, code D, the beneficiary's share of the
long-term capital loss carryover. (If the beneficiary is a
corporation, see the instructions for box 3.) See section
642(h) and related regulations for more information.
Item D
If the fiduciary of a trust or decedent's estate filed Form
1041-T, you must check this box and enter the date it was
filed.
Gains or losses from the complete or partial disposition of
a rental, rental real estate, or trade or business activity that is
a passive activity must be shown on an attachment to
Schedule K-1.
Item E
If this is the final year of the estate or trust, you must check
this box.
Note. If this is the final K-1 for the beneficiary, check the
Box 5—Other Portfolio and Nonbusiness Income
“Final K-1” box at the top of Schedule K-1.
Enter the beneficiary's share of annuities, royalties, or any
other income, minus allocable deductions (other than directly
apportionable deductions), that isn't subject to any passive
activity loss limitation rules at the beneficiary level. Use boxes
6 through 8 to report income items subject to the passive
activity rules at the beneficiary's level.
Part II. Information About the Beneficiary
Complete a Schedule K-1 for each beneficiary. On each
Schedule K-1, enter the beneficiary's name, address, and
identifying number.
Item H
Boxes 6 Through 8—Ordinary Business Income,
Rental Real Estate, and Other Rental Income
Check the “Foreign beneficiary” box if the beneficiary is a
nonresident alien individual, a foreign corporation, or a
foreign estate or trust. Otherwise, check the “Domestic
beneficiary” box.
Enter the beneficiary's share of trade or business, rental real
estate, and other rental income, minus allocable deductions
(other than directly apportionable deductions). To assist the
beneficiary in figuring any applicable passive activity loss
limitations, also attach a separate schedule showing the
43
Instructions for Form 1041 (2023)
beneficiary's share of income derived from each trade or
business, rental real estate, and other rental activity.
for the estate tax paid attributable to such income (see the
line 19 instructions), then the beneficiary is allowed an estate
tax deduction in proportion to their share of the distribution
that consists of such income. For an example of the
Box 9—Directly Apportioned Deductions
computation, see Regulations section 1.691(c)-2. Figure the
computation on a separate sheet and attach it to the return.
The limitations on passive activity losses and credits
under section 469 apply to estates and trusts.
!
CAUTION
Estates and trusts that distribute income to
Box 11, Code A—Excess Deductions on
Termination—Section 67(e) Expenses
beneficiaries are allowed to apportion depreciation,
depletion, and amortization deductions to the beneficiaries.
These deductions are referred to as “directly apportionable
deductions.”
If this is the final return of the estate or trust, and there are
excess deductions on termination (see the instructions for
line 23), enter the beneficiary's share of excess deductions
for section 67(e) expenses (amounts allowed in arriving at
AGI) in box 11, using code A. See Final Regulations -
TD9918 for examples of allowable excess deductions on
termination of an estate or trust.
Rules for treating a beneficiary's income and directly
apportionable deductions from an estate or trust and other
rules for applying the passive loss and credit limitations to
beneficiaries of estates and trusts haven't yet been issued.
Any directly apportionable deduction, such as
depreciation, is treated by the beneficiary as having been
incurred in the same activity as incurred by the estate or trust.
However, the character of such deduction may be
determined as if the beneficiary incurred the deduction
directly.
Note. The beneficiary may deduct the excess deductions
shown in box 11, code A, as an adjustment to income on
Schedule 1 (Form 1040), Part II, line 24k.
Excess deductions on termination occur only during the
last tax year of the trust or decedent's estate when the total
deductions (excluding the charitable deduction and
exemption) are greater than the gross income during that tax
year.
To assist the beneficiary in figuring any applicable passive
activity loss limitations, also attach a separate schedule
showing the beneficiary's share of directly apportionable
deductions derived from each trade or business, rental real
estate, and other rental activity.
Generally, a deduction based on an NOL carryover isn't
available to a beneficiary as an excess deduction. However, if
the last tax year of the estate or trust is also the last year in
which an NOL carryover may be taken (see section 172(b)),
the NOL carryover is considered an excess deduction on the
termination of the estate or trust to the extent it isn't absorbed
by the estate or trust during its final tax year. For more
information, see Regulations section 1.642(h)-4 for a
discussion of the allocation of the carryover among the
beneficiaries.
Enter the beneficiary's share of directly apportioned
deductions using codes A through C.
Depreciation (code A). Enter the beneficiary's share of the
depreciation deductions directly apportioned to each activity
reported in boxes 5 through 8. See Depreciation, Depletion,
and Amortization, earlier, for a discussion of how the
depreciation deduction is apportioned between the
beneficiaries and the estate or trust. Report any AMT
adjustment or tax preference item attributable to depreciation
separately in box 12, using code G.
Only the beneficiary of an estate or trust that succeeds to
its property is allowed to deduct that entity's excess
deductions on termination. A beneficiary who doesn't have
enough income in that year to absorb the entire deduction
can't carry the balance over to any succeeding year.
Note. An estate or trust can't make an election under section
179 to expense certain depreciable business assets.
Depletion (code B). Enter the beneficiary's share of the
depletion deduction under section 611 directly apportioned
to each activity reported in boxes 5 through 8. See
Depreciation, Depletion, and Amortization, earlier, for a
discussion of how the depletion deduction is apportioned
between the beneficiaries and the estate or trust. Report any
tax preference item attributable to depletion separately in
box 12, using code H.
Amortization (code C). Itemize the beneficiary's share of
the amortization deductions directly apportioned to each
activity reported in boxes 5 through 8. Apportion the
amortization deductions between the estate or trust and the
beneficiaries in the same way that the depreciation and
depletion deductions are divided. Report any AMT
adjustment attributable to amortization separately in box 12,
using code I.
Box 11, Code B—Excess Deductions on
Termination—Non-Miscellaneous Itemized
Deductions
If this is the final return of the estate or trust, and there are
excess deductions on termination (see the instructions for
line 23), enter the beneficiary's share of excess deductions
for non-miscellaneous itemized deductions in box 11, using
code B. Figure the deductions on a separate sheet and
attach it to the return.
An individual beneficiary must be able to itemize
deductions in order to claim excess deductions that are
non-miscellaneous itemized deductions in determining
taxable income.
Box 10—Estate Tax Deduction (Including Certain
Generation-Skipping Transfer Taxes)
Note. Section 67(g) suspends miscellaneous itemized
deductions subject to the 2% floor for tax years 2018 through
2025. Therefore, miscellaneous itemized deductions are not
deductible as excess deductions on termination of an estate
or trust. Consult your state taxing authority for information
If the distribution deduction consists of any IRD, and the
estate or trust was allowed a deduction under section 691(c)
44
Instructions for Form 1041 (2023)
about deducting miscellaneous itemized deductions on your
state tax return.
Box 13—Credits and Credit Recapture
Enter each beneficiary's share of the credits and credit
recapture using the applicable codes. Listed below are the
credits that can be allocated to the beneficiary(ies). Attach a
statement if additional information must be provided to the
beneficiary as explained below.
Box 11, Codes C and D—Unused Capital Loss
Carryover
Upon termination of the trust or decedent's estate, the
beneficiary succeeding to the property is allowed as a
deduction any unused capital loss carryover under section
1212. If the estate or trust incurs capital losses in the final
year, use the Capital Loss Carryover Worksheet in the
Instructions for Schedule D (Form 1041) to figure the amount
of capital loss carryover to be allocated to the beneficiary.
Credit for estimated taxes (code A). Payment of estimated
•
tax to be credited to the beneficiary (section 643(g)).
See the instructions for Schedule G, Part II, line 11,
before you make an entry to allocate any estimated
!
CAUTION
tax payments to a beneficiary. If the fiduciary doesn't
make a valid election, then the IRS will disallow the estimated
tax payment that is reported on Schedule K-1 and claimed on
the beneficiary's return.
Box 11, Codes E and F—NOL Carryover
Upon termination of a trust or decedent's estate, a
beneficiary succeeding to its property is allowed to deduct
any unused NOL (and any alternative tax net operating loss)
carryover for regular and AMT purposes if the carryover
would be allowable to the estate or trust in a later tax year but
for the termination. Enter in box 11, using codes E and F, the
unused carryover amounts.
Credit for backup withholding (code B).
•
Income tax withheld on wages can't be distributed to
the beneficiary.
!
CAUTION
The low-income housing credit (code C). Attach a
•
statement that shows the beneficiary's share of the amount, if
any, entered on line 6 of Form 8586, Low-Income Housing
Credit, with instructions to report that amount on Form 8586,
line 4, or Form 3800, Part III, line 4d, if the beneficiary's only
source for the credit is a pass-through entity.
Box 12—AMT Items
Adjustment for minimum tax purposes (code A). Enter
the beneficiary's share of the adjustment for minimum tax
purposes.
To figure the adjustment, subtract the beneficiary's share
of the income distribution deduction figured on Schedule B,
line 15, from the beneficiary's share of the income distribution
deduction on a minimum tax basis figured on Schedule I
(Form 1041), line 42. The difference is the beneficiary's share
of the adjustment for minimum tax purposes.
Advanced manufacturing production credit (code D).
•
Attach a statement showing the amount of the credit the
beneficiary must report on line 7 of Form 7207, with
instructions to report the amount directly on Form 3800, Part
III, line 1b, if the beneficiary's only source for the credit is a
pass-through entity.
Work opportunity credit (code F).
•
Credit for small employer health insurance premiums
•
(code G).
Biofuel producer credit (code H).
•
•
•
Note. Schedule B, line 15, equals the sum of boxes 1, 2a, 3,
Credit for increasing research activities (code I).
4a, 5, 6, 7, and 8 of all Schedules K-1.
Renewable electricity production credit (code J). Attach a
AMT adjustment attributable to qualified dividends, net
short-term capital gains, or net long-term capital gains
(codes B through D). If any part of the amount reported in
box 12, code A, is attributable to qualified dividends (code B),
net short-term capital gain (code C), or net long-term capital
gain (code D), enter that part using the applicable code.
AMT adjustment attributable to unrecaptured section
1250 gain or 28% rate gain (codes E and F). Enter the
beneficiary's distributive share of any AMT adjustments to the
unrecaptured section 1250 gain (code E) or 28% rate gain
(code F), whichever is applicable, in box 12.
Accelerated depreciation, depletion, and amortization
(codes G through I). Enter any adjustments or tax
preference items attributable to accelerated depreciation
(code G), depletion (code H), or amortization (code I) that
were directly apportioned to the beneficiary. For property
placed in service before 1987, report separately the
accelerated depreciation of real and leased personal
property.
Exclusion items (code J). Enter the beneficiary's share of
the adjustment for minimum tax purposes from box 12, code
A, of Schedule K-1 that is attributable to exclusion items
(Schedule I (Form 1041), lines 2, 3, 4, 5, and 7).
statement that shows separately the amount of the credit the
beneficiary must report on line 14 of Form 8835, including the
allocation of the credit for production during the 4-year period
beginning on the date the facility was placed in service and
for production after that period.
Empowerment zone employment credit (code K).
Orphan drug credit (code M).
•
•
•
Credit for employer-provided childcare facilities and
services (code N).
Biodiesel, renewable diesel, or sustainable aviation fuels
•
credit (code O). If the credit includes the small agri-biodiesel
credit, attach a statement that shows the beneficiary's share
of the small agri-biodiesel credit, the number of gallons
claimed for the small agri-biodiesel credit, and the estate's or
trust's productive capacity for agri-biodiesel.
Credit to holders of tax credit bonds (code P).
•
•
•
Credit for employer differential wage payments (code Q).
Recapture of credits (code R). On an attached statement
to Schedule K-1, provide any information the beneficiary will
need to report recapture of credits.
Other credits (code ZZ). This code is used to report the
•
beneficiary's share of all other credits.
Box 14—Other Information
Enter the dollar amounts and applicable codes for the items
listed under Other information.
45
Instructions for Form 1041 (2023)
level. See Determining the trust’s or estate’s QBI or qualified
PTP items, later. The beneficiary must then determine
whether each item is includible in QBI.
In addition, the trust or estate must also report on whether
any of its trades or businesses are SSTBs and identify on the
statement any trades or businesses that are aggregated.
Foreign taxes (code B). Enter the beneficiary's allocable
share of taxes paid or accrued to a foreign country. Attach a
statement reporting the beneficiary's share of foreign tax
(paid or accrued) and income by category including interest,
dividends, rents and royalties, and other income. See Form
1116 and Pub. 514 for more information.
Trusts and estates should use Statement A—QBI
Pass-Through Entity Reporting, in these instructions, or a
substantially similar statement, to report each beneficiary’s
allocable information from each trade or business, including
QBI items, W-2 wages, UBIA of qualified property, qualified
PTP items, and section 199A dividends by attaching the
completed statement(s) to each beneficiary’s Schedule K-1.
The trust or estate should also use Statement A—QBI
Pass-Through Entity Reporting to report each beneficiary’s
share of QBI items, W-2 wages, UBIA of qualified property,
qualified PTP items, and section 199A dividends reported to
the trust or estate by another entity.
Qualified rehabilitation expenditures (code C). Provide
the beneficiary with a statement of their share of qualified
rehabilitation expenditures and other information needed to
complete Part VII of Form 3468, Investment Credit. If there
are expenditures and other information from more than one
activity, the attached statement will separately identify the
expenditures and other information for each property. See the
instructions for Form 3468, Part VII, for details.
Note. Expenditures related to rental real estate activities are
subject to different passive activity limitation rules than other
qualified rehabilitation expenditures. See the Instructions for
Form 8582-CR for details.
Basis of energy property (code D). Provide the
beneficiary with a statement with the distributive share of
amounts needed to complete Form 3468, Part VI. If there is
information for more than one property, the attached
statement will separately identify the information for each
property. See the instructions for Form 3468, Part VI, for
details.
Note. The estate or trust must report each beneficiary's
share of qualified items of income, gain, deduction, and loss
from a PTP. The PTP component is not limited by the W-2
wages and UBIA of qualified property limitations. Therefore,
neither the PTP nor its owners (including estates and trusts)
are required to report W-2 wages or UBIA of qualified
property amounts related to a trade or business operated by
a PTP.
Foreign trading gross receipts (code G). Enter the
beneficiary's share, if any, of foreign trading gross receipts.
See Form 8873 for more information.
NIIT (code H). Use code H to identify the amount of the
beneficiary's adjustment for section 1411 NII or deductions.
See the Instructions for Form 8960. An attachment may be
provided with the Schedule K-1 informing the beneficiary of
the detailed items to be reported on Form 1040 or 1040-SR.
See Net Investment Income Tax (NIIT), earlier, for more
information on these amounts.
Trusts and estates should use Statement B—QBI
Pass-Through Entity Aggregation Election(s), in these
instructions, or a substantially similar statement, to report
aggregated trades or businesses and provide supporting
information to beneficiaries on each Schedule K-1.
Trusts and estates should use Statement C—QBI
Pass-Through Entity Reporting—Patrons of Specified
Agricultural and Horticultural Cooperatives, in these
instructions, or a substantially similar statement, to report
allocable QBI and W-2 wages allocable to qualified payments
from a specified agricultural or horticultural cooperative for
each trade or business. This statement should also be used
to report each beneficiary’s allocable section 199A(g)
deduction reported to the trust or estate by the specified
cooperative.
Section 199A information (code I). In the case of a trust
or estate, the QBI deduction, also known as the section 199A
deduction, is determined at the beneficiary level for the
portions of QBI, qualified REIT dividends, and qualified PTP
items apportioned to the beneficiaries. To allow beneficiaries
to correctly figure their QBI deduction, the trust or estate
must enter an asterisk (*) on each beneficiary’s Schedule K-1
next to code I and enter “STMT” in the right column to
indicate that the information is provided on an attached
statement. Do not add amounts into a single number and
report it on Schedule K-1. The information must be
Determining the trust’s or estate’s qualified trades or
businesses. The trust’s or estate’s qualified trades or
businesses include its section 162 trades or businesses,
except for SSTBs, or the trade or business of providing
services as an employee. A section 162 trade or business
generally includes any activity carried on to make a profit and
with considerable, regular, and continuous activity. For more
information on what qualifies as a trade or business for
purposes of section 199A, see the instructions for Form 8995
or Form 8995-A.
separately identified for each trade or business the trust or
estate directly conducts, including specified service trades or
businesses (SSTBs). The trust or estate must attach the
statement to each Schedule K-1, separately identifying the
beneficiary’s allocable share of:
Rental real estate. Rental real estate may constitute a
trade or business for purposes of the QBI deduction if the
rental real estate:
1. Qualified items of income, gain, deduction, and loss;
2. W-2 wages;
3. UBIA of qualified property;
4. Qualified PTP items; and
Rises to the level of a trade or business under section 162;
Satisfies the requirements for the rental real estate safe
•
•
harbor in Rev. Proc. 2019-38, 2019-42 I.R.B. 942; or
•
Meets the self-rental exception (that is, the rental or
5. Section 199A dividends, also known as qualified REIT
licensing of property to a commonly controlled trade or
business conducted by an individual or relevant pass-through
entity (RPE)) in Regulations section 1.199A-1(b)(14).
dividends.
The trust or estate must make an initial determination of
which items are qualified items of income, gain, deduction,
and loss at its level and report to each beneficiary their share
of all items that may be qualified items at the beneficiary
The determination of whether rental real estate constitutes a
trade or business for purposes of the QBI deduction is made
46
Instructions for Form 1041 (2023)
by the trust or estate. The trust or estate must first make this
determination and then only include the allocable share of
rental real estate items of income, gain, loss, and deduction
on the statement provided to beneficiaries. Rental real estate
that does not meet one of the three conditions noted above
does not constitute a trade or business for purposes of the
QBI deduction and must not be included in the QBI
or a substantially similar statement, and attach it to each
Schedule K-1. The statement must provide the information
necessary to identify each separate trade or business
included in each aggregation, a description of the aggregated
trades or businesses, and an explanation of the factors met
that allow the aggregation in accordance with Regulations
section 1.199A-4. The aggregation statement must be
completed each year to show the trust’s or estate's trade or
business aggregations. Failure to disclose the aggregations
may cause them to be disaggregated.
The trust’s or estate's aggregations must be reported
consistently for all subsequent years, unless there is a
change in facts and circumstances that changes or
disqualifies the aggregation. The trust or estate must provide
a written explanation for any changes to prior year
aggregations that describes the change in facts and
circumstances.
If the trust or estate directly or indirectly owns an interest in
an RPE that aggregates multiple trades or businesses, it
must attach a copy of the RPE’s aggregation to each
Schedule K-1. The trust or estate cannot break apart the
aggregation of another RPE, but it may add trades or
businesses to the aggregation, assuming the requirements
above are satisfied.
Determining the trust’s or estate’s QBI or qualified
PTP items. The trust’s or estate’s items of QBI that must be
reported to beneficiaries include the allocated amounts of
qualified items of income, gain, deduction, and loss from the
trust’s or estate’s trades or businesses that are effectively
connected with the conduct of a trade or business within the
United States. This may include, but is not limited to, items
such as ordinary business income or (losses), section 1231
gains or (losses), section 179 deductions, and interest from
debt-financed distributions.
QBI may also include rental income (losses) or royalty
income, if the activity rises to the level of a trade or business;
and gambling gains or (losses), but only if the trust or estate
is engaged in the trade or business of gambling. Whether an
activity rises to the level of a trade or business must be
determined at the entity level and, once made, is binding on
beneficiaries.
Qualified PTP items that must be reported to the
beneficiaries include the allocated amounts of the trust’s or
estate’s share of qualified items of income, gain, deduction,
and loss from a PTP and may also include gain or loss
recognized on the disposition of the trust’s or estate’s
partnership interest that is not treated as a capital gain or
loss.
information provided to beneficiaries.
SSTBs excluded from qualified trades or businesses.
SSTBs are generally excluded from the definition of a
qualified trade or business. An SSTB is any trade or business
providing services in the field of health, law, accounting,
actuarial science, performing arts, consulting, athletics,
financial services, brokerage services, investing and
investment management, trading or dealing in securities,
trust or estate interests, or commodities or any other trade or
business where the principal asset is the reputation or skill of
one or more of its employees or owners. The term “any trade
or business where the principal asset is the reputation or skill
of one or more of its employees or owners” means any trade
or business that consists of any of the following: (a) a trade or
business in which a person receives fees, compensation, or
other income for endorsing products or services; (b) a trade
or business in which a person licenses or receives fees,
compensation, or other income for the use of an individual’s
image, likeness, name, signature, voice, trademark, or any
other symbols associated with the individual’s identity; or (c)
receiving fees, compensation, or other income for appearing
at an event or on radio, television, or another media format.
Exception. If the beneficiary’s taxable income is equal to
or less than the threshold for the reporting 2023 tax year,
$182,100 ($364,200 if married filing jointly), the QBI from the
SSTB may be used by the beneficiary to compute their QBI
deduction. If the beneficiary’s taxable income is within the
phase-in range, the threshold amount plus $50,000
($100,000 if married filing jointly), an applicable percentage
of the QBI, W-2 wages, and UBIA of qualified property from
an SSTB may be used by the beneficiary to compute their
QBI deduction. Therefore, the statement attached to the
Schedule K-1 issued to each beneficiary must identify any
items relating to SSTBs.
Aggregation. A trust or estate engaged in more than one
trade or business may choose to aggregate multiple trades or
businesses into a single trade or business for purposes of
section 199A if it meets the following requirements.
1. The same person, or group of persons, either directly
or through attribution, owns 50% or more of each trade or
business for a majority of the tax year, including the last day
of the tax year, and all trades or businesses use the same tax
year-end.
However, QBI and qualified PTP items don’t include any of
the following.
2. None of the trades or businesses are SSTBs.
Items that are treated as capital gain or loss under any
•
3. The trades or businesses to be aggregated meet at
provision of the Code.
Dividends or dividend equivalents, including qualified REIT
least two of the following three factors.
•
a. They provide products, property, or services that are
the same or that are customarily offered together.
b. They share facilities or share significant centralized
business elements, such as personnel, accounting, legal,
manufacturing, purchasing, human resources, or information
technology resources.
c. They are operated in coordination with, or reliance
upon, one or more of the businesses in the aggregated
group.
dividends.
Interest income (unless received in connection with the
•
trade or business).
Wage income.
•
•
Income that is not effectively connected with the conduct
of a trade or business within the United States (for more
“effectively connected income”).
Commodities transactions, or foreign currency gains or
•
losses described in section 954(c)(1)(C) or (D).
Income, loss, or deductions from notional principal
If the trust or estate chooses to aggregate multiple trades
or businesses, it must report the aggregation on Statement B,
•
contracts under section 954(c)(1)(F).
47
Instructions for Form 1041 (2023)
Annuities (unless received in connection with the trade or
QBI Flowchart. Trusts or estates may use the QBI
Flowchart to help them determine if an allocated item of
income, gain, deduction, or loss is includible in QBI
reportable to beneficiaries.
•
business).
Guaranteed payments described in section 707(c)
•
received by the entity for services rendered to a partnership.
Payments described in section 707(a) received by the
•
entity for services rendered to a partnership.
QBI Flowchart
Questions
Yes
No
Is the item effectively connected with the conduct of a trade or business within the United
States?
Continue
Continue
Stop, this item isn’t QBI.
Is the item attributable to a trade or business (this may include section 1231 gain (loss),
section 179 deductions, interest from debt-financed distributions, etc.)? Examples of an item
not considered attributable to the trade or business at the entity level include gambling income
(loss) where the entity isn’t engaged in the trade or business of gambling, income (loss) from
vacation properties when the entity isn’t in that trade or business, activities not engaged in for
profit, etc.
Stop, this item isn’t QBI.
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
Continue
or is it a dividend or dividend equivalent?
Is the item interest income other than interest income properly allocable to a trade or
business? (Note that interest income attributable to an investment of working capital,
reserves, or similar accounts isn’t properly allocable to a trade or business.)
Stop, this item isn’t QBI.
Is the item an annuity, other than an annuity received in connection with the trade or business? Stop, this item isn’t QBI.
Continue
Continue
Is the item gain or loss from a commodities transaction or foreign currency gain or loss
described in section 954(c)(1)(C) or (D)?
Stop, this item isn’t QBI.
Is the item gain or loss from a notional principal contract under section 954(c)(1)(F)?
Is the item of income or loss from a qualified PTP?
Stop, this item isn’t QBI.
Continue
This item is a qualified PTP
item. Report this item as
qualified PTP income or
loss, subject to
This item is QBI. Report this
item as QBI subject to
beneficiary-specific
determinations.
beneficiary-specific
determinations, and check
the “PTP” box.
wages and UBIA of qualified property reported to the trust or
estate from any qualified trades or businesses of an RPE the
trust or estate owns directly or indirectly. However, trusts or
estates that own a direct or indirect interest in a PTP may not
include any amounts for W-2 wages or UBIA of qualified
property from the PTP, as the W-2 wages and UBIA of
qualified property from a PTP are not allowed in computing
the W-2 wage and UBIA limitations.
The W-2 wages are amounts paid to employees described
in sections 6051(a)(3) and (8). If the trust or estate conducts
more than one trade or business, it must allocate the W-2
wages among its trades or businesses. See Rev. Proc.
2019-11, 2019-09 I.R.B. 742, for more information.
Specific Instructions for Statement A—QBI
Pass-Through Entity Reporting.
QBI or qualified PTP items. The trust or estate must first
determine if it is engaged in one or more trades or
businesses. It must then determine if any of its trades or
businesses are SSTBs. The trust or estate must also
determine whether it has qualified PTP items from an interest
in a PTP. The trust or estate must indicate the status on the
appropriate checkboxes for each trade or business (or
aggregated trade or business) or PTP interest reported.
Note. SSTBs and PTPs cannot be aggregated with any
other trade or business. So, if the aggregation box is
checked, the “SSTB” and “PTP” boxes for that specific
aggregated trade or business should not be checked.
Next, the trust or estate must report to each beneficiary
their allocable share of all apportioned items that are QBI or
qualified PTP items for each trade or business the trust or
estate owns directly or indirectly. Use the QBI Flowchart to
determine if an allocated item is reportable as a QBI item or
qualified PTP item subject to beneficiary-specific
The unadjusted basis of qualified property is figured by
adding the unadjusted basis of all qualified assets
immediately after acquisition. Qualified property includes all
tangible property subject to depreciation under section 167
for which the depreciable period hasn't ended that is held
and used for the production of QBI by the trade or business
during the tax year and held on the last day of the tax year.
The depreciable period ends on the later of 10 years after the
property is placed in service or the last day of the full year for
the applicable recovery period under section 168.
determinations. Each item included under “Other” must be
stated separately, identifying the nature and amount of each
item.
W-2 wages and UBIA of qualified property. The trust or
estate must determine the W-2 wages and UBIA of qualified
property properly allocable to QBI for each qualified trade or
business and report the allocable share to each beneficiary
on Statement A, or a substantially similar statement, attached
to Schedule K-1. This includes the allocable share of W-2
Section 199A dividends. The trust or estate must report
the apportioned allocable share of any REIT dividends to
each beneficiary on Statement A, or a substantially similar
statement, attached to Schedule K-1. Section 199A
dividends do not have to be reported by trade or business
and can be reported as a single amount to beneficiaries.
Section 199A dividends include dividends the trust or estate
48
Instructions for Form 1041 (2023)
receives from a REIT held for more than 45 days, for which
the payment is not obligated to someone else, is not a capital
gain dividend under section 857(b)(3), and is not a qualified
dividend under section 1(h)(11), plus any apportioned
qualified REIT dividends received from a RIC.
under sections 6051(a)(3) and (8) for the calendar year
ended with or within the trust’s or estate’s tax year. If the trust
or estate conducts more than one trade or business, it must
allocate W-2 wages among its trades or businesses. See
Rev. Proc. 2019-11 for more information.
Fiscal year trusts and estates. For purposes of
determining the QBI or qualified PTP items, UBIA of qualified
property, and the aggregate amount of qualified section 199A
dividends, fiscal year trusts or estates include all items from
the fiscal tax year.
Note. The trust or estate must report each beneficiary’s
share of qualified items of income, gain, deduction, and loss
from a PTP, but the W-2 wages and UBIA of qualified
property from the PTP should not be reported, as the
beneficiary cannot use that information in computing their
QBI deduction.
For purposes of determining W-2 wages, fiscal year trusts
or estates include apportioned amounts paid to employees
Statement A—QBI Pass-Through Entity Reporting
Pass-through entity’s name:
Beneficiary’s name:
Pass-through entity’s EIN:
Beneficiary’s identifying number:
PTP
Aggregated
SSTB
PTP
Aggregated
SSTB
PTP
Aggregated
SSTB
Beneficiary's Share of:
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
disaggregated. The trust’s or estate’s aggregations must be
reported consistently for all subsequent years, unless there is
a change in facts and circumstances that changes or
disqualifies the aggregation. The trust or estate must provide
a written explanation for any changes to prior year
aggregations that describes the change in facts and
circumstances.
If the trust or estate holds a direct or indirect interest in an
RPE that aggregates multiple trades or businesses, the trust
or estate must also include a copy of the RPE’s aggregations
with each beneficiary’s Schedule K-1. The trust or estate
cannot break apart the aggregation of another RPE, but it
may add trades or businesses to the aggregation, assuming
the aggregation requirements are satisfied.
Specific Instructions for Statement B—QBI
Pass-Through Entity Aggregation Election(s). If the trust
or estate elects to aggregate more than one trade or
business that meet all the requirements to aggregate, the
trust or estate must report the aggregation to beneficiaries on
Statement B, or a substantially similar statement, and attach
it to each Schedule K-1. The trust or estate must indicate
trades or businesses that were aggregated by checking the
appropriate box for each aggregated trade or business. The
trust or estate must also provide a description of the
aggregated trade or business and an explanation of the
factors met that allow the aggregation.
The aggregation statement must be completed each year
to show the trust’s or estate’s trade or business aggregations.
Failure to disclose the aggregations may cause them to be
49
Instructions for Form 1041 (2023)
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.
QBI items and W-2 wages allocable to qualified payments
include apportioned QBI items included on Statement A that
are allocable to the qualified payments reported to the trust or
estate on Form 1099-PATR from the cooperative.
Section 199A(g) deduction. The trust or estate must
report to its beneficiaries their allocable shares of any
apportioned section 199A(g) deduction passed through the
cooperative, as reported on Form 1099-PATR. Section
199A(g) deductions do not have to be reported by trade or
business and can be reported as a single amount to
beneficiaries.
Specific Instructions for Statement C—QBI
Pass-Through Entity Reporting—Patrons of Specified
Agricultural and Horticultural Cooperatives.
QBI items and wages allocable to qualified payments.
If the trust or estate is a patron of a specified agricultural or
horticultural cooperative, the trust or estate must provide the
allocable share of QBI items and W-2 wages allocable to
qualified payments from each trade or business to each of its
beneficiaries on Statement C, or a substantially similar
statement, and attach it to Schedule K-1 so each beneficiary
can compute their patron reduction under section 199A(b)(7).
Statement C—QBI Pass-Through Entity Reporting—Patrons of Specified Agricultural and Horticultural
Cooperatives
Pass-through entity’s name:
Beneficiary’s name:
Pass-through entity’s EIN:
Beneficiary's identifying number:
PTP
Aggregated
SSTB
PTP
Aggregated
SSTB
PTP
Aggregated
SSTB
Beneficiary’s Share of:
QBI Items Allocable to Qualified Payments Subject to Beneficiary-Specific
Determinations
TB1
TB2
TB3
Ordinary business income
Rental income
Other
W-2 Wages Allocable to Qualified Payments
Section 199A(g) Deduction
beneficiary with a statement with the distributive share of
amounts that the beneficiary will need to complete Form
Code J. Qualifying advanced coal project property and
qualifying gasification project property. Provide the
50
Instructions for Form 1041 (2023)
3468, Part II, Sections A and B. If there is information for
more than one property, the attached statement will
separately identify the information for each property. See the
instructions for Form 3468, Part II, Sections A and B, for
details.
Code K. Qualifying advanced energy project property.
Provide the beneficiary with a statement with the distributive
share of amounts that the beneficiary will need to complete
Form 3468, Part III. If there is information for more than one
property, the attached statement will separately identify the
information for each property. See the instructions for Form
3468, Part III, for details.
Code L. Advanced manufacturing investment property.
Provide the beneficiary with a statement with the distributive
share of amounts that the beneficiary will need to complete
Form 3468, Part IV. If there is information for more than one
property, the attached statement will separately identify the
information for each property. See the instructions for Form
3468, Part IV, for details.
Other information (code ZZ). List on a separate sheet the
tax information the beneficiary will need to complete their
return that isn't entered elsewhere on Schedule K-1.
In addition, if the beneficiary is a “covered person” in
connection with a foreign tax credit splitter arrangement
under section 909, attach a statement that identifies the
arrangement including the foreign taxes paid or accrued.
Inclusion of global intangible low-taxed income (GILTI).
Section 951A requires U.S. shareholders of controlled foreign
corporations to report their ratable share of GILTI in taxable
income. If applicable, provide the information necessary to
figure the GILTI inclusion to each beneficiary. See the
Instructions for Form 8992 for details.
Foreign-derived intangible income (FDII). Public Law
115-97 enacted section 250, which allows a domestic
corporation a deduction for the eligible percentage of FDII
and GILTI. Section 250 is effective for tax years beginning
after 2017. If applicable, provide the necessary information to
each domestic corporate beneficiary for its calculation of FDII
benefit. See section 250 for more information. See the
Instructions for Form 8993 for details.
Limitation on business interest expense. If an estate or
trust is required to file Form 8990, the adjusted taxable
income of an estate or trust beneficiary is reduced by any
income (including any DNI) received from the estate or trust
by the beneficiary to the extent such income supported a
deduction for business interest expense under section 163(j)
(1)(B) in computing the estate's or trust's taxable income. If
applicable, provide the beneficiary the necessary information
to calculate this amount in an attachment to Schedule K-1.
See Form 8990 and the Instructions for Form 8990 for
additional information.
For example, if the estate or trust participates in a
transaction that must be disclosed on Form 8886 (see
earlier), both the estate or trust and its beneficiaries may be
required to file Form 8886. The estate or trust must determine
if any of its beneficiaries are required to disclose the
transaction and provide those beneficiaries with information
they will need to file Form 8886. This determination is based
on the category(ies) under which a transaction qualified for
disclosure. See the Instructions for Form 8886 for details.
51
Instructions for Form 1041 (2023)
Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws of the
United States. You are required to give us the information. We need it to ensure that you are complying with these laws and to
allow us to figure and collect the right amount of tax.
You aren't required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the
form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as
their contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return
information are confidential, as required by Code section 6103.
The time needed to complete and file this form and related schedules will vary depending on individual circumstances. The
estimated average times are:
Form 1041
Schedule D
Schedule I
Schedule J
Schedule K-1
Form 1041-V
Recordkeeping. . . .
25 hr., 49min.
14 hr., 35 min.
17 hr., 42 min.
11 hr., 00 min.
6 hr., 27 min.
43 min.
Learning about the law
or the form. . . .
16 hr., 21min.
31 hr., 27min.
3 hr., 38 min.
4 hr., 58 min.
4 hr., 22 min.
4 hr., 51 min.
1 hr., 27 min.
2 hr., 37 min.
35 min.
43 min.
- - - -
- - - -
Preparing the form. . . .
Copying, assembling, and sending
the form to the IRS. . . .
4 hr., 01min.
16 min.
- - - -
16 min.
- - - -
- - - -
Comments and suggestions. We welcome your comments concerning the accuracy of these time estimates or
suggestions for making this form and related schedules simpler. You can send us comments through IRS.gov/FormComments.
Or, you can write to the Internal Revenue Service, Tax Forms and Publications, 1111 Constitution Ave. NW, IR-6526,
Washington, DC 20224. Although we can't respond individually to each comment received, we do appreciate your feedback
and will consider your comments and suggestions as we revise our tax forms, instructions, and publications. Don't send Form
1041 to this address. Instead, see Where To File, earlier.
52
Instructions for Form 1041 (2023)
Index
A
Q
Foreign 5
Penalty 28
Amounts paid or permanently set
Exemption 27
aside 29
Assembly 13
Attachments 13
R
F
Returns:
B
Amended 20
Fiduciary accounting income (FAI)
Beneficiary 4
Final 20
(See Accounting income)
Estate 42
Revocable Living Trusts:
G
C
S
Special filing instructions:
Nonqualified deferred compensation
plans 19
D
Definitions:
I
Beneficiary 4
DNI 4
Fiduciary 4
IRD 4
T
IRD:
Deduction 27
M
Blind 21
Complex 42
N
Domestic 5
Foreign 37
Grantor 3
Nonqualified deferred compensation
Distributable net income (See DNI)
Simple 42
plans 19
P
E
Penalties:
Split-interest 20
Elections:
W
Who must file:
Other 11
Treating contributions as paid in prior tax
year 28
ESBTs (See Electing small business trusts)
53