Instructions For Form 5227 - 2016 (Page 13 of 20) in pdf

Instructions for Part I-B of Schedule A

Substitute Forms

You don't need prior IRS approval for a substitute

Column (a). Enter the amount from the prior year Form

Schedule K-1 if it is an exact copy of the IRS statement. The

5227, Schedule A, Part I-B, line 4(d).

boxes must use the same numbers and titles and must be in

Column (b). Enter the CRT’s current year NII.

the same order and format as on the comparable IRS

Schedule K-1. The substitute schedule must include the

Using Form 8960 as a worksheet, include the

OMB number. You must request IRS approval to use other

amounts of income, gain, loss, and deductions

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substitute Schedules K-1. To request approval, write to:

reported on lines 1-12 of Form 8960 to compute NII

(line 12 of Form 8960). Don't file the Form 8960 with the

Internal Revenue Service

Form 5227.

Attention: Substitute Forms Program

SE:W:CAR:MP:P:TP

Column (c). Enter the lesser of (i) the sum of column (a)

5000 Ellin Road, C6–440

and (b), or (ii) the total distributions for the year (reported on

Lanham, MD 20706

line 2a of Part I-A of Schedule A). If the sum of columns (a)

and (b) is zero or less, enter -0- in column (c).

You may be subject to a penalty if you file a

Column (d). Subtract column (c) from the sum of columns

Schedule K-1 that does not conform to the

(a) and (b). This amount will be reported in column (a) of the

specifications in Pub. 1167, General Rules and

2017 Form 5227.

CAUTION

Specifications for Substitute Forms and Schedules.

Effect of the SNIIC Election on Netting and

For updates on the Substitute Forms Program after this

Ordering Rules

publication went to print, go to the product page for Pub.

The SNIIC election will change the netting and ordering rules

1167 at

for ordinary income and capital gains or losses. See Ordering

Rules for Ordinary Income and Additional Rules for Capital

Inclusion of Amounts in Recipients' Income

Gains and Losses, later, for illustrative charts.

If there are two or more recipients, each will be treated as

receiving his or her pro rata share of the various classes of

You may want to read the Part II-A instructions and

income or corpus.

complete all worksheets (as necessary) before you

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make an entry on Part II-A of Schedule A.

Amounts distributed by a charitable remainder annuity

trust or a charitable remainder unitrust have the following

Part II-A. Current Distributions

characteristics in the hands of the recipients:

Schedule (Section 664 trust only)

First, as ordinary income to the extent of ordinary income

for the current year and undistributed ordinary income for

You must give each recipient listed in Part II-A a

prior years of the trust. Ordinary income is computed without

Schedule K-1 (Form 1041) that reflects that recipient's

regard to any net operating loss deductions under section

current distribution. The following rules and worksheets will

172. See the Ordering Rules for Ordinary Income, next.

help you figure the type of income a recipient receives from

Second, as capital gains to the extent of the trust's

the trust's distributions. Also, attach a copy of each

undistributed capital gains. Undistributed capital gains of the

Schedule K-1 to Form 5227. See the Instructions for

trust are determined on a cumulative net basis without regard

Schedule K-1 (Form 1041) for more information.

to any capital loss carrybacks and carryovers. See the

Netting Rules, Ordering Rules for Capital Gains and Losses

Column (b). Recipient's Identifying Number

and Carryover Rules later for capital gains.

As a payer of income, the trust is required under section

Third, as nontaxable income to the extent of the trust's

6109 to request and provide a proper identifying number for

nontaxable income for the current year and undistributed

each recipient of income. Enter the recipient's number on the

nontaxable income for prior years.

respective Schedule K-1. Individuals and business recipients

Fourth, as a distribution of trust corpus. For this purpose,

are responsible for giving you their taxpayer identification

trust corpus means the net FMV of the trust assets less the

numbers upon request. You may use Form W-9, Request for

total undistributed income (but not loss) in each of the above

Taxpayer Identification Number and Certification, to request

categories.

the recipient's identifying number.

Column (j). NII

Penalty

If the CRT has not made a SNIIC election, then enter the total

The trust may incur a penalty under section 6723 if it fails to

amount of NII allocated to each recipient in column (j) that is

provide the taxpayer identification number of each recipient

included in columns (d) through (g) for that recipient.

or income beneficiary identified on Schedule A. The penalty

is $50 for each failure to provide a required taxpayer

If the CRT has made a SNIIC election, then for each

identification number, unless reasonable cause can be

recipient multiply the amount in column (c) of Part I-B by the

established for the failure. If you are unable to provide the

percentage reported in column (c) of line 4 of Part II-A of

taxpayer identification number for any recipient or income

Schedule A, and enter the amount in column (j) for each

beneficiary, explain the circumstances in a signed affidavit

recipient.

and attach it to this return.

For each recipient, enter the difference between the

amount in column (j) and the sum of the amounts in columns

-13-

Instructions for Form 5227

Instructions For Form 5227 - 2016 Page 13

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