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Allocation of Adjustments

Column D

[M.S. 290.01, subd. 19b(10)]

able net income to the total distributable net

Th e benefi ciary(s) of a trust or an estate must

income (the amount on Form 1041, Sched-

To obtain the proper percentage, divide each

fi le an individual income tax return to report

ule B, line 7.) Divide each share by the total

fi gure from column C on lines 44 and 45 by

their portion of the income distributed. A resi-

distributable net income to determine the

the total of column C on line 46. Enter this

dent benefi ciary must report all income from

percentage.

percentage in column D for to correspond

the trust or estate. A nonresident benefi ciary

with each benefi ciary and the fi duciary. Th e

Where the adjustment is an addition, that

who receives $10,150 or more of Minnesota

total of column D must equal 100%.

portion of the adjustment allo cated to each

gross income must report income assignable to

benefi ciary and to the fi duciary must be

Column E

Minnesota.

shown as an addi tion.

To obtain the proper share for each benefi -

Th e purpose of this section is to allocate any

Where the adjustment is a subtraction, that

ciary and the fi duciary, multiply the adjust-

adjustments noted on lines 25-33 and 35–42

part of the adjustment allocated to each ben-

ment on line 46, column E, under addi-

between the benefi ciary(s) and fi duciary.

efi ciary and to the fi duciary must be shown

tions and subtractions by the percentage in

If all the income is retained by the trust

as a subtraction.

column D. Enter the result for each benefi -

or estate, then any adjustment is allocated

ciary and the fi duciary in column E, under

entirely to the fi duciary. If all of the income

Column C

additions or subtractions.

is distributed, then any adjustment is passed

Enter the federal distributable net income as-

through to the benefi ciary(s) in proportion

Complete a Schedule KF for each benefi -

signed to each benefi ciary and the fi duciary

to their share of distributable net income.

ciary who is assigned adjustments. (See the

as deter mined for federal purposes. Add

If part of the income is retained and part

instructions below.)

the amounts and enter the total on line 46,

distributed, then part of the adjustment is

column C.

Any adjustment allocated to the fi duciary on

allocated to the fi duciary and part to the

line 45, column E, must be reported on Form

benefi ciary(s).

M2 as an addition on line 4 or a subtraction

Th e share of adjustments in column E is the

on line 6.

same percentage share as the fi duciary’s and

If there is no federal distributable net in-

each benefi ciary’s share of federal distribut-

come, the adjustment, if any, is dis tributed

according to the terms of the will or trust

instrument or according to Minnesota law.

Completing Schedule KF

Line Instructions

KF, Line 19

Complete and provide Schedule

If you are a qualifi ed business operating in a

KF to each nonresident benefi ciary

Calculate lines 1–22 the same for all resident

JOBZ zone, enter the benefi ciary’s distribu-

and nonresident benefi ciaries. Calculate lines

with Minnesota source income and

tive share, if any, of the JOBZ jobs credit that

23–29 for nonresident benefi ciaries only.

any Minnesota benefi ciary who has

is passed through to the benefi ciary.

Round amounts to the nearest whole dollar.

adjustments to income.

KF, Line 20

KF, Lines 1–17

If you are a partner of a partnership or a

Purpose

If all or part of the fi duciary’s income is

shareholder of an S corporation that con-

distributed, then any adjustment shown on

ducted qualifi ed research and development

Th e purpose of Schedule KF is to provide

lines 25-33 and 35-42 of Form M2 is passed

in Minnesota, from line 14 of Schedule KPI

benefi ciaries with the information they

through to the benefi ciary(s) in the pro-

and line 14 of Schedule KS, enter the ben-

need to fi le Form M1, Minnesota Individual

portion to their share of distributable net

efi ciary’s distributive share of the credit that

Income Tax Return. Th e schedule shows

income.

is passed through to the benefi ciary. Attach

each benefi ciary their specifi c share of the

the appropriate schedule when you fi le your

fi duciary’s income, credits and modifi ca-

From line 44 of Form M2, enter the adjust-

return.

tions.

ments to income allocated to each benefi -

ciary.

KF, Line 21

A benefi ciary who is a Minnesota resident

must report all income from the trust or es-

If you are a partner of a partnership or a

KF, Line 18

tate. A nonresident benefi ciary must report

shareholder of an S corporation that hired

If you received a Minnesota income tax

income which is assignable to Minnesota.

a qualifi ed student for internship, from line

withholding credit, enter the benefi ciary’s

12 of Schedule KPI and the Schedule KS,

Be sure to include copies of all Schedules

distributive share of any credit that is passed

enter the benefi ciary’s distributive share

KF and federal Schedules K-1 when you fi le

through to the benefi ciary. Do not include

your Form M2.

amounts reported on line 15b of Form M2.

Continued

2014 Minnesota Income Tax For Estates And Trusts (Fiduciary) Form M2 Instructions - Department Of Revenue Page 9

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