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Department of the Treasury
Internal Revenue Service
Instructions for Form 1041-N

(Rev. December 2021)

U.S. Income Tax Return for Electing Alaska Native Settlement Trusts

Section references are to the Internal Revenue Taxable Income the tax year, after adjustment is made
Code unless otherwise noted. for all distributions made by the
In general, an electing ANST's taxable
Future Developments income is figured in the same manner sponsoring ANC during the tax year.
as any other taxable trust (see Internal However, this increase is limited to the
For the latest information about Revenue Code subchapter J). However, fair market value (FMV) of the trust's
developments related to Form 1041-N the electing ANST isn't allowed to take assets as of the date the beneficial
and its instructions, such as legislation an income distribution deduction, interest of the trust first becomes
enacted after they were published, go to though it can claim an exemption disposable.
IRS.gov/Form1041N. deduction, the amount of which If stock in the sponsoring ANC may
depends on the terms of the trust. be disposed of to a person in a manner
General Instructions See the Schedule K instructions for that isn't allowed by section 7(h) of the
Use this revision for tax years beginning information on the beneficiaries' tax ANCSA (if the stock were settlement
after 2017. treatment of distributions received from common stock) and at any time after
the ANST. such disposition of stock is first allowed,
the corporation transfers assets to an
Purpose of Form Income Assignment From a ANST, then items 1, 2, and 3 above will
Under section 646, an Alaska Native
Settlement Trust (ANST) may elect to Native Corporation apply to the ANST in the same manner
as if the ANST allowed dispositions of
apply special income tax treatment to The ANST reports income beneficial interests in the ANST in a
the trust and its beneficiaries. This assignments from an ANC on the manner not allowed by section 7(h) of
one-time election is made by filing Form appropriate income line consistent with the ANCSA.
1041-N in the first tax year of the trust. the type of income assigned to the
Form 1041-N is used to report an ANST. See Part III—Other Information, The surrender of an interest in an
ANST's income, deductions, gains, Question 1, later, for the information ANC or an electing ANST by the
losses, etc., and to figure and pay any required to be attached to the form. shareholder or beneficiary, for a whole
income tax due. Form 1041-N is also or partial redemption or for the whole or
used to report special information Tax partial liquidation of the corporation or
applicable to an ANST's filing An electing ANST pays tax on its trust, will be considered a transfer
requirements. taxable income at the lowest rate allowed by section 7(h) of the ANCSA.
specified for single individuals (10%). If
Definitions the ANST has net capital gain or Information Reporting
An ANST is a settlement trust within the qualified dividends, use the tax
meaning of section 3(t) of the Alaska computation on Part IV of Schedule D, Requirements
Native Claims Settlement Act (ANCSA). which applies a 0% rate on its adjusted Electing ANSTs must complete
net capital gain. Schedule K and file it with Form 1041-N.
An Alaska Native Corporation (ANC) The ANST must also provide a copy of
has the same meaning as the term Disqualifying Acts Schedule K to the sponsoring ANC by
"Native Corporation" has under section If, at any time, a beneficial interest in an the date Form 1041-N is required to be
3(m) of the ANCSA. ANST may be disposed of to a person filed with the IRS. The ANST isn't
A sponsoring ANC means the ANC in a manner that isn't permitted by required to provide information to the
that transfers assets to an electing section 7(h) of the ANCSA (if the beneficiaries on distributions made to
ANST. interest were settlement common them. The sponsoring ANC will provide
stock), then: the beneficiaries with any required
A trustee is a fiduciary of the trust. • If no election has previously been information.
Any reference in these instructions to made, the ANST can't elect special tax
“you” means the trustee of the trust. treatment under section 646 for the trust Who Must File
and its beneficiaries; or The trustee of any electing ANST
Tax Treatment of an • If the election is in effect at that time: having any taxable income, or having
Electing ANST 1. The election won't apply as of the gross income of at least $600 for the tax
Adjusted Gross Income (AGI) first day of the tax year in which a year, must file Form 1041-N for that
prohibited disposition is first allowed; year.
Figure the AGI of an electing ANST by
subtracting from total income (line 5) 2. The section 646 tax treatment
administrative costs (lines 7 through 9) won't apply to the trust for that tax year Making the Election
and the exemption amount (line 11). or in any subsequent tax years; and The trustee of an ANST must
Administrative costs are deductible to 3. The distributable net income of ! make this election by the due
the extent they would not have been the trust will be increased by the current CAUTION date (including extensions) for
incurred if the property were not held by or accumulated earnings and profits of
the ANST. the sponsoring ANC as of the close of

Oct 20, 2021 Cat. No. 38105U

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filing the ANST's tax return for its first  the return. The person required to sign    consent on Form 3115, Application for 
tax year.                                   the return must:                           Change in Accounting Method. For 
                                            • Complete the required preparer           more information, see Pub. 538, 
The trustee makes the election for the      information;                               Accounting Periods and Methods.
ANST by signing Form 1041-N in the          • Sign it in the space provided for the 
signature block on page 1. The return       preparer's signature; and                  Accounting Periods
must be filed by the due date (including    • Give you a copy of the return for your   All electing ANSTs must adopt a 
extensions) for filing the ANST's tax       records, in addition to the copy to be     calendar year.
return for its first tax year. Once the     filed with the IRS.
election is made, it applies to all                                                    Rounding Off to Whole 
subsequent years and can't be revoked.      Paid Preparer Authorization
                                            If the trustee wants to allow the IRS to   Dollars
When To File                                discuss the ANST's tax return with the     You may round off cents to whole 
ANSTs file Form 1041-N by the 15th          paid preparer who signed it, check the     dollars on the ANST's return and 
day of the 4th month following the close    “Yes” box in the signature area of the     schedules. If you do round to whole 
of the tax year. If the due date falls on a return. This authorization applies only to dollars, you must round all amounts. To 
Saturday, Sunday, or legal holiday, file    the individual whose signature appears     round, drop amounts under 50 cents 
on the next business day.                   in the Paid Preparer Use Only section of   and increase amounts from 50 to 99 
                                            the ANST's return. It doesn't apply to the cents to the next dollar. For example, 
Private Delivery Services                   firm, if any, shown in that section.       $1.39 becomes $1 and $2.50
                                                                                       becomes $3.
You can use certain private delivery          If the “Yes” box is checked, the 
services (PDSs) designated by the IRS       trustee is authorizing the IRS to call the If you have to add two or more 
to meet the "timely mailing as timely       paid preparer to answer any questions      amounts to figure the amount to enter 
filing" rule for tax returns. Go to         that may arise during the processing of    on a line, include cents when adding the 
IRS.gov/PDS for the current list of         the ANST's return. The trustee is also     amounts and round off only the total.
designated services.                        authorizing the paid preparer to:
The PDS can tell you how to get             • Give the IRS any information that is     Estimated Tax
written proof of the mailing date.          missing from the ANST's return;            Generally, an ANST must pay estimated 
                                            • Call the IRS for information about the   income tax if it expects to owe at least 
For the IRS mailing address to use if       processing of the ANST's return or the     $1,000 after subtracting withholding and 
you’re using a PDS, go to IRS.gov/          status of its refund or payment(s); and    credits. For details and exceptions, see 
PDSStreetAddresses.                         • Respond to certain IRS notices that      Form 1041-ES, Estimated Income Tax 
         PDSs can't deliver items to P.O.   the trustee has shared with the preparer   for Estates and Trusts.
                                            about math errors, offsets, and return 
CAUTION  Postal Service to mail any item 
!        boxes. You must use the U.S.       preparation. The notices won't be sent 
                                                                                       Interest and Penalties
to an IRS P.O. box address.                 to the preparer.
                                                                                       Interest
                                              The trustee isn't authorizing the paid 
Extension of Time To File                   preparer to receive any refund, enter      Interest is charged on taxes not paid by 
Use Form 7004, Application for              into any agreement (including those        the due date, even if an extension of 
Automatic Extension of Time To File         regarding additional tax liability), or    time to file is granted. Interest is also 
Certain Business Income Tax,                otherwise represent the ANST before        charged on the failure-to-file penalty, the 
Information, and Other Returns, to          the IRS. If the trustee wants to expand    accuracy-related penalty, and the fraud 
request an automatic extension of time      the paid preparer's authorization, see     penalty. The interest charge is figured at 
to file.                                    Pub. 947, Practice Before the IRS and      a rate determined under section 6621.
                                            Power of Attorney.                         Late Filing of Return
An extension of time to file doesn't 
extend the time to pay the tax.               The authorization can't be revoked.      The law provides a penalty of 5% of the 
                                            However, the authorization will            tax due for each month, or part of a 
Where To File                               automatically end no later than the due    month, that the return isn’t filed up to a 
File Form 1041-N at the following           date (regardless of extensions) for filing maximum of 25% of the tax due. If the 
address.                                    the ANST's next tax return.                return is more than 60 days late, the 
                                                                                       minimum penalty is the smaller of $435 
Department of the Treasury                  Accounting Methods                         or the tax due. The penalty won’t be 
Internal Revenue Service                    Figure taxable income using the method     imposed if you can show that the failure 
Ogden, UT 84201-0027                        of accounting regularly used in keeping    to file on time is due to reasonable 
                                            the ANST's books and records.              cause. If you receive a notice about 
Who Must Sign                               Generally, permissible methods include     penalty and interest after you file this 
The trustee or an authorized                the cash method, the accrual method,       return, send us an explanation, and we 
representative must sign Form 1041-N.       or any other method authorized by the      will determine if you meet 
                                            Internal Revenue Code. In all cases, the   reasonable-cause criteria. Don’t attach 
                                            method used must clearly reflect           an explanation when you file Form 
Paid Preparer                               income.                                    1041-N.
Generally, anyone who is paid to 
prepare a tax return must sign the return     Generally, the ANST may change its       For more information about penalties 
and provide the information requested       accounting method (overall method or       for late filing, see Late Filing of Return in 
in the Paid Preparer Use Only area of       for any material item) only by getting     the Instructions for Form 1041.

                                                               -2-                   Instructions for Form 1041-N (Rev. 12-2021)

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Late Payment of Tax Line 3b—Address preferred stock held for less than 91
Section 6651 also provides for penalties Include the suite, room, or other unit days during the 181-day period that
for late payment. Generally, the penalty number after the street address. If the began 90 days before the ex-dividend
for not paying the tax when due is / of 1 2 Post Office doesn't deliver mail to the date. Preferred dividends attributable to
1% of the unpaid amount for each street address and you have a P.O. box, periods totaling less than 367 days are
month or part of a month it remains show the box number instead of the subject to the 61-day holding period rule
unpaid. The maximum penalty is 25% of street address. above.
• Dividends on any share of stock to
the unpaid amount. The penalty is If you change your address after filing the extent that the ANST is under an
imposed on the net amount due. Any Form 1041-N, use Form 8822-B, obligation (including a short sale) to
penalty is in addition to interest charges Change of Address or Responsible make related payments with respect to
on late payments. Party—Business, to notify the IRS. positions in substantially similar or
If you include interest or either If a different address from the prior related property.
! of these penalties with your year was entered and Form 8822-B • Payments in lieu of dividends, but
CAUTION payment, identify and enter only if you know or have reason to know
wasn't filed, check the box on line 6 for
these amounts in the bottom margin of “Change in fiduciary's address.” that the payments aren't qualified
Form 1041-N. Don’t include the interest dividends.
or penalty amount in the balance of tax Line 6
due on line 18. Be sure to check all the boxes that Line 3—Capital Gain or (Loss)
apply. Also, see the line 3a and line 3b Enter the gain from Schedule D, line 11,
Underpaid Estimated Tax instructions above for information or the loss from Schedule D,
If the trustee underpaid estimated tax, regarding a change in the fiduciary's line 12.
use Form 2210, Underpayment of name and for information on changes to
Estimated Tax by Individuals, Estates, the fiduciary's address. Note. Report capital gain distributions
and Trusts, to figure any penalty due. on Schedule D (Form 1041-N), line 7.
Enter the amount of the penalty in the Part II—Tax Computation
bottom margin of Form 1041-N. Don’t
include it in the balance of tax due on Income Line 4—Other Income
line 18. Line 2a—Total Ordinary Dividends List the type and amount of income not
included on lines 1a through 3. List the
Other Penalties Report the total of all ordinary dividends types and amounts on an attached
Other penalties can be imposed for received during the tax year. schedule if the ANST has more than
negligence, substantial understatement one item of other income.
of tax, and fraud. See Pub. 17, Your Line 2b—Qualified Dividends
Federal Income Tax, for details on these Enter the ANST's total qualified Include on line 4 taxable
penalties. dividends on line 2b and use Part IV of contributions received from an ANC.
Schedule D to figure the ANST's tax. See also Part III—Other Information,
Specific Instructions Qualified dividends are eligible for a Question 1, later, for additional
lower tax rate than other ordinary information that may need to be
Enter the year (or period) for which you income. Generally, these dividends are attached to the return. Include on this
are filing for the electing ANST. shown in box 1b of Form(s) 1099-DIV, line income recognized on the early
Dividends and Distributions. See Pub. disposition of noncash property for
Part I—General 550, Investment Income and Expenses, which the ANST previously made a
Information for the definition of qualified dividends if section 247(g) election. See also Part
you received dividends not reported on III—Other Information, Question 1, later,
Line 1—Name of Trust Form 1099-DIV. for additional information that may need
to be attached to the return. Include on
Enter the exact name that was used to Exceptions. Some dividends may be this line the ordinary income recognized
apply for the employer identification reported as qualified dividends in on the disposition of property for which
number (EIN) for the trust to file Form box 1b of Form 1099-DIV but aren't the ANST made a section 247(g)
1041-N. qualified dividends. These include the election. Report on Schedule D (Form
Line 3a—Name and Title of following. 1041-N) the capital gain recognized on
Trustee • Dividends received on any share of such disposition. See Section 247(g)
stock that the ANST held for less than Election Property in the Instructions for
Enter the name and title (if any) of the 61 days during the 121-day period that Schedule D (Form 1041-N) for
trustee. If a fiduciary relationship was began 60 days before the ex-dividend additional information.
created or terminated, file Form 56, date. The ex-dividend date is the first
Notice Concerning Fiduciary date following the declaration of a If the ANST is reporting global
Relationship. dividend on which the purchaser of a intangible low-taxed income (GILTI),
If a fiduciary relationship wasn't stock isn't entitled to receive the next include it on the attached statement.
created or terminated but the fiduciary dividend payment. When counting the Complete and attach Form 8992.
had a change in name or another number of days the ANST held the
fiduciary's name was entered, check the stock, include the day you disposed of
“Change in fiduciary's name” box on the stock but not the day you acquired it.
line 6. • Dividends attributable to periods
totaling more than 366 days that the
ANST received on any share of

Instructions for Form 1041-N (Rev. 12-2021) -3-

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Deductions                                  taxable income reduced by NOL               Instructions for Form 1041 for details on 
                                            carryovers or carrybacks is reduced, the    the credits that may be claimed.
Allocation of Deductions for                NOL deduction on line 4 is reduced by 
Tax-Exempt Income                           the reduction amount. See section           Line 17—Reserved for Future Use
Generally, no deduction is allowed for      965(n) and the regulations thereunder 
any expense that is allocable to            for more information.                       Don’t enter any information on line 17.
tax-exempt income, such as interest on 
state or local bonds.                       In determining whether an expense is        Line 18—Total Tax
                                            deductible it must be determined            If the ANST owes any additional taxes 
Exceptions. State income taxes and          whether the expense would be                (for example, recapture taxes), include 
business expenses that are allocable to     "commonly or customarily" incurred by a     these taxes on line 18. To the left of the 
tax-exempt interest are deductible.         hypothetical individual owning the same     entry space, enter the type and amount 
Expenses that are directly allocable        property. A cost incurred by an ANST is     of the tax. Also attach to Form 1041-N 
to tax-exempt income are allocable only     an allowable deduction to the extent that   any forms required to figure these taxes. 
to tax-exempt income. A reasonable          it is excluded from the definition of       See the Instructions for Form 1041 for 
proportion of expenses indirectly           miscellaneous itemized deductions           more details on additional taxes that 
allocable to both tax-exempt income         under section 67(b) and commonly or         may apply.
and other income must be allocated to       customarily would not be incurred by a 
each class of income.                       hypothetical individual holding the same      If the ANST shows more than one 
                                            property.                                   type of additional tax on this line, attach 
Limitations on Deductions                                                               a schedule showing the type and 
                                            Include on line 9 the deduction for 
Generally, the amount an ANST has                                                       amount of each tax, and include the 
                                            qualified business income. For 
"at-risk" limits the loss it can deduct in                                              total of all additional taxes on this line.
                                            information on how to figure the trust's 
any tax year. Also, section 469 and its 
                                            deduction for qualified business income, 
regulations generally limit losses from                                                   Report on this line of an amended 
                                            see Form 8995, Qualified Business 
passive activities to the amount of                                                     return the additional 10% tax for the 
                                            Income Deduction Simplified 
income derived from all passive                                                         year in which the ANST received a 
                                            Computation, and Form 8995-A, 
activities. Similarly, credits from passive                                             contribution of noncash property from 
                                            Qualified Business Income Deduction.
activities are generally limited to the tax                                             an ANC, elected to defer the recognition 
attributable to such activities.                                                        of income under section 247(g), but 
                                            Line 10—Reserved for Future Use             disposed of the property within the first 
                                                                                        tax year subsequent to the tax year the 
For details on these and other              Don’t enter any information on line 10.
limitations on deductions, see                                                          ANST received the property. The 
Deductions in the Instructions for Form                                                 increase in tax due to the inclusion of 
                                            Line 11—Exemption
1041.                                                                                   the deferred income, which is the base 
                                            A trust whose governing instrument          amount for the computation of the 
Miscellaneous itemized deductions           requires all income to be distributed       additional 10% tax shown on this line, 
subject to the 2% floor will not be         currently is allowed a $300 exemption,      should be included on line 14. If the 
allowed for tax years 2018 through          even if it distributed amounts other than   amended return also shows changes to 
2025.                                       income during the tax year. All other       income, deductions, or credits unrelated 
                                            trusts are allowed a $100 exemption.        to the inclusion of the deferred income, 
                                                                                        attach a schedule showing the 
Line 9—Other Deductions                     Tax and Payments                            computation of the additional tax due 
Attach a schedule listing by type and       Line 14—Tax                                 only to the inclusion of the deferred 
amount all allowable deductions that                                                    income. See also Part III—Other 
aren't deductible elsewhere on the form.    If the ANST doesn't have a net capital      Information, Question 1, later, for the 
No deduction is allowed for distributions   gain or qualified dividends and has an      statement to be attached to the 
to beneficiaries.                           amount greater than zero on line 13,        amended return.
                                            check the first box on line 14, multiply 
An ANST may elect under section             the amount on line 13 by 10% (0.10), 
965(n) to determine the amount of the       and enter the result on line 14.            Line 19—Current Year Net 965 Tax 
                                                                                        Liability Paid
net operating loss (NOL) for a tax year     Schedule D. If the ANST had a net 
determined under section 172 and the        capital gain (or qualified dividends) and   If the ANST made a payment with 
amount of taxable income to be reduced      any taxable income, complete Part IV of     respect to a current year net 965 tax 
by NOL carryovers or carrybacks to          Schedule D (Form 1041-N), enter the         liability resulting from an S-corporation 
such tax year without regard to certain     tax (or -0-, if applicable) from line 28 of triggering event, enter on line 19 the 
amounts under section 172. The              Schedule D on line 14, and check the        amount of the payment reported on 
amount not taken into consideration (the    “Schedule D” box.                           Form 965-A, Part II, column (k), for the 
reduction amount) is generally equal to                                                 current year.
the amount of the section 965(a) 
inclusion (net of the section 965(c)        Line 15—Credits
deduction). If, as a result of an election  Specify the type of credit being claimed    Line 20—Payments
under section 965(n), the amount of the     or form number and attach any required      Include on line 20 any:
NOL for the tax year is adjusted, the       credit forms. If you are claiming more      • Estimated tax payments made for the 
reduction amount is included in other       than one type of credit, attach a           tax year;
income on line 4. If, as a result of an     schedule listing the type and amount of     • Tax paid with a request for an 
election under section 965(n), the          each credit claimed. See the                extension of time to file;

                                                        -4-                          Instructions for Form 1041-N (Rev. 12-2021)

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• Federal income tax withheld (for the election. For each property for which or other financial account in a foreign
example, backup withholding); the ANST both revokes the election and country.
• Payment made in the current year does not recognize additional income,
with respect to a net 965 tax liability; attach a statement that identifies such Exception. Check “No” if either of the
and property and the reason for not following applies to the ANST.
• Credit for tax paid on undistributed recognizing additional income. • The combined value of the accounts
capital gains. Attach Copy B of Form was $10,000 or less during the whole
Early disposition of property for
2439, Notice to Shareholder of year.
which the ANST made a section
Undistributed Long-Term Capital Gains. • The accounts were with a U.S.
247(g) election. An early disposition of military banking facility operated by a
property for which the ANST made a U.S. financial institution.
Line 21—Tax Due section 247(g) election is a disposition
You must pay the tax in full when the that occurs during the first tax year Refer to FinCEN Form 114, Report of
return is filed to avoid interest charges subsequent to the tax year in which Foreign Bank and Financial Accounts
and possible penalties. Make the check such property was contributed to the (FBAR), to see if the ANST is
or money order payable to “United ANST. Attach a copy of the statement considered to have an interest in or
States Treasury.” Write the EIN, the tax attached to the return on which the signature or other authority over a bank,
year, and “Form 1041-N” on the ANST made the election. Clearly securities, or other financial account in a
payment. Enclose, but don't attach, the identify on the statement the noncash foreign country.
payment with Form 1041-N. property the ANST sold or exchanged If you checked “Yes” for Question 3,
during the tax year. For each early electronically file FinCEN Form 114 with
Part III—Other Information disposition of noncash property, include the Department of the Treasury using
on the appropriate line of the amended FinCEN's BSA E-Filing System.
Question 1 return (and attach any required Because FinCEN Form 114 isn't a tax
If you answer “Yes” to this question, supporting schedules) the additional form, don't file it with Form 1041-N.
attach the following information, as income the ANST recognized. For each
necessary. property sold or exchanged for which Go to www.FINCEN.gov for more
the ANST does not recognize additional information.
Assignment of income under section income, attach a statement that If you are required to file
139G. Attach a copy of the written identifies such property and the reason ! FinCEN Form 114 but don't, you
assignment received from the ANC. See for not recognizing additional income. CAUTION may have to pay a penalty of up
Income Assignment From a Native See also the instructions for line 18 for to $10,000 (or more in some cases).
Corporation, earlier, for how to report how to report the additional tax due on
the assigned income. the sale or exchange of the asset. Question 4
Property for which the ANC made an For tax years beginning after December
election under section 247(e). Attach Question 2
the statement required under section The ANST may be required to file Form 31, 2015, a domestic trust, including an
6039H(e) received from the ANC. If the 3520, Annual Return To Report ANST, that is formed or availed of to
ANST elects under section 247(g) to Transactions With Foreign Trusts and hold specified foreign financial assets
defer recognition of income related to Receipt of Certain Foreign Gifts, if any ("a specified domestic entity") must file
any noncash property received from the of the following apply. Form 8938 with its Form 1041-N for the
ANC, clearly identify on the statement • It directly or indirectly transferred tax year. Form 8938 must be filed each
for which noncash property the ANST is property or money to a foreign trust. For year the value of the trust's specified
making the election and describe the this purpose, any U.S. person who foreign financial assets equals or
property (if the statement from the ANC created a foreign trust is considered a exceeds the reporting threshold. For
does not describe it). Include in other transferor. more information on domestic trusts that
income (line 4) the amount of income • It is treated as the owner of any part are specified domestic entities and the
otherwise required to be recognized by of the assets of a foreign trust under the types of foreign financial assets that
the ANST. grantor trust rules. must be reported, see the Instructions
• It received a distribution from a for Form 8938, generally, and in
All other property. Attach a foreign trust. particular, Who Must File, Specified
description of the property, the date the Domestic Entity, Reporting Thresholds,
ANST received the property, and the Note. An owner of a foreign trust must Specified Foreign Financial Assets,
FMV of the property on that date. ensure that the trust files Form 3520-A, Interests in Specified Foreign Financial
Revocation of prior section 247(g) Annual Information Return of Foreign Assets, Assets Not Required To Be
election by the ANST. Attach a copy Trust With a U.S. Owner. Reported, and Exceptions to Reporting.

of the statement attached to the return Question 3 An ANST required to file Form 8938
on which the ANST made the election.
Check the “Yes” box and enter the with its Form 1041-N for the tax year
Clearly identify on the statement the
name of the foreign country if either (1) should check "Yes" to Question 4 of
noncash property for which the ANST is
or (2) below applies. Part III of Form 1041-N.
revoking the prior election. For noncash
property for which the ANST is revoking 1. The ANST owns more than 50% Question 5
the prior election, include on the of the stock in any corporation that owns
appropriate line of the amended return one or more foreign bank accounts. To make the section 643(e)(3) election
to recognize gain on property distributed
(and attach any required supporting 2. At any time during the year, the in kind, check the box and complete
schedules) the additional income the ANST had an interest in or signature or Schedule D. For more information, see
ANST recognized as a result of revoking other authority over a bank, securities, Section 643(e)(3) Election, later.

Instructions for Form 1041-N (Rev. 12-2021) -5-

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Use Form 8992, U.S. Shareholder You may find additional helpful
Schedule D—Capital Calculation of Global Intangible information in Pub. 544, Sales and
Gains and Losses Low-Taxed Income (GILTI), to report the Other Dispositions of Assets, and Pub.
ANST’s GILTI. 551, Basis of Assets.
General Instructions
Use Form 8995, Qualified Business
Purpose of Schedule Section 247(g) Election Property
Income Deduction Simplified
Use Schedule D to report gains and Computation, and Form 8995-A, Early disposition of section 247(g)
losses from the sale or exchange of Qualified Business Income Deduction, property. An early disposition of
capital assets by an ANST. to figure the qualified business income property for which the ANST made a
deduction. section 247(g) election is a disposition
Details of each transaction must be that occurs during the first tax year
reported on this schedule. If there are Capital Asset subsequent to the tax year in which
more transactions than spaces on line 1 such property was contributed to the
or 5, you can report the transactions on Each item of property held by the ANST ANST. The ANST must amend the tax
an attached statement containing all the is a capital asset, except for the return for the year in which the ANST
same information as Schedule D using following. received the contributed property to
a similar format. Enter on Schedule D, • Stock in trade, inventory, or property report on line 4 the amount of income
lines 1 and 5, as appropriate, the totals held primarily for sale to customers. that would have been included in that
from all attached statements for lines 1 • Depreciable or real property used in a year but for the election.
and 5. trade or business.
• Certain patents, inventions, models, Other dispositions of section 247(g)
or designs (whether or not patented); property. Report on line 4 the amount
Other Forms You May Have To File secret formulas or processes; or similar of income deferred as a result of making
Use Form 461, Limitation on Business property (see section 1221(a)(3)). the section 247(g) election. Also report
Losses, to report the excess business • Copyrights; literary, musical, or any additional gain or loss on the
loss that is reported on your artistic compositions; letters or disposition of property as if there were
noncorporate tax return. memoranda; or similar property eligible no section 247(g) election, following
for copyright protection that the trust these Schedule D instructions.
Use Form 965-A, Individual Report of received from someone whose personal Note. Section 267 doesn't allow an
Net 965 Tax Liability, to report the net efforts created them or for whom they ANST to claim a loss on the disposition
965 tax liability. were created in a way (such as by gift) of property to a related party. In
that entitled the trust to the basis of the addition, when an ANST disposes of
Use Form 4797, Sales of Business previous owner (in the case of letters, depreciable property to a related party,
Property, to report the following. memoranda, or similar property, such section 1239 applies to deny capital
• The sale or exchange of property property may also be prepared or gains treatment for any gain.
used in a trade or business. produced for the trust).
• The sale or exchange of depreciable Note. Pursuant to section 1221(b)(3),
and amortizable property. the trust can elect to treat musical Short-Term or Long-Term
• The involuntary conversion (other compositions and copyrights in musical Separate the capital gains and losses
than from casualty or theft) of property works as capital assets if it sold or according to how long the ANST held or
and capital assets held for business or exchanged them in a tax year beginning owned the property. The holding period
profit. after May 17, 2006, and acquired the for short-term capital gains and losses is
• The disposition of noncapital assets assets under circumstances entitling it 1 year or less. The holding period for
other than inventory or property held to the basis of the person who created long-term gains and losses is more than
primarily for sale to customers in the the property or for whom it was 1 year.
ordinary course of trade or business. prepared or produced.
• Accounts or notes receivable To figure the length of the period the
Use Form 4684, Casualties and acquired in the ordinary course of a ANST held property, begin counting on
Thefts, to report involuntary conversions trade or business for services rendered the day after the ANST acquired the
of property due to casualty or theft. or from the sale of inventoriable assets property and include the day the ANST
or property held primarily for sale to disposed of it. Use the trade dates for
Use Form 6781, Gains and Losses customers. the date of acquisition and sale of
From Section 1256 Contracts and • Certain U.S. Government stocks and bonds traded on an
Straddles, to report gains and losses publications not purchased at the public exchange or over-the-counter market.
from section 1256 contracts and sale price.
straddles. • Certain "commodities derivative For property received by the ANST
financial instruments" held by a dealer from an ANC for which the ANC made
Use Form 8824, Like-Kind (see section 1221(a)(6)). an election under section 247(e)(1), the
Exchanges, if the ANST made one or • Certain hedging transactions entered ANST's holding period includes the
more like-kind exchanges. A like-kind into in the normal course of the ANST's period the ANC held the property.
exchange occurs when the ANST trade or business (see section 1221(a)
exchanges business or investment (7)). Section 643(e)(3) Election
property for property of a like kind. • Supplies regularly used in the ANST's For in-kind noncash property
trade or business. distributions, a fiduciary may elect to
Use Form 8938, Statement of have the ANST recognize gain or loss in
Specified Foreign Financial Assets. the same manner as if the distributed

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Capital Loss Carryover Worksheet
                                                                                                                                       Keep for Your Records
Use this worksheet to figure the ANST's capital loss carryovers from the current tax year to the following tax year if Schedule D, line 12, is a loss and (a) the 
loss on Schedule D, line 11, is more than $3,000; or (b) Form 1041-N, page 1, line 13, is a loss.
1. Enter taxable income (or loss) from Form 1041-N, line 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   1.  
2. Enter loss from Schedule D, line 12, as a positive amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  2.  
3. Enter amount from Form 1041-N, line 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             3.  
4. Adjusted taxable income. Combine lines 1, 2, and 3. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                       4.  
5. Enter the smaller of line 2 or line 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      5.  
Note. If line 4 of Schedule D is a loss, go to line 6; otherwise, enter -0- on line 6 and go to line 10.
6. Enter loss from Schedule D, line 4, as a positive amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 6.  
7. Enter gain, if any, from Schedule D, line 10. If that line is blank or shows a loss, enter -0- . . . . . . . .               7.  
8. Add lines 5 and 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  8.  
9. Short-term capital loss carryover. Subtract line 8 from line 6. If zero or less, enter -0-. Enter this loss on the short-term 
capital loss carryover line of next year's Schedule D       . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             9.  
Note. If line 10 of Schedule D is a loss, go to line 10; otherwise, skip lines 10 through 14.
10. Enter loss from Schedule D, line 10, as a positive amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 10.  
11. Enter gain, if any, from Schedule D, line 4. If that line is blank or shows a loss, enter -0-  . . . . . . . .              11.  
12. Subtract line 6 from line 5. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.  
13. Add lines 11 and 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.  
14. Long-term capital loss carryover. Subtract line 13 from line 10. If zero or less, enter -0-. Enter this loss on the long-term 
capital loss carryover line of next year's Schedule D       . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             14.  

property had been sold to the                        Column (e)—Cost or Other Basis                                             property's basis may be required. See 
beneficiary at its FMV. If the election is                                                                                      Pub. 551 for additional information.
                                                     Generally, the basis of property 
made, the beneficiary's basis of such 
                                                     acquired by gift is the same as its basis 
property is its FMV. This election                                                                                              Column (f)—Gain or (Loss)
                                                     in the hands of the donor. However, if 
applies to all distributions made by the 
                                                     the FMV of the property at the time it 
ANST during the tax year and, once                                                                                              Make a separate entry in this column for 
                                                     was transferred to the trust is less than 
made, may be revoked only with IRS                                                                                              each transaction reported on lines 1 and 
                                                     the transferor's basis, then the FMV is 
consent.                                                                                                                        5 and any other lines that apply to the 
                                                     used for determining any loss on                                           ANST. For lines 1 and 5, subtract the 
Note. Section 267 doesn't allow an                   disposition.                                                               amount in column (e) from the amount 
ANST to claim a deduction for any loss                                                                                          in column (d). Enter negative amounts in 
on property to which a section 643(e)(3)                    For property received by the ANST                                   parentheses.
election applies. In addition, when an               from an ANC for which the ANC made 
ANST distributes depreciable property,               an election under section 247(e)(1), the                                   Line 23
section 1239 applies to deny capital                 ANST's basis in the property is the 
gains treatment for any gain on property             lesser of the adjusted basis of the ANC                                    Add line 18 from the Unrecaptured 
to which a section 643(e)(3) election                in the property immediately before the                                     Section 1250 Gain Worksheet and line 7 
applies.                                             contribution, or the FMV of the property                                   from the 28% Rate Gain Worksheet.
                                                     immediately before the contribution.                                       Exclusion of gain on qualified small 
For more information on making the                                                                                              business (QSB) stock.                         Section 1202 
section 643(e)(3) election, see Part                        If the property was transferred to the                              allows you to exclude a portion of the 
III—Other Information, Question 5,                   ANST and a gift tax was paid under                                         eligible gain on the sale or exchange of 
earlier.                                             chapter 12, then increase the donor's                                      certain QSB stock.
                                                     basis as follows: multiply the amount of 
Column (d)—Sales Price                               the gift tax paid by a fraction, the                                       How to report.    Report on line 5 of 
Enter either the gross sales price or the            numerator of which is the net                                              Schedule D the gain realized on the sale 
net sales price from the sale. On sales              appreciation in value of the gift (defined                                 of QSB stock. Complete all columns as 
of stocks and bonds, report the gross                below), and the denominator of which is                                    indicated. Directly below the line on 
amount as reported to the ANST on                    the amount of the gift. For this purpose,                                  which you report the gain, enter in 
Form 1099-B, Proceeds From Broker                    the net appreciation in value of the gift is                               column (a) “Section 1202 exclusion” 
and Barter Exchange Transactions, or                 the amount by which the FMV of the gift                                    and enter as a loss in column (f) the 
similar statement. However, if the ANST              exceeds the donor's adjusted basis.                                        amount of allowable exclusion. If you 
was advised that gross proceeds less                 Then, add the result to the donor's                                        are completing line 23 of Schedule D, 
commissions and option premiums                      basis.                                                                     enter as a positive number the amount 
were reported to the IRS, enter only the                                                                                        of your allowable exclusion on line 2 of 
                                                     Adjustments to basis. Before figuring 
net amount in column (d).                                                                                                       the 28% Rate Gain Worksheet; if you 
                                                     any gain or loss on the sale, exchange,                                    excluded 60% of the gain, enter  /  of 2 3
                                                     or other disposition of property owned                                     the exclusion; if you excluded 75% of 
                                                     by the ANST, adjustments to the 

Instructions for Form 1041-N (Rev. 12-2021)                       -7-

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Unrecaptured Section 1250 Gain Worksheet
                                                                                                                                                     Keep for Your Records
If the ANST isn't reporting a gain on Form 4797, Sales of Business Property, line 7 (for 2021, or the comparable line for the current tax year), 
skip lines 1 through 9 and go to line 10. 
  1. If the ANST has section 1250 property in Part III of Form 4797 for which you made an entry in Part I of Form 4797 (but not on 
  Form 6252, Installment Sale Income), enter the smaller of line 22 or line 24 of Form 4797 (for 2021, or the comparable line for 
  the current tax year) for that property. If the ANST did not have any such property, go to line 4. If it had more than one such 
  property, see instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           1.  
  2. Enter the amount from Form 4797, line 26g (for 2021, or the comparable line for the current tax year), for the property for which 
  you made an entry on line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              2.  
  3. Subtract line 2 from line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       3.  
  4. Enter the total unrecaptured section 1250 gain included on line 26 or line 37 of Form(s) 6252 (for 2021, or the comparable line 
  for the current tax year) from installment sales of trade or business property held more than 1 year. See instructions  . . . . . . .                                              4.  
  5. Enter the total of any amounts reported to the ANST on a Schedule K-1 from a partnership or an S corporation as 
  “unrecaptured section 1250 gain” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 5.  
  6. Add lines 3 through 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       6.  
  7. Enter the smaller of line 6 or the gain from Form 4797, line 7 (for 2021, or the comparable line for 
  the current tax year) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        7.  
  8. Enter the amount, if any, from Form 4797, line 8 (for 2021, or the comparable line for the current tax 
  year) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    8.  
  9. Subtract line 8 from line 7. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               9.  
  10. Enter the amount of any gain from the sale or exchange of an interest in a partnership attributable to unrecaptured section 1250 
  gain. See instructions  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          10.  
  11. Enter the total of any amounts reported to the ANST on a Schedule K-1, Form 1099-DIV, or Form 2439 as "unrecaptured 
  section 1250 gain" from an estate, trust, real estate investment trust, or mutual fund (or other regulated investment 
  company)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        11.  
  12. Enter the total of any unrecaptured section 1250 gain from sales (including installment sales) or other dispositions of section 
  1250 property held more than 1 year for which you did not make an entry in Part I of Form 4797 for the year of sale. See 
  instructions   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     12.  
  13. Add lines 9 through 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       13.  
  14.  If the ANST had any section 1202 gain or collectibles gain or (loss), enter the total of lines 1 
  through 4 of the 28% Rate Gain Worksheet. Otherwise, enter -0-  . . . . . . . . . . . . . . . . . . . . . . . .                            14.  
  15. Enter the (loss), if any, from Schedule D, line 4. If Schedule D, line 4, is zero or a gain, 
  enter -0-  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   15.  
  16.  Enter the ANST's long-term capital loss carryover from Schedule D, line 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                             16. (      )
  17. Combine lines 14 through 16. If the result is zero or a gain, enter -0-. If the result is a (loss), enter it as a positive 
  amount       . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.  
  18. Unrecaptured section 1250 gain. Subtract line 17 from line 13. If zero or less, enter -0-. Combine this result with the result on 
  line 7 of the 28% Rate Gain Worksheet, if any, and enter that result on Schedule D, line 23 . . . . . . . . . . . . . . . . . . . . . . . . .                                      18.  

the gain, enter  /  of the exclusion. Don’t 1 3 •  The ANST reported a long-term                                                            Form 4797 (or the comparable line of 
make an entry for any section 1202              capital gain from the sale or exchange                                                      Form 4797 for the year of sale) for that 
exclusion that is 100% of the gain.             of an interest in a partnership that                                                        property. The result is the total 
  For more information about QSB                owned section 1250 property.                                                                unrecaptured section 1250 gain that 
stock, see the Instructions for                                                                                                             must be allocated to the installment 
Schedule D (Form 1041).                         Instructions for the Unrecaptured                                                           payments received from the sale.
                                                Section 1250 Gain Worksheet                                                                    Step 3. Generally, the amount of 
Unrecaptured Section 1250 Gain                                                                                                              section 1231 gain on each installment 
                                                Lines 1 through 3.    If the ANST had                                                       payment is treated as unrecaptured 
Complete the Unrecaptured Section               more than one property described on                                                         section 1250 gain until the total 
1250 Gain Worksheet if any of the               line 1, complete lines 1 through 3 for                                                      unrecaptured section 1250 gain figured 
following apply.                                each property on a separate worksheet.                                                      in Step 2 has been used in full. Figure 
• During the tax year, the ANST sold or         Enter the total of the line 3 amounts for                                                   the amount of gain treated as 
otherwise disposed of section 1250              all properties on line 3 and go to line 4.                                                  unrecaptured section 1250 gain for 
property (generally, real property that 
was depreciated) held more than 1 year.         Line 4.      To figure the amount to enter                                                  installment payments received during 
• The ANST received installment                 on line 4, follow the steps below for                                                       the tax year as the smaller of (a) the 
payments during the tax year for section        each installment sale of trade or                                                           amount from line 26 or line 37 of the 
1250 property held more than 1 year for         business property held more than 1                                                          2021 Form 6252 (or comparable lines 
which it is reporting gain on the               year.                                                                                       for the current tax year), whichever 
                                                                                                                                            applies; or (b) the amount of 
installment method.                                          Step 1.  Figure the smaller of (a) the                                         unrecaptured section 1250 gain 
• The ANST received a Schedule K-1              depreciation allowed or allowable, or (b)                                                   remaining to be reported. This amount 
from an estate or trust, partnership, or S      the total gain for the sale. This is the                                                    is generally the total unrecaptured 
corporation that shows "unrecaptured            smaller of line 22 or line 24 of the 2021                                                   section 1250 gain for the sale reduced 
section 1250 gain" reportable for the tax       Form 4797 (or the comparable lines of                                                       by all gain reported in prior years 
year.                                           Form 4797 for the year of sale) for that                                                    (excluding section 1250 ordinary 
• The ANST received a Form 1099-DIV             property.                                                                                   income recapture). However, if you 
or Form 2439 from a real estate 
investment trust or regulated investment                     Step 2.  Reduce the amount figured                                             chose not to treat all of the gain from 
company (including a mutual fund) that          in Step 1 by any section 1250 ordinary                                                      payments received after May 6, 1997, 
reports "unrecaptured section 1250              income recapture for the sale. This is                                                      and before August 24, 1999, as 
gain" for the tax year.                         the amount from line 26g of the 2021                                                        unrecaptured section 1250 gain, use 

                                                                      -8-                               Instructions for Form 1041-N (Rev. 12-2021)

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28% Rate Gain Worksheet                                                                                         Keep for Your Records
   1. Enter the total of all collectibles gain or (loss) from items reported on Schedule D, line 5, column (f)  . . . . . . . . . . . . . . . . . . .                              1.  
   2. Enter any of the following as a positive number.
      • Any section 1202 exclusion reported on Schedule D, line 5, column (f), that is 50% of the gain.
      • 2 3/  of any section 1202 exclusion reported on Schedule D, line 5, column (f), that is 60% of the gain.
      • 1 3/  of any section 1202 exclusion reported on Schedule D, line 5, column (f), that is 75% of the gain.
      Don’t make an entry for any section 1202 exclusion that is 100% of the gain.
   Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.  
   3. Enter the total of all collectibles gain or (loss) from items reported on Schedule D, line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . .                           3.  
   4. Enter the total of all collectibles gain from capital gain distributions reported on Schedule D, line 7 . . . . . . . . . . . . . . . . . . . .                              4.  
   5. Enter the long-term capital loss carryover from Schedule D, line 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     5. (    )
   6. If Schedule D, line 4, is a (loss), enter that (loss) here. Otherwise, enter -0-  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    6.  
   7. Combine lines 1 through 6. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              7.  

only the amount you chose to treat as      Form 4797 (or the comparable line of                        the total gain for the sale. This is the 
unrecaptured section 1250 gain for         Form 4797 for the year of sale) for that                    smaller of line 22 or line 24 of Form 
those payments to reduce the total         property. The result is the total                           4797 (for 2021, or the comparable line 
unrecaptured section 1250 gain             unrecaptured section 1250 gain that                         for the current tax year) for that 
remaining to be reported for the sale.     must be allocated to the installment                        property. Next, reduce that amount by 
Include this amount on line 4.             payments received from the sale.                            any section 1250 ordinary income 
                                                                                                       recapture for the sale. This is the 
Line 10.   Include on line 10 the ANST's              Step 3. Generally, the amount of                 amount from line 26g of Form 4797 (for 
share of the partnership's unrecaptured    capital gain on each installment                            2021, or the comparable line for the 
section 1250 gain that would result if the payment is treated as unrecaptured                          current tax year) for that property. The 
partnership had transferred all of its     section 1250 gain until the total                           result is the total unrecaptured section 
section 1250 property in a fully taxable   unrecaptured section 1250 gain figured                      1250 gain for the sale. Include this 
transaction immediately before the         in Step 2 has been used in full. Figure                     amount on line 12.
ANST sold or exchanged its interest in     the amount of gain treated as 
that partnership. If the ANST recognized   unrecaptured section 1250 gain for 
less than all of the realized gain, the    installment payments received during                        28% Rate Gain or (Loss)
partnership will be treated as having      the tax year as the smaller of (a) the                      Complete the 28% Rate Gain 
transferred only a proportionate amount    amount from line 26 or line 37 of the                       Worksheet if lines 10 and 11 of 
of each section 1250 property.             2021 Form 6252 (or comparable lines                         Schedule D are both greater than zero 
Line 12.   An example of an amount to      for the current tax year), whichever                        and the ANST reports in Part II, column 
include on line 12 is unrecaptured         applies; or (b) the amount of                               (f), either:
section 1250 gain from the sale of a       unrecaptured section 1250 gain                              •        A section 1202 gain on QSB stock, or
vacation home previously used as a         remaining to be reported. This amount                       •        A collectibles gain or (loss).
rental property but converted to           is generally the total unrecaptured 
personal use prior to the sale.            section 1250 gain for the sale reduced                               A collectibles gain or loss is any 
                                           by all gain reported in prior years                         long-term gain or deductible long-term 
   Installment sales.  To figure the       (excluding section 1250 ordinary                            loss from the sale or exchange of a 
amount to include on line 12, follow the   income recapture). However, if you                          collectible that is a capital asset.
steps below for each installment sale of   chose not to treat all of the gain from 
property held more than 1 year for which   payments received after May 6, 1997,                                 Collectibles include works of art, 
you didn’t make an entry in Part I of      and before August 24, 1999, as                              rugs, antiques, metals (such as gold, 
Form 4797 for the year of sale.            unrecaptured section 1250 gain, use                         silver, and platinum bullion), gems, 
                                           only the amount you chose to treat as 
   Step 1. Figure the smaller of (a) the                                                               stamps, coins, alcoholic beverages, and 
                                           unrecaptured section 1250 gain for 
depreciation allowed or allowable, or (b)                                                              certain other tangible property.
                                           those payments to reduce the total 
the total gain for the sale. This is the 
                                           unrecaptured section 1250 gain 
smaller of line 22 or line 24 of the 2021                                                                       Also, include gain (but not loss) from 
                                           remaining to be reported for the sale. 
Form 4797 (or comparable lines of Form                                                                 the sale or exchange of an interest in a 
                                           Include this amount on line 12.
4797 for the year of sale) for that                                                                    partnership, S corporation, or trust held 
property.                                             Other sales or dispositions of                   for more than 1 year and attributable to 
                                           section 1250 property.                 For each sale        unrealized appreciation of collectibles. 
   Step 2. Reduce the amount figured                                                                   For details, see Regulations section 
                                           of property held more than 1 year (for 
in Step 1 by any section 1250 ordinary                                                                 1.1(h)-1. Also, attach the statement 
                                           which an entry wasn't made in Part I of 
income recapture for the sale. This is                                                                 required under Regulations section 
                                           Form 4797), figure the smaller of (a) the 
the amount from line 26g of the 2021                                                                   1.1(h)-1(e).
                                           depreciation allowed or allowable, or (b) 

                                                              -9-

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Schedule K—Distributions Tier I distributions are excluded from the profits of the sponsoring ANC (after
gross income of the beneficiary. adjustment for distributions made by the
to Beneficiaries Tier II Distributions (Section 646(e) sponsoring ANC during the year).
Use this schedule to report the type and (2)) Section 643(e) applies for purposes of
amount of distributions that were made determining the amount of a Tier III
These are distributions of amounts that
to each beneficiary. A copy of this distribution of property (other than
would have been Tier I distributions in
schedule must be furnished to the cash).
prior years (during which a section 646
sponsoring ANC. The sponsoring ANC,
election was in effect), but that have not,
not the ANST, provides information to Tier IV Distributions (Section 646(e)
in fact, been distributed in any prior
the beneficiaries regarding distributions. (4))
year.
Distributions for each year are These are distributions of any amounts
considered to have been made in the Tier II distributions are excluded from that remain after applying the above
following order. the gross income of the beneficiary. rules. They are considered as amounts
Tier III Distributions (Section 646(e) in excess of distributable net income for
Tier I Distributions (Section 646(e) (3))
(1)) the year.
These are distributions considered to
These are distributions from the ANST have been made by the sponsoring Tier IV distributions are excluded from
to the extent of the ANST's taxable ANC with respect to its stock. the gross income of the beneficiary.
income, reduced by any income tax
paid by the ANST on that income, and Tier III distributions are taxable to
increased by any tax-exempt interest beneficiaries as dividends, to the extent
income. of current or accumulated earnings and

Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws of the
United States. You are required to give us the information. We need it to ensure that you are complying with these laws and to
allow us to figure and collect the right amount of tax. You aren't required to provide the information requested on a form that is
subject to the Paperwork Reduction Act unless the form displays a valid OMB control number. Books or records relating to a
form or its instructions must be retained as long as their contents may become material in the administration of any Internal
Revenue law. The time needed to complete and file this form will vary depending on individual circumstances. The estimated
average time is:

Recordkeeping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 hr., 30 min.
Learning about the law or the form . . . . . . . . . . . . . . . . . . . . . . 2 hr., 39 min.
Preparing the form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 hr., 12 min.
Copying, assembling, and sending the form to the IRS . . . . . . . . . 16 min.

If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler, we
would be happy to hear from you. You can send us comments from IRS.gov/FormComments. Or you can send your comments
to Internal Revenue Service, Tax Forms and Publications, 1111 Constitution Ave. NW, IR-6526, Washington, DC 20224. Don’t
send the tax form to this address. Instead, see Where To File, earlier.

-10- Instructions for Form 1041-N (Rev. 12-2021)

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