Instructions For Form 541 - California Fiduciary Income Tax Return

2013 Instructions for Form 541

California Fiduciary Income Tax Return

References in these instructions are to the Internal Revenue Code (IRC) as of January 1, 2009, and to the California Revenue and Taxation Code (R&TC).

What’s New

General Information

statute of limitations is four years from the

due date of the return or from the date filed,

whichever, is later. However, the statute is

e-filing – The Franchise Tax Board (FTB) offers

A Important Information

extended in situations in which an individual or a

e-filing for fiduciaries filing Form 541, California

business entity is under examination by the IRS.

Fiduciary Income Tax Return, for taxable years

In general, for taxable years beginning on or after

beginning on or after January 1, 2013. Check

January 1, 2010, California law conforms to the

The FTB recommends keeping copies of returns

with the software provider to see if they support

Internal Revenue Code (IRC) as of January 1,

and records that verify income, deductions,

fiduciary (estate or trust) e-filing.

2009. However, there are continuing differences

adjustments, or credits reported, for at least

between California and federal law. When

the minimum time required under the statute of

New Voluntary Contributions – You may

California conforms to federal tax law changes,

limitations. However, some records should be

contribute to the following new funds:

we do not always adopt all of the changes

kept much longer.

• Protect Our Coast and Oceans Fund

made at the federal level. For more information,

Fiduciaries may be required to produce

• Keep Arts in Schools Fund

go to ftb.ca.gov and search for conformity.

• American Red Cross, California Chapters Fund

documentation substantiating the claimed basis

Additional information can be found in FTB

of any assets sold, exchanged, transferred, or

Net Operating Loss (NOL) Carryback – NOLs

Pub. 1001, Supplemental Guidelines to California

distributed regardless of the original acquisition

incurred in taxable years beginning on or after

Adjustments, the instructions for California

date.

January 1, 2013, shall be carried back to each of

Schedule CA (540 or 540NR), and the Business

Tax Shelter

the preceding two taxable years.

Entity tax booklets.

If the fiduciary was involved in a reportable

The allowable NOL carryback percentage varies.

For updates regarding federal acts go to ftb.

transaction, including a listed transaction, the

For an NOL incurred in a taxable year beginning

ca.gov and search for conformity.

fiduciary may have a disclosure requirement.

on or after:

The instructions provided with California tax

Attach the federal Form 8886, Reportable

• January 1, 2013, and before January 1, 2014,

forms are a summary of California tax law and are

Transaction Disclosure Statement, to the back

the carryback amount shall not exceed 50% of

only intended to aid taxpayers in preparing their

of the California return along with any other

the NOL.

state income tax returns. We include information

supporting schedules. If this is the first time

• January 1, 2014, and before January 1, 2015,

that is most useful to the greatest number of

the reportable transaction is disclosed on the

the carryback amount shall not exceed 75% of

taxpayers in the limited space available. It is

tax return, send a duplicate copy of the federal

the NOL.

not possible to include all requirements of the

Form 8886 to the address below. The FTB may

• January 1, 2015, the carryback amount shall

California Revenue and Taxation Code (R&TC) in

impose penalties if the trust fails to file federal

be 100% of the NOL.

the tax booklets. Taxpayers should not consider

Form 8886, or any other required information.

the tax booklets as authoritative law.

Individuals, Estates, and Trusts compute the

TAX SHELTER FILING

NOL carryback in Part IV of form FTB 3805V, Net

Backup Withholding – With certain limited

ATSU 398 MS F385

Operating Loss (NOL) Computation and NOL and

exceptions, payers that are required to withhold

FRANCHISE TAX BOARD

Disaster Loss Limitations — Individuals, Estates,

and remit backup withholding to the Internal

PO BOX 1673

and Trusts. For more information, get form

Revenue Service (IRS) are also required to

SACRAMENTO CA 95812-9900

FTB 3805V.

withhold and remit to the FTB on income sourced

For more information, go to ftb.ca.gov and

to California. If the estate or trust (payee) has

Election to Waive Carryback – Any taxpayer

search for tax shelter.

backup withholding, the estate or trust (payee)

entitled to a carryback period pursuant to Internal

Claim of Right

must contact the FTB to provide a valid taxpayer

Revenue Code (IRC) Section 172(b)(3) may elect

If the fiduciary had to repay an amount that was

identification number, before filing the tax return.

to relinquish/waive the entire carryback period

included in income in an earlier year, under a

Failure to provide a valid taxpayer identification

with respect to an NOL incurred in the 2013

claim of right, the fiduciary may be able to deduct

number may result in a denial of the backup

taxable year. By making the election, the taxpayer

the amount repaid from its income for the year in

withholding credit. For more information, go to

is electing to carry an NOL forward instead of

which it was repaid. Or, if the amount the fiduciary

ftb.ca.gov and search for backup withholding.

carrying it back in the previous two years.

repaid is more than $3,000, the fiduciary may be

To make the election, check the box in Part I

Nonresident Group Tax Returns

able to take a credit against its tax for the year in

under Section C – Election to Waive Carryback,

A corporation may file a group nonresident tax

which it was repaid. For more information, see the

of form FTB 3805V, and attach form FTB 3805V

return on behalf of certain electing nonresident

Repayments section of federal Publication 525,

to the tax return. For more information, get form

individuals who receive wages, salaries, fees,

Taxable and Nontaxable Income.

FTB 3805V.

or other compensation from that corporation

Punitive Damage Awards

for director services performed in California,

Elimination of Tax Clearance Requirement –

For court actions filed after August 16, 2004,

including attendance of board of directors’

Effective on or after January 1, 2014, California

and the final determination rendered by

meetings in California. Get FTB Pub. 1067,

no longer requires any estate to obtain a Tax

June 30, 2006, the tax treatment of punitive

Guidelines for Filing a Group Form 540NR, for

Clearance Certificate.

damages differs between federal and state. For

more information.

Single-Sales Factor Formula – For taxable years

California purposes, the amount of punitive

Access by Internet

beginning on or after January 1, 2013, Revenue

damages paid to the director of the Department

You can download, view, and print California tax

and Taxation Code (R&TC) Section 25128.7

of Finance shall be excluded from income and the

forms and publications at ftb.ca.gov.

requires all business income of an apportioning

attorney fees associated with the amount paid are

trade or business, other than an apportioning

not deductible.

California Tax Service Center

trade or business under R&TC Section 25128(b),

For additional business tax information, go to

B Purpose

to apportion its business income to California

taxes.ca.gov. This website is sponsored by the

using the single sales factor formula. For more

Board of Equalization (BOE), the Employment

Use Form 541, California Fiduciary Income Tax

information, get Schedule R, Apportionment and

Development Department (EDD), the FTB, and

Return, if any of the following apply to report:

Allocation of Income, or go to ftb.ca.gov and

the IRS.

search for law changes.

• Income received by an estate or trust

State Agencies Websites

• Income that is accumulated or currently

Market Assignment – For taxable years beginning

Access other California state agency websites

distributed to the beneficiaries

on or after January 1, 2013, R&TC Section 25136

at ca.gov.

• An applicable tax liability of the estate or trust

requires all taxpayers to assign sales, other than

• File an amended tax return for the estate or

Providing California and Federal Returns

sales of tangible personal property, using market

trust

The FTB may request a copy of California or

assignment. For more information, get Schedule R

federal returns that are subject to or related to

or go to ftb.ca.gov and search for law changes.

a federal examination. Generally, the California

Page 2 Form 541 Booklet 2013

Instructions For Form 541 - California Fiduciary Income Tax Return - 2013

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