Instructions For Schedule K-1 (Form 1041) - 2016 (Page 2 of 3) in pdf

line 12; line 5 of the 28% Rate Gain

Box 2b—Qualified Dividends

Box 9—Directly Apportioned

Worksheet for Schedule D, line 18; and

Deductions

This box reports the beneficiary’s share of

line 16 of the Unrecaptured Section 1250

qualified dividends. This amount is

The fiduciary must attach a statement

Gain Worksheet for Schedule D, line 19.

reported on line 9b of Form 1040.

showing depreciation, depletion, and

amortization directly apportioned to you, if

Box 11, Codes D and E—NOL

Boxes 3 and 4a—Net Short-Term

any, for each activity reported in boxes 5

Carryover

through 8.

and Net Long-Term Capital Gain

Upon termination of a trust or decedent’s

Net short-term capital gains are reported

estate, a beneficiary succeeding to its

Box 10—Estate Tax Deduction

on line 5 of Schedule D (Form 1040) and

property is allowed to deduct any unused

(Including Certain

net long-term capital gains are reported on

net operating loss (NOL) if the carryover

line 12 of Schedule D (Form 1040).

Generation-Skipping Transfer

would be allowable to the trust or estate in

Taxes)

a later tax year but for the termination. The

If there is an attachment to this

deduction for regular tax purposes,

If an estate or trust distributes income in

Schedule K-1 reporting a disposition of a

reported as code D, is reported on Form

respect of a decedent (IRD) to a

passive activity, see the Instructions for

1040, line 21.

beneficiary, the beneficiary is entitled to

Form 8582, Passive Activity Loss

deduct the portion of the estate tax

Limitations, for information on the

A deduction for an Alternative Tax NOL

imposed on the decedent's estate which is

treatment of a disposition of an interest in

(ATNOL) carryover for Alternative

attributable to the IRD distributed to the

a passive activity.

Minimum Tax (AMT) purposes, reported

beneficiary. You may claim this amount on

as code E, is reported on Form 6251,

line 28 of Schedule A (Form 1040) as a

Boxes 4b and 4c—28% Rate Gain

line 11.

miscellaneous itemized deduction not

and Unrecaptured Section 1250

subject to the 2% floor. For an example on

Gain

how this amount was computed, see

Box 12—Alternative Minimum Tax

Regulations section 1.691(c)-2 and Pub.

Items

A 28% rate gain is reported on line 4 of the

559, Survivors, Executors, and

28% Rate Gain Worksheet—Line 18 in the

The information reported in box 12, codes

Administrators.

Schedule D (Form 1040) instructions.

A through I is used to prepare your Form

6251. Code A, Adjustment for minimum

An unrecaptured section 1250 gain is

Box 11, Code A—Excess

tax purposes, is the total amount reported

reported on line 11 of the Unrecaptured

Deductions on Termination

on Form 6251, line 15. Codes B through F

Section 1250 Gain Worksheet—Line 19 in

represent the portion, if any, of the amount

If this is the final return of the estate or

the Schedule D (Form 1040) instructions.

included in code A.

trust, and there are excess deductions on

termination, you may deduct the

Codes B through F. If you have an

Box 5—Other Portfolio and

beneficiary’s share of the excess

amount in box 12 with code B, C, D, E, or

Nonbusiness Income

deductions on line 23 of Schedule A (Form

F, see the instructions for lines 37, 38, and

1040) as a miscellaneous itemized

The amount reported in this box is your

39 of Form 6251.

deduction subject to the 2% floor.

distributive share of royalties, annuities,

Codes G through I. Include the amount

and other income that isn't subject to the

with any of these codes on the applicable

Excess deductions on termination

passive activity rules. It also includes

line of Form 6251.

occur only during the last tax year of the

income in respect of a decedent (IRD),

trust or decedent’s estate when the total

which isn't included in boxes 1, 2a, 3, 4a,

Code J. Exclusion items. If you pay

deductions (excluding the charitable

6, 7, or 8.

alternative minimum tax in 2016, the

deduction and exemption) are greater

amount in box 12, code J will help you

than the gross income during that tax year.

figure any minimum tax credit for 2017.

Boxes 6 through 8—Ordinary

Only the beneficiary of an estate or trust

See the 2017 Form 8801, Credit for Prior

Business Income, Net Rental Real

that succeeds to its property is allowed to

Year Minimum Tax—Individuals, Estates,

deduct that entity’s excess deductions on

Estate Income, and Other Rental

and Trusts, for more information.

termination. A beneficiary who doesn’t

Income

have enough income in that year to absorb

Box 13—Credits and Credit

The fiduciary will provide you with a

the entire deduction can’t carry the

Recapture

separate schedule showing your

balance over to any succeeding year.

distributive share of income from each

Codes A through Q list all the credits that

trade or business, net rental real estate, or

Box 11, Codes B and C—Unused

may be allocated to you as a beneficiary.

other rental activity.

Capital Loss Carryover

Generally, you must file the source

Any losses reported in boxes 6 through

Upon termination of the trust or

credit form along with Form 3800, General

8 may be subject to the passive loss

decedent’s estate, the beneficiary

Business Credit, to claim the general

limitations of section 469, which generally

succeeding to the property is allowed to

business credits listed on Schedule K-1

limits deducting passive losses only from

deduct any unused capital loss carryover

(Form 1041), codes C through Q.

passive activity income. The rules for

under section 1212.

However, if your only source for the

applying these limitations to beneficiaries

credits listed on Form 3800, Part III is from

haven't yet been issued. For more details,

A short-term capital loss carryover,

pass-through entities, you may not be

see Pub. 925, Passive Activity and At-Risk

reported as code B, is reported on

required to complete the source credit

Rules.

Schedule D (Form 1040), line 5.

form. Instead, you may be able to report

the credit directly on Form 3800. See

A long-term capital loss carryover,

below for the instructions for specific

reported as code C, is reported, as

credits.

appropriate, on Schedule D (Form 1040),

2016 Instructions for Schedule K-1 (Form 1041)

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Instructions For Schedule K-1 (Form 1041) - 2016 Page 2

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