Instructions For Form 5227 (Page 4 of 12) in pdf

Schedule I of Form 1041 to determine whether the trust

corresponding lines on Form 5227 to report the interest,

is subject to any alternative minimum tax.

dividends, capital gains, etc., from the flow-through entity.

See the instructions for Part III on page 5 to determine

Line 5—Farm Income or (Loss)

the amount of the current distribution to report to each

If the trust operated a farm, use Schedule F (Form 1040),

beneficiary on Form 1041, Schedule K-1.

Profit or Loss From Farming, to report farm income and

expenses. Enter the net profit or loss from Schedule F on

Part I—Ordinary Income

line 5.

Line 6—Ordinary Gain or (Loss)

Line 1—Interest Income

Report all taxable interest income that was received by

Enter from Form 4797, Sales of Business Property, the

gain or loss from the sale or exchange of property other

the trust. Examples of taxable interest include interest

than capital assets and also from involuntary conversions

from:

•

(other than casualty or theft). For more information, see

Accounts (including certificates of deposit and money

market accounts) with banks, credit unions, and thrifts;

the Instructions for Form 4797.

•

Notes, loans, and mortgages;

•

Deductions

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

•

Deductions are to be allocated as follows.

U.S. savings bonds;

•

Original issue discount; and

1. Allowable deductions directly attributable to one or

•

Income received as a regular interest holder of a Real

more classes of income items (i.e., interest, dividends, or

Estate Mortgage Investment Conduit (REMIC).

rents) or corpus are allocated to such income classes or

corpus.

For taxable bonds acquired after December 31, 1987,

2. Allowable deductions not allocated under 1 above

amortizable bond premium is treated as an offset to the

are allocated on the basis of gross income after directly

interest income instead of as a separate interest

attributable deductions, to the extent of such income.

deduction. See Pub. 550, Investment Income and

3. Deductions not allocated under either 1 or 2 above

Expenses.

may be allocated in any manner.

Line 2a—Qualified Dividends

No deduction is ever allowed for:

Report on this line all qualified dividends received by the

•

The personal exemption under section 642(b),

trust. In general, a qualified dividend is a dividend

•

Charitable contributions under section 642(c),

•

received during the tax year from (a) a domestic

Net operating losses under section 642(d),

•

corporation or (b) a qualified foreign corporation. A

Income distribution deductions under section 661,

qualified dividend does not include any dividend from a

•

Capital loss carryforwards under section 1212,

corporation if the corporation is (or was) exempt from

•

Federal income taxes, or

•

income tax under section 501 or 521 for the corporation’s

Federal excise taxes under Chapter 42.

current or preceding tax year during which the distribution

Any expense that is not deductible in determining

was made.

taxable income and not allocated to nontaxable income

Generally, these dividends are reported to the trust in

must be allocated to corpus. For a discussion on the

box 1b of Form(s) 1099-DIV.

allocation of deductions to tax-exempt income, see the

Instructions for Form 1041.

Qualified dividends are treated as a separate class of

ordinary income for purposes of ordering distributions.

All federal income taxes for which the split-interest

See Ordering Rules on page 6 for more information on

trust is liable because it has unrelated business taxable

distributions. See Pub. 550 for additional information on

income, and all taxes imposed by Chapter 42 of the

qualified dividends, including holding period

Internal Revenue Code (relating to private foundations),

requirements.

are allocated to corpus.

Line 2b—Ordinary Dividends

Line 17—Total Long-Term Capital Gain or

(Loss) for Tax Year

Enter on line 2b the total of all ordinary dividends,

including the qualified dividends reported on line 2a.

The total of long-term capital gains or losses from all

classes (described below) is entered on line 17a. The

Line 3—Business Income or (Loss)

following is a summary of the classes:

•

If the trust operated a business, report the income and

28% long-term capital gain class. This class consists

expenses on Schedule C, Profit or Loss From Business

of collectibles gains and losses and the taxable gain (but

(or Schedule C-EZ, Net Profit From Business) of Form

not more than the section 1202 exclusion) on the sale or

1040. See the instructions for F. Unrelated Business

exchange of qualified small business stock. Enter these

Taxable Income on page 3. Enter the net profit or loss

gains or losses on line 17b.

•

from Schedule C or C-EZ on line 3.

Section 1250 long-term capital gain class. This

class consists of unrecaptured section 1250 gain

Line 4—Rents, Royalties, Partnerships,

(generally, the part of real estate capital gain attributable

Other Estates and Trusts, etc.

to depreciation) on sales, exchanges, etc., of assets held

Use Schedule E (Form 1040), Supplemental Income and

more than one year. Enter this gain on line 17c.

Loss, to report the trust’s income or losses from rents,

Undistributed, unrecaptured section 1250 gain on sales,

royalties, partnerships, S corporations, other estates and

exchanges, etc., after May 6, 1997, is included in this

trusts, and REMICs. Enter the net profit or loss from

class.

•

Schedule E on line 4. See the Instructions for Schedule E

All other long-term capital gain class.This class

(Form 1040) for reporting requirements. If the trust

consists of all other gains or losses from sales,

received a Schedule K-1 from a partnership, S

exchanges, and conversions (including installment

corporation, or other flow-through entity, use the

payments received) of assets held more than 12 months.

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Instructions For Form 5227 Page 4

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