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                                                                                                                       Department of the Treasury
                                                                                                                       Internal Revenue Service
2023

Instructions for Form 1041 

and Schedules A, B, G, J, 

and K-1

U.S. Income Tax Return for Estates and Trusts

Section references are to the Internal Revenue Code unless                     Contents                                                                  Page
otherwise noted.                                                               Schedule A—Charitable Deduction                 . . . . . . . . . . . . .   28
Contents                                                                Page   Schedule B—Income Distribution Deduction . . . . . . .                      29
What's New  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   1  Schedule G—Tax Computation and Payments                         . . . . .   31
Reminders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   1  Net Investment Income Tax (NIIT)              . . . . . . . . . . . . . .   36
Photographs of Missing Children . . . . . . . . . . . . . . . .             2  Other Information     . . . . . . . . . . . . . . . . . . . . . . . . . .   37
The Taxpayer Advocate Service (TAS)               . . . . . . . . . . . .   2  Schedule J (Form 1041)—Accumulation 
How To Get Forms and Publications . . . . . . . . . . . . . .               3    Distribution for Certain Complex Trusts . . . . . . . .                   39
General Instructions    . . . . . . . . . . . . . . . . . . . . . . . . .   3  Schedule K-1 (Form 1041)—Beneficiary's Share of 
Purpose of Form . . . . . . . . . . . . . . . . . . . . . . . . . . . .     3    Income, Deductions, Credits, etc.               . . . . . . . . . . . .   41
Income Taxation of Trusts and Decedents'                                       Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Estates     . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   3  Future Developments
Abusive Trust Arrangements          . . . . . . . . . . . . . . . . . . .   3  For the latest information about developments related to 
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4  Form 1041 and Schedules A, B, G, J, K-1 and its instructions, 
Who Must File   . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   5  such as legislation enacted after they were published, go to 
Electronic Filing . . . . . . . . . . . . . . . . . . . . . . . . . . . .   8  IRS.gov/Form1041.

When To File  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   8  What's New
Period Covered    . . . . . . . . . . . . . . . . . . . . . . . . . . . .   8
Where To File . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   9  Due date of return.       Calendar year estates and trusts must 
                                                                               file Form 1041 by April 15, 2024. If you live in Maine or 
Who Must Sign . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     9  Massachusetts, you have until April 17, 2024, because of the 
Accounting Methods . . . . . . . . . . . . . . . . . . . . . . . . .        9  Patriots' Day and Emancipation Day holidays.
Accounting Periods . . . . . . . . . . . . . . . . . . . . . . . . .        10 Capital gains and qualified dividends.                For tax year 2023, 
Rounding Off to Whole Dollars . . . . . . . . . . . . . . . . .             10 the 20% maximum capital gains rate applies to estates and 
Estimated Tax   . . . . . . . . . . . . . . . . . . . . . . . . . . . .     10 trusts with income above $14,650. The 0% and 15% rates 
Interest and Penalties    . . . . . . . . . . . . . . . . . . . . . . .     10 apply to certain threshold amounts. The 0% rate applies to 
                                                                               amounts up to $3,000. The 15% rate applies to amounts over 
Other Forms That May Be Required . . . . . . . . . . . . .                  11
                                                                               $3,000 and up to $14,650.
Additional Information . . . . . . . . . . . . . . . . . . . . . . .        13
Assembly and Attachments . . . . . . . . . . . . . . . . . . .              13 Bankruptcy estate filing threshold.               For tax year 2023, the 
                                                                               requirement to file a return for a bankruptcy estate applies 
Special Reporting Instructions . . . . . . . . . . . . . . . . .            13 only if gross income is at least $13,850.
Specific Instructions   . . . . . . . . . . . . . . . . . . . . . . . .     18
                                                                               Qualified disability trust.       For tax year 2023, a qualified 
Name of Estate or Trust . . . . . . . . . . . . . . . . . . . . . .         18 disability trust can claim an exemption of up to $4,700. This 
Name and Title of Fiduciary . . . . . . . . . . . . . . . . . . .           18 amount is not subject to phaseout.
Address . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   18 Qualified sick and family leave credits.                Generally, the 
A. Type of Entity . . . . . . . . . . . . . . . . . . . . . . . . . . .     18 credits for qualified sick and family leave wages have expired. 
B. Number of Schedules K-1 Attached . . . . . . . . . . .                   19 However, qualified sick and family leave wages paid in 2023 
C. Employer Identification Number . . . . . . . . . . . . . .               19 for leave taken before April 1, 2021, and for leave taken after 
D. Date Entity Created    . . . . . . . . . . . . . . . . . . . . . . .     19 March 31, 2021, and before October 1, 2021, may be eligible 
                                                                               to claim the credits in 2023.
E. Nonexempt Charitable and Split-Interest Trusts . . .                     19
F. Initial Return, Amended Return, etc.           . . . . . . . . . . .     20 Reminders
G. Section 645 Election . . . . . . . . . . . . . . . . . . . . . .         20 • Review a copy of the will or trust instrument, including any 
Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    21 amendments or codicils, before preparing an estate's or 
                                                                               trust's return.
Deductions  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     22
                                                                               • We encourage you to use Form 1041-V, Payment Voucher 
Limitations on Deductions . . . . . . . . . . . . . . . . . . . .           23 for Estates and Trusts, to accompany your payment of a 
Tax and Payments      . . . . . . . . . . . . . . . . . . . . . . . . .     27

Jan 9, 2024                                                             Cat. No. 11372D

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balance of tax due on Form 1041, particularly if your payment Item G. Section 645 election. If the estate has made a
is made by check or money order. section 645 election, the executor must check item G and
Form 8978 Worksheet. A Form 8978 provide the taxpayer identification number (TIN) of the
Worksheet—Schedule G, Part I, Line 8 has been added to electing trust with the highest total asset value in the box
the instructions to calculate the amount due when there is a provided.
negative amount from Form 8978, line 14, that was not used The executor must also attach a statement to Form 1041
to reduce Schedule G, line 3, to zero, and you have chapter 1 providing the following information for each electing trust
taxes and/or tax and interest from Form 8621. (including the electing trust provided in item G): (a) the name
Advanced manufacturing production credit. Section of the electing trust, (b) the TIN of the electing trust, and (c)
13502 of the Inflation Reduction Act of 2022 (IRA 2022) the name and address of the trustee of the electing trust.
created the advanced manufacturing production credit for Form 1041 e-filing. When e-filing Form 1041, use either
certain components produced and sold after 2022. See Form Form 8453-FE, U.S. Estate or Trust Declaration for an IRS
7207, Advanced Manufacturing Production Credit, and its e-file Return, or Form 8879-F, IRS e-file Signature
instructions and section 45X. Authorization for Form 1041.
Net operating loss (NOL) carryback. Generally, an NOL Note. Form 8879-F can only be associated with a single
arising in a tax year beginning in 2021 or later may not be Form 1041. Form 8879-F can no longer be used with multiple
carried back and instead must be carried forward indefinitely. Forms 1041.
However, farming losses arising in tax years beginning in For more information about e-filing returns through MeF,
2021 or later may be carried back 2 years and carried see Pub. 4164, Modernized e-File (MeF) Guide for Software
forward indefinitely. Developers and Transmitters.
For special rules for NOLs arising in 2018, 2019 or 2020,
see Pub. 536, Net Operating Losses (NOLs) for Individuals, Photographs of Missing Children
Estates, and Trusts, for more information. The Internal Revenue Service is a proud partner with the
National Center for Missing & Exploited Children® (NCMEC).
Section 965. Section 965(a) inclusion amounts are not
Photographs of missing children selected by the Center may
applicable for tax year 2021 and later years. However,
appear in instructions on pages that would otherwise be
section 965 may still apply to certain estates and trusts
blank. You can help bring these children home by looking at
(including the S portion of electing small business trusts
the photographs and calling 1-800-THE-LOST
(ESBTs)) where a section 965(h) or section 965(i) election
(1-800-843-5678) if you recognize a child.
has been made.
Section 1061 reporting. Section 1061 recharacterizes The Taxpayer Advocate Service (TAS)
certain long-term capital gains of applicable partnership
interests held by an estate or trust as short-term capital The TAS Is Here To Help You
gains. See Section 1061 Reporting Guidance FAQs. What Is TAS?
Excess deductions on termination. Under Final
Regulations - TD9918, each excess deduction on termination TAS is an independent organization within the IRS that
of an estate or trust retains its separate character as an helps taxpayers and protects taxpayer rights. TAS strives to
amount allowed in arriving at adjusted gross income (AGI), a ensure that every taxpayer is treated fairly and that you know
non-miscellaneous itemized deduction, or a miscellaneous and understand your rights under the Taxpayer Bill of Rights.
itemized deduction.
See Box 11, Code A Excess Deductions on How Can You Learn About Your Taxpayer Rights?
Termination—Section 67(e) Expenses and Box 11, Code B
Excess Deductions on Termination—Non-Miscellaneous The Taxpayer Bill of Rights describes 10 basic rights that all
Itemized Deductions, later, for more information. taxpayers have when dealing with the IRS. Go to
TaxpayerAdvocate.IRS.gov to help you understand what
Qualified Opportunity Investment. With the exception of these rights mean to you and how they apply. These are your
grantor trusts, if you held a qualified investment in a qualified rights. Know them. Use them.
opportunity fund (QOF) at any time during the year, you must
file your return with Form 8997, Initial and Annual Statement
What Can TAS Do for You?
of Qualified Opportunity Fund (QOF) Investments, attached
to your return. For more information, see Form 8997 and its TAS can help you resolve problems that you can't resolve
instructions. with the IRS. And their service is free. If you qualify for their
Extension of time to file. The extension of time to file an assistance, you will be assigned to one advocate who will
estate (other than a bankruptcy estate) or trust return is 5 /1 2 work with you throughout the process and will do everything
months. possible to resolve your issue. TAS can help you if:
Item A. Type of entity. On page 1 of Form 1041, item A, • Your problem is causing financial difficulty for you, your
family, or your business;
taxpayers should select more than one box, when
appropriate, to reflect the type of entity. • You face (or your business is facing) an immediate threat
of adverse action; or
Item F. Net operating loss (NOL) carryback. If an • You’ve tried repeatedly to contact the IRS but no one has
amended return is filed for an NOL carryback, check the Net responded, or the IRS hasn’t responded by the date
operating loss carryback box in item F. See Amended Return, promised.
later, for complete information.

2 Instructions for Form 1041 (2023)

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How Can You Reach TAS? (the grantor) is treated as the owner of the trust's assets.
Such a trust is a grantor type trust. See Grantor Type Trusts ,
TAS has offices in every state, the District of Columbia, and later, under Special Reporting Instructions.
Puerto Rico. To find your advocate’s number: A trust or decedent's estate figures its gross income in
• Go to TaxpayerAdvocate.IRS.gov/Contact-Us; much the same manner as an individual. Most deductions
• Download Pub. 1546, The Taxpayer Advocate Service Is and credits allowed to individuals are also allowed to estates
Your Voice at the IRS, available at IRS.gov/pub/irs-pdf/ and trusts. However, there is one major distinction. A trust or
p1546.pdf; decedent's estate is allowed an income distribution
• Call the IRS toll free at 800-TAX-FORM (800-829-3676) to deduction for distributions to beneficiaries. To figure this
order a copy of Pub. 1546; deduction, the fiduciary must complete Schedule B. The
• Check your local directory; or income distribution deduction determines the amount of any
• Call TAS toll free at 877-777-4778. distributions taxed to the beneficiaries.
How Else Does TAS Help Taxpayers? For this reason, a trust or decedent's estate is sometimes
referred to as a “pass-through entity.” The beneficiary, and not
the trust or decedent's estate, pays income tax on their
TAS works to resolve large-scale problems that affect many distributive share of income. Schedule K-1 (Form 1041) is
taxpayers. If you know of one of these broad issues, report it used to notify the beneficiaries of the amounts to be included
to TAS at IRS.gov/SAMS. Be sure to not include any personal on their income tax returns.
taxpayer information.
Before preparing Form 1041, the fiduciary must figure the
How To Get Forms and Publications accounting income of the estate or trust under the will or trust
Internet. You can access the IRS website 24 hours a instrument and applicable local law to determine the amount,
day, 7 days a week, at IRS.gov to: if any, of income that is required to be distributed, because
the income distribution deduction is based, in part, on that
• Download forms, including talking tax forms, instructions, amount.

and publications; Abusive Trust Arrangements
• Order IRS products;
• Use the online Internal Revenue Code, regulations, and Certain trust arrangements claim to reduce or eliminate
other official guidance; federal taxes in ways that are not permitted under the law.
• Research your tax questions; Abusive trust arrangements are typically promoted by the
• Search publications by topic or keyword; promise of tax benefits with no meaningful change in the
• Apply for an employer identification number (EIN); and taxpayer's control over or benefit from the taxpayer's income
• Sign up to receive local and national tax news by email. or assets. The promised benefits may include reduction or
elimination of income subject to tax; deductions for personal
Tax forms and publications. The estate or trust can expenses paid by the trust; depreciation deductions of an
download or print all of the forms and publications it may owner's personal residence and furnishings; a stepped-up
need on IRS.gov/FormsPubs. Otherwise, the estate or trust basis for property transferred to the trust; the reduction or
can go to IRS.gov/OrderForms to place an order and have elimination of self-employment taxes; and the reduction or
forms mailed to it. The IRS will process your order for forms elimination of gift and estate taxes. These promised benefits
and publications as soon as possible. are inconsistent with the tax rules applicable to trust
arrangements.
General Instructions Abusive trust arrangements often use trusts to hide the
true ownership of assets and income or to disguise the
Purpose of Form substance of transactions. These arrangements frequently
involve more than one trust, each holding different assets of
The fiduciary of a domestic decedent's estate, trust, or
the taxpayer (for example, the taxpayer's business, business
bankruptcy estate uses Form 1041 to report:
equipment, home, automobile, etc.). Some trusts may hold
• The income, deductions, gains, losses, etc., of the estate
interests in other trusts, purport to involve charities, or are
or trust;
foreign trusts. Funds may flow from one trust to another trust
• The income that is either accumulated or held for future
by way of rental agreements, fees for services, purchase
distribution or distributed currently to the beneficiaries;
agreements, and distributions.
• Any income tax liability of the estate or trust;
• Employment taxes on wages paid to household Some of the abusive trust arrangements that have been
employees; and identified include unincorporated business trusts (or
• Net Investment Income Tax (NIIT). See Schedule G, Part I, organizations), equipment or service trusts, family residence
line 5, and the Instructions for Form 8960. trusts, charitable trusts, and final trusts. In each of these
trusts, the original owner of the assets nominally subject to
Income Taxation of Trusts and the trust effectively retains the authority to cause financial
Decedents' Estates benefits of the trust to be directly or indirectly returned or
made available to the owner. For example, the trustee may be
A trust or a decedent's estate is a separate legal entity for
the promoter, a relative, or a friend of the owner who simply
federal tax purposes. A decedent's estate comes into
carries out the directions of the owner whether or not
existence at the time of death of an individual. A trust may be
permitted by the terms of the trust.
created during an individual's life (inter vivos) or at the time of
their death under a will (testamentary). If the trust instrument When trusts are used for legitimate business, family, or
contains certain provisions, then the person creating the trust estate planning purposes, either the trust, the beneficiary, or

Instructions for Form 1041 (2023) 3

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the transferor of assets to the trust will pay the tax on income • All accrued income of a decedent who reported their
generated by the trust property. Trusts can't be used to income on the cash method of accounting,
transform a taxpayer's personal, living, or educational • Income accrued solely because of the decedent's death in
expenses into deductible items, and can't seek to avoid tax the case of a decedent who reported their income on the
liability by ignoring either the true ownership of income and accrual method of accounting, and
assets or the true substance of transactions. Therefore, the • Income to which the decedent had a contingent claim at
tax results promised by the promoters of abusive trust the time of their death.
arrangements are not allowable under the law, and the Some examples of IRD for a decedent who kept their
participants in and promoters of these arrangements may be books on the cash method are:
subject to civil or criminal penalties in appropriate cases. • Deferred salary payments that are payable to the
For more details, including the legal principles that control decedent's estate,
the proper tax treatment of these abusive trust arrangements, • Uncollected interest on U.S. savings bonds,
see Notice 97-24, 1997-1 C.B. 409. • Proceeds from the completed sale of farm produce, and
• The portion of a lump-sum distribution to the beneficiary of
For additional information about abusive tax a decedent's individual retirement arrangement (IRA) that
arrangements, go to IRS.gov and type “Abusive Trusts” in the equals the balance in the IRA at the time of the owner's
search box. death. This includes unrealized appreciation and income
accrued to that date, less the aggregate amount of the
Definitions owner's nondeductible contributions to the IRA. Such
Adjusted gross income (AGI). Compute the AGI of an amounts are included in the beneficiary's gross income in the
estate or a non-grantor trust by subtracting the following from tax year that the distribution is received.
total income on line 9 of page 1. The IRD has the same character it would have had if the
1. The administration costs of the estate or trust (the total decedent had lived and received such amount.
of lines 12, 14, and 15a to the extent they are costs incurred Deductions and credits in respect of a decedent. The
in the administration of the estate or trust) that wouldn't have following deductions and credits, when paid by the
been incurred if the property were not held by the estate or decedent's estate, are allowed on Form 1041 even though
trust. they were not allowable on the decedent's final income tax
return.
2. The income distribution deduction (line 18). Business expenses deductible under section 162.
•
3. The amount of the exemption (line 21). • Interest deductible under section 163.
4. The net operating loss deduction (NOLD) claimed on • Taxes deductible under section 164.
line 15b. • Percentage depletion allowed under section 611.
• Foreign tax credit.
Electing small business trust (ESBT). Compute the
AGI of the S portion of an ESBT in the same manner as an For more information on IRD, see section 691 and Pub.
individual taxpayer, except that administration costs allocable 559, Survivors, Executors, and Administrators.
to the S portion (to the extent they are costs incurred in the Income required to be distributed currently. Income
administration of the trust that wouldn't have been incurred if required to be distributed currently is income that is required
the property were not held by the estate or trust) shall be under the terms of the governing instrument and applicable
deducted in arriving at AGI. local law to be distributed in the year it is received. The
Beneficiary. A beneficiary includes an heir, a legatee, or a fiduciary must be under a duty to distribute the income
devisee. currently, even if the actual distribution is not made until after
the close of the trust's tax year. See Regulations section
Decedent's estate. The decedent's estate is an entity that 1.651(a)-2.
is formed at the time of an individual's death and is generally
charged with gathering the decedent's assets, paying the Fiduciary. A fiduciary is a trustee of a trust, or an executor,
decedent's debts and expenses, and distributing the executrix, administrator, administratrix, personal
remaining assets. Generally, the estate consists of all the representative, or person in possession of property of a
property, real or personal, tangible or intangible, wherever decedent's estate.
situated, that the decedent owned an interest in at death. Note. Any reference in these instructions to “you” means the
Distributable net income (DNI). The income distribution fiduciary of the estate or trust.
deduction allowable to estates and trusts for amounts paid, Trust. A trust is an arrangement created either by a will or by
credited, or required to be distributed to beneficiaries is an inter vivos declaration by which trustees take title to
limited to DNI. This amount, which is figured on Schedule B, property for the purpose of protecting or conserving it for the
line 7, is also used to determine how much of an amount beneficiaries under the ordinary rules applied in chancery or
paid, credited, or required to be distributed to a beneficiary probate courts.
will be includible in their gross income.
Revocable living trust. A revocable living trust is an
Income in respect of a decedent (IRD). When completing arrangement created by a written agreement or declaration
Form 1041, you must take into account any items that are during the life of an individual and can be changed or ended
IRD. at any time during the individual's life. A revocable living trust
In general, IRD is income that a decedent was entitled to is generally created to manage and distribute property. Many
receive but that was not properly includible in the decedent's people use this type of trust instead of (or in addition to) a
final income tax return under the decedent's method of will.
accounting.
IRD includes:

4 Instructions for Form 1041 (2023)

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Because this type of trust is revocable, it is treated as a U.S. owner must generally file Form 3520-A, Annual
grantor type trust for tax purposes. See Grantor Type Trusts Information Return of Foreign Trust With a U.S. Owner.
under Special Reporting Instructions, later, for special filing
instructions that apply to grantor trusts. If a domestic trust becomes a foreign trust, it is treated
under section 684 as having transferred all of its assets to a
Be sure to read Optional Filing Methods for Certain foreign trust, except to the extent a grantor or another person
TIP Grantor Type Trusts, later. Generally, most people is treated as the owner of the trust when the trust becomes a
that have revocable living trusts will be able to use foreign trust.
Optional Method 1. This method is the easiest and least
burdensome way to meet your obligations. Grantor Type Trusts
If all or any portion of a trust is a grantor type trust, then that
Who Must File trust or portion of a trust must follow the special reporting
requirements discussed later under Special Reporting
Decedent's Estate Instructions. See Grantor Type Trust under Specific
The fiduciary (or one of the joint fiduciaries) must file Form Instructions, later, for more details on what makes a trust a
1041 for a domestic estate that has: grantor type trust.
1. Gross income for the tax year of $600 or more; Note. A trust may be part grantor trust and part “other” type
2. A beneficiary who is a nonresident alien; or of trust, for example, simple or complex, or ESBT.
3. If you held a qualified investment in a qualified Qualified subchapter S trusts (QSSTs). QSSTs must
opportunity fund (QOF) at any time during the year, you must follow the special reporting requirements for these trusts,
file your return with Form 8997 attached. See the Form 8997 discussed later under Special Reporting Instructions.
instructions.
An estate is a domestic estate if it isn't a foreign estate. A Special Rule for Certain Revocable Trusts
foreign estate is one the income of which is from sources
outside the United States that isn't effectively connected with Section 645 provides that if both the executor (if any) of an
the conduct of a U.S. trade or business and isn't includible in estate (the related estate) and the trustee of a qualified
gross income. If you are the fiduciary of a foreign estate, file revocable trust (QRT) elect the treatment in section 645, the
Form 1040-NR, U.S. Nonresident Alien Income Tax Return, trust must be treated and taxed as part of the related estate
instead of Form 1041. during the election period. This election may be made by a
QRT even if no executor is appointed for the related estate.
Trust
The fiduciary (or one of the joint fiduciaries) must file Form In general, Form 8855, Election To Treat a Qualified
1041 for a domestic trust taxable under section 641 that has: Revocable Trust as Part of an Estate, must be filed by the due
1. Any taxable income for the tax year; date for Form 1041 for the first tax year of the related estate.
This applies even if the combined related estate and electing
2. Gross income of $600 or more (regardless of taxable trust don't have sufficient income to be required to file Form
income); 1041. However, if the estate is granted an extension of time
3. A beneficiary who is a nonresident alien; or to file Form 1041 for its first tax year, the due date for Form
4. If you held a qualified investment in a QOF at any time 8855 is the extended due date.
during the year, you must file your return with Form 8997
attached. See the Form 8997 instructions. Once made, the election is irrevocable.
Two or more trusts are treated as one trust if the trusts Qualified revocable trusts (QRTs). In general, a QRT is
have substantially the same grantor(s) and substantially the any trust (or part of a trust) that, on the day the decedent
same primary beneficiary(ies) and a principal purpose of died, was treated as owned by the decedent because the
such trusts is avoidance of tax. This provision applies only to decedent held the power to revoke the trust as described in
that portion of the trust that is attributable to contributions to section 676. An electing trust is a QRT for which a section
corpus made after March 1, 1984. 645 election has been made.
A trust is a domestic trust if: Election period. The election period is the period of time
• A U.S. court is able to exercise primary supervision over during which an electing trust is treated as part of its related
the administration of the trust (court test), and estate.
• One or more U.S. persons have the authority to control all The election period begins on the date of the decedent's
substantial decisions of the trust (control test). death and terminates on the earlier of:
• The day on which the electing trust and related estate, if
See Regulations section 301.7701-7 for more information any, distribute all of their assets; or
on the court and control tests. • The day before the applicable date.
Also treated as a domestic trust is a trust (other than a To determine the applicable date, first determine whether a
trust treated as wholly owned by the grantor) that: Form 706, United States Estate (and Generation-Skipping
• Was in existence on August 20, 1996, Transfer) Tax Return, is required to be filed as a result of the
• Was treated as a domestic trust on August 19, 1996, and decedent's death. If no Form 706 is required to be filed, the
• Elected to continue to be treated as a domestic trust. applicable date is 2 years after the date of the decedent's
death. If Form 706 is required, the applicable date is the later
A trust that isn't a domestic trust is treated as a foreign of 2 years after the date of the decedent's death or 6 months
trust. If you are the trustee of a foreign trust, file Form after the final determination of liability for estate tax. For
1040-NR instead of Form 1041. Also, a foreign trust with a additional information, see Regulations section 1.645-1(f).

Instructions for Form 1041 (2023) 5

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Taxpayer identification number (TIN). All QRTs must under the name and TIN of the filing trustee's trust. A
obtain a new TIN following the death of the decedent whether statement providing the same information about the electing
or not a section 645 election is made. (Use Form W-9, trusts (except the filing trust) that is listed under If there is an
Request for Taxpayer Identification Number and Certification, executor above must be attached to these Forms 1041. All
to notify payers of the new TIN.) electing trusts must choose the same tax year.
An electing trust that continues after the termination of the If there is more than one electing trust, the filing trustee is
election period doesn't need to obtain a new TIN following responsible for ensuring that the filing trust's share of the
the termination unless: combined tax liability is paid.
• An executor was appointed and agreed to the election For additional information on filing requirements when
after the electing trust made a valid section 645 election, and there is no executor, including application of the separate
the electing trust filed a return as an estate under the trust's share rule, see Regulations section 1.645-1(e). For
TIN; or information on the requirements when an executor is
• No executor was appointed and the QRT was the filing appointed after an election is made and the executor doesn't
trust (as explained later). agree to the election, see later.
A related estate that continues after the termination of the Responsibilities of the trustee when there is an
election period doesn't need to obtain a new TIN. executor (or there isn't an executor and the trustee isn't
the filing trustee). When there is an executor (or there isn't
For more information about TINs, including trusts with
an executor and the trustee isn't the filing trustee), the trustee
multiple owners, see Regulations sections 1.645-1 and
of an electing trust is responsible for the following during the
301.6109-1(a).
election period.
General procedures for completing Form 1041 during • To timely provide the executor with all the trust information
the election period. necessary to allow the executor to file a complete, accurate,
If there is an executor. The following rules apply to filing and timely Form 1041.
Form 1041 while the election is in effect. • To ensure that the electing trust's share of the combined
• The executor of the related estate is responsible for filing tax liability is paid.
Form 1041 for the estate and all electing trusts. The return is The trustee does not file a Form 1041 during the election
filed under the name and TIN of the related estate. Be sure to period (except for a final return if the trust terminates during
check the “Decedent's estate” box at the top of Form 1041 the election period, as explained later).
and item G if the estate has made a section 645 election. The
Procedure for completing Form 1041 for the year in
executor continues to file Form 1041 during the election
which the election terminates.
period even if the estate distributes all of its assets before the
end of the election period. If there is an executor. If there is an executor, the Form
• The Form 1041 includes all items of income, deduction, 1041 filed under the name and TIN of the related estate for
and credit for the estate and all electing trusts. the tax year in which the election terminates includes (a) the
• For item G, the executor must provide the TIN of the items of income, deduction, and credit for the related estate
electing trust with the highest total asset value. for its entire tax year; and (b) the income, deductions, and
• The executor must attach a statement to Form 1041 credits for the electing trust for the period that ends with the
providing the following information for each electing trust last day of the election period. If the estate won't continue
(including the electing trust provided in item G): (a) the name after the close of the tax year, indicate that this Form 1041 is
of the electing trust, (b) the TIN of the electing trust, and (c) a final return.
the name and address of the trustee of the electing trust. At the end of the last day of the election period, the
• The related estate and the electing trust are treated as combined entity is deemed to distribute the share comprising
separate shares for purposes of computing DNI and applying the electing trust to a new trust. All items of income, including
distribution provisions. Also, each of those shares can net capital gains, that are attributable to the share comprising
contain two or more separate shares. For more information, the electing trust are included in the calculation of DNI of the
see Separate share rule, later, and Regulations section electing trust and treated as distributed. The distribution rules
1.645-1(e)(2)(iii). of sections 661 and 662 apply to this deemed distribution.
• The executor is responsible for ensuring that the estate's The combined entity is entitled to an income distribution
share of the combined tax obligation is paid. deduction for this deemed distribution, and the "new" trust
For additional information, including treatment of transfers must include its share of the distribution in its income. See
between shares and charitable contribution deductions, see Regulations sections 1.645-1(e)(2)(iii) and 1.645-1(h) for
Regulations section 1.645-1(e). more information.
If there isn't an executor. If no executor has been If the electing trust continues in existence after the
appointed for the related estate, the trustee of the electing termination of the election period, the trustee must file Form
trust files Form 1041 as if it were an estate. File using the TIN 1041 under the name and TIN of the trust, using the calendar
that the QRT obtained after the death of the decedent. The year as its accounting period, if it is otherwise required to file.
trustee can choose a fiscal year as the trust's tax year during If there isn't an executor. If there isn't an executor, the
the election period. Be sure to check the “Decedent's estate” following rules apply to filing Form 1041 for the tax year in
box at the top of Form 1041 and item G if the filing trust has which the election period ends.
made a section 645 election. For item G, the filing trustee • The tax year of the electing trust closes on the last day of
must provide the TIN of the electing trust with the highest the election period, and the Form 1041 filed for that tax year
total asset value. The electing trust is entitled to a single $600 includes all items of income, deduction, and credit for the
personal exemption on returns filed for the election period. electing trust for the period beginning with the first day of the
tax year and ending with the last day of the election period.
If there is more than one electing trust, the trusts must
appoint one trustee as the filing trustee. Form 1041 is filed • The deemed distribution rules discussed above apply.

6 Instructions for Form 1041 (2023)

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• Check the box to indicate that this Form 1041 is a final If the election terminates as the result of a later appointed
return. executor, the executor of the related estate must file Forms
• If the filing trust continues after the termination of the 1041 under the name and TIN of the related estate for all tax
election period, the trustee must obtain a new TIN. If the trust years of the related estate beginning with the decedent's
meets the filing requirements, the trustee must file a Form death. The electing trust's election period and tax year
1041 under the new TIN for the period beginning with the day terminate the day before the appointment of the executor.
after the close of the election period and, in general, ending The trustee isn't required to amend any of the returns filed by
December 31 of that year. the electing trust for the period prior to the appointment of the
Responsibilities of the trustee when there is an executor. The trust must file a final Form 1041 following the
executor (or there isn't an executor and the trustee isn't instructions above for completing Form 1041 in the year in
the filing trustee). In addition to the requirements listed which the election terminates and there is no executor.
above under this same heading, the trustee is responsible for Termination of the trust during the election period. If
the following. an electing trust terminates during the election period, the
• If the trust will not continue after the close of the election trustee of that trust must file a final Form 1041 by completing
period, the trustee must file a Form 1041 under the name and the entity information (using the trust's EIN), checking the
TIN of the trust. Complete the entity information and items A, Final return box, and signing and dating the form. Don't report
C, D, and F. Indicate in item F that this is a final return. Don't items of income, deduction, and credit. These items are
report any items of income, deduction, or credit. reported on the related estate's return.
• If the trust will continue after the close of the election
period, the trustee must file a Form 1041 for the trust for the Alaska Native Settlement Trusts
tax year beginning the day after the close of the election The trustee of an Alaska Native Settlement Trust may elect
period and, in general, ending December 31 of that year. Use the special tax treatment for the trust and its beneficiaries
the TIN obtained after the decedent's death. Follow the provided for in section 646. The election must be made by
general rules for completing the return. the due date (including extensions) for filing the trust's tax
Special filing instructions. return for its first tax year ending after June 7, 2001. Don't
When the election isn't made by the due date of the use Form 1041. Use Form 1041-N, U.S. Income Tax Return
QRT's Form 1041. If the section 645 election hasn't been for Electing Alaska Native Settlement Trusts, to make the
made by the time the QRT's first income tax return would be election. Additionally, Form 1041-N is the trust's income tax
due for the tax year beginning with the decedent's death, but return and satisfies the section 6039H information reporting
the trustee and executor (if any) have decided to make a requirement for the trust.
section 645 election, then the QRT isn't required to file a
Bankruptcy Estate
Form 1041 for the short tax year beginning with the
decedent's death and ending on December 31 of that year. The bankruptcy trustee or debtor-in-possession must file
However, if a valid election isn't subsequently made, the QRT Form 1041 for the estate of an individual involved in
may be subject to penalties and interest for failure to file and bankruptcy proceedings under chapter 7 or 11 of title 11 of
failure to pay. the U.S. Code if the estate has gross income for the tax year
of $13,850 or more. See Bankruptcy Estates, later, for
If the QRT files a Form 1041 for this short period, and a details.
valid section 645 election is subsequently made, then the
trustee must file an amended Form 1041 for the electing Charitable Remainder Trusts (CRTs)
trust, excluding all items of income, deduction, and credit of
the electing trust. These amounts are then included on the A section 664 CRT doesn’t file Form 1041. Instead, a CRT
first Form 1041 filed by the executor for the related estate (or files Form 5227, Split-Interest Trust Information Return. If the
the filing trustee for the electing trust filing as an estate). CRT has any unrelated business taxable income, it must also
file Form 4720, Return of Certain Excise Taxes Under
Later appointed executor. If an executor for the related
Chapters 41 and 42 of the Internal Revenue Code.
estate isn't appointed until after the trustee has made a valid
section 645 election, the executor must agree to the trustee's Common Trust Funds
election and they must file a revised Form 8855 within 90
days of the appointment of the executor. If the executor Don't file Form 1041 for a common trust fund maintained by a
doesn't agree to the election, the election terminates as of bank. Instead, the fund may use Form 1065, U.S. Return of
the date of appointment of the executor. Partnership Income, for its return. For more details, see
section 584 and Regulations section 1.6032-1.
If the executor agrees to the election, the trustee must
amend any Form 1041 filed under the name and TIN of the ESBTs
electing trust for the period beginning with the decedent's
ESBTs file Form 1041. However, see Electing Small Business
death. The amended returns are still filed under the name
and TIN of the electing trust, and they must include the items Trusts (ESBTs), later, for a discussion of the special reporting
requirements for these trusts.
of income, deduction, and credit for the related estate for the
periods covered by the returns. Also, attach a statement to Pooled Income Funds
the amended Forms 1041 identifying the name and TIN of
the related estate, and the name and address of the executor. Pooled income funds file Form 1041. See Pooled Income
Check the “Final return” box on the amended return for the Funds, later, for the special reporting requirements for these
tax year that ends with the appointment of the executor. trusts. Additionally, pooled income funds must file Form 5227.
Except for this amended return, all returns filed for the
combined entity after the appointment of the executor must Qualified Funeral Trusts
be filed under the name and TIN of the related estate. Trustees of pre-need funeral trusts who elect treatment under
section 685 file Form 1041-QFT, U.S. Income Tax Return for

Instructions for Form 1041 (2023) 7

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Qualified Funeral Trusts. All other pre-need funeral trusts, see Form 8879-F can only be associated with a single
Grantor Type Trusts, later, for Form 1041 reporting ! Form 1041. Form 8879-F can't be used with multiple
requirements. CAUTION Forms 1041.

Qualified Settlement Funds Form 1041 may also be e-filed using Form 8453-FE.
The trustee of a designated or qualified settlement fund For more information about e-filing returns through MeF,
(QSF) must generally file Form 1120-SF, U.S. Income Tax see Pub. 4164.
Return for Settlement Funds, instead of Form 1041.
If Form 1041 is e-filed and there is a balance due, the
Special election. If a QSF has only one transferor, the
fiduciary may authorize an electronic funds withdrawal with
transferor may elect to treat the QSF as a grantor type trust.
the return.
To make the grantor trust election, the transferor must
attach an election statement to a timely filed Form 1041, Private Delivery Services (PDSs)
including extensions, that the administrator files for the QSF You can use certain PDSs designated by the IRS to meet the
for the tax year in which the settlement fund is established. If “timely mailing as timely filing/paying” rule for tax returns and
Form 1041 isn't filed because Optional Method 1 or 2 payments. Go to IRS.gov/PDS for the current list of
(described later) was chosen, attach the election statement designated services.
to a timely filed income tax return, including extensions, of
the transferor for the tax year in which the settlement fund is The PDS can tell you how to get written proof of the
established. mailing date.
Election statement. The election statement may be For the IRS mailing address to use if you’re using a PDS,
made separately or, if filed with Form 1041, on the go to IRS.gov/PDSstreetAddresses.
attachment described under Grantor Type Trusts, later. At the
top of the election statement, enter “Section 1.468B-1(k) PDSs can't deliver items to P.O. boxes. You must use
Election” and include the transferor's: ! the U.S. Postal Service to mail any item to an IRS
• Name, CAUTION P.O. box address.
• Address,
• TIN, and When To File
• A statement that they will treat the QSF as a grantor type For calendar year estates and trusts, file Form 1041 and
trust. Schedule(s) K-1 by April 15, 2024. If you live in Maine or
Massachusetts, you have until April 17, 2024, because of the
Widely Held Fixed Investment Trust (WHFITs) Patriots' Day and Emancipation Day holidays.
Trustees and middlemen of WHFITs don't file Form 1041.
Instead, they report all items of gross income and proceeds For fiscal year estates and trusts, file Form 1041 by the
on the appropriate Form 1099. For the definition of a WHFIT, 15th day of the 4th month following the close of the tax year.
see Regulations section 1.671-5(b)(22). A tax information For example, an estate that has a tax year that ends on June
statement that includes the information given to the IRS on 30, 2024, must file Form 1041 by October 15, 2024. If the
Forms 1099, as well as additional information identified in due date falls on a Saturday, Sunday, or legal holiday, file on
Regulations section 1.671-5(e), must be given to trust the next business day.
interest holders. See the General Instructions for Certain
Information Returns for more information. Extension of Time To File
If more time is needed to file the estate or trust return, use
Electronic Filing Form 7004, Application for Automatic Extension of Time To
Qualified fiduciaries or transmitters may be able to file Form File Certain Business Income Tax, Information, and Other
1041 and related schedules electronically. To become an Returns, to apply for an automatic 5 / -month extension of 1 2
e-file provider, complete the following steps. time to file.
1. Create an IRS e-Services account.
Period Covered
2. Submit your e-file provider application online. File the 2023 return for calendar year 2023 and fiscal years
3. Pass a suitability check. beginning in 2023 and ending in 2024. If the return is for a
fiscal year or a short tax year (less than 12 months), fill in the
The online application process takes 4–6 weeks to
tax year space at the top of the form.
complete.
The 2023 Form 1041 may also be used for a tax year
Note. Existing e-file providers must now use -Services to e beginning in 2024 if:
make account updates.
1. The estate or trust has a tax year of less than 12
Help is available online at e-services or through the e-Help months that begins and ends in 2024, and
Desk at 866-255-0654 (512-416-7750 for international calls),
2. The 2024 Form 1041 isn't available by the time the
Monday through Friday, 6:30 a.m.–6:00 p.m. (Central time).
estate or trust is required to file its tax return. However, the
Frequently asked questions and Online Tutorials are available
estate or trust must show its 2024 tax year on the 2023 Form
to answer questions or to guide users through the application
1041 and incorporate any tax law changes that are effective
process.
for tax years beginning after 2023.
If you file Form 1041 electronically, you may sign the return
electronically by using a personal identification number (PIN).
See Form 8879-F for details.

8 Instructions for Form 1041 (2023)

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Where To File
For all estates and trusts, including charitable and split-interest trusts (other than CRTs).

                                                                  THEN use this address if you...
      IF you are located in...          Are not enclosing a check or money order:   Are enclosing a check or money order:
Connecticut, Delaware, District of 
Columbia, Georgia, Illinois, Indiana, 
Kentucky, Maine, Maryland, 
Massachusetts, Michigan, New           Department of the Treasury                 Department of the Treasury
Hampshire, New Jersey, New York, North  Internal Revenue Service                  Internal Revenue Service 
Carolina, Ohio, Pennsylvania, Rhode    Kansas City, MO 64999-0048                 Kansas City, MO 64999-0148
Island, South Carolina, Tennessee, 
Vermont, Virginia, West Virginia, 
Wisconsin
Alabama, Alaska, Arizona, Arkansas, 
California, Colorado, Florida, Hawaii, 
Idaho, Iowa, Kansas, Louisiana,        Department of the Treasury                 Department of the Treasury
Minnesota, Mississippi, Missouri,      Internal Revenue Service                   Internal Revenue Service 
Montana, Nebraska, Nevada, New         Ogden, UT 84201-0048                       Ogden, UT 84201-0148
Mexico, North Dakota, Oklahoma, 
Oregon, South Dakota, Texas, Utah, 
Washington, Wyoming
A foreign country or U.S. territory    Internal Revenue Service                   Internal Revenue Service 
                                       P.O. Box 409101                            P.O. Box 409101
                                       Ogden, UT 84409                            Ogden, UT 84409

                                                                  appears in the Paid Preparer Use Only area of the estate's or 
Who Must Sign
                                                                  trust's return. It doesn't apply to the firm, if any, shown in that 
                                                                  section.
Fiduciary
The fiduciary, or an authorized representative, must sign           If the “Yes” box is checked, the fiduciary is authorizing the 
Form 1041. If there are joint fiduciaries, only one is required   IRS to call the paid preparer to answer any questions that 
to sign the return.                                               may arise during the processing of the estate's or trust's 
                                                                  return. The fiduciary is also authorizing the paid preparer to:
  A financial institution that submitted estimated tax            • Give the IRS any information that is missing from the 
payments for trusts for which it is the trustee must enter its    estate's or trust's return;
EIN in the space provided for the EIN of the fiduciary. Don't     • Call the IRS for information about the processing of the 
enter the EIN of the trust. For this purpose, a financial         estate's or trust's return or the status of its refund or 
institution is one that maintains a Treasury Tax and Loan         payment(s); and
(TT&L) account. If you are an attorney or other individual        • Respond to certain IRS notices that the fiduciary has 
functioning in a fiduciary capacity, leave this space blank.      shared with the preparer about math errors, offsets, and 
Don't enter your individual social security number (SSN).         return preparation. The notices won't be sent to the preparer.
                                                                    The fiduciary isn't authorizing the paid preparer to receive 
Paid Preparer
                                                                  any refund check, bind the estate or trust to anything 
Generally, anyone who is paid to prepare a tax return must        (including any additional tax liability), or otherwise represent 
have a Preparer Tax Identification Number (PTIN), sign the        the estate or trust before the IRS.
return, and fill in the other blanks in the Paid Preparer Use 
Only area of the return.                                            The authorization will automatically end no later than the 
                                                                  due date (without regard to extensions) for filing the estate's 
  The person required to sign the return must:                    or trust's 2024 tax return. If the fiduciary wants to expand the 
• Complete the required preparer information including their      paid preparer's authorization or revoke the authorization 
PTIN,                                                             before it ends, see Pub. 947, Practice Before the IRS and 
• Sign it in the space provided for the preparer's signature (a   Power of Attorney.
facsimile signature is acceptable), and
• Give you a copy of the return for your records.                 Accounting Methods
                                                                  Figure taxable income using the method of accounting 
  If you, as fiduciary, fill in Form 1041, leave the Paid         regularly used in keeping the estate's or trust's books and 
Preparer Use Only space blank.                                    records. Generally, permissible methods include the cash 
  If someone prepares this return and doesn't charge you,         method, the accrual method, or any other method authorized 
that person should not sign the return.                           by the Internal Revenue Code. In all cases, the method used 
                                                                  must clearly reflect income.
Paid Preparer Authorization                                         Generally, the estate or trust may change its accounting 
If the fiduciary wants to allow the IRS to discuss the estate's   method (for income as a whole or for any material item) only 
or trust's 2023 tax return with the paid preparer who signed it,  by getting consent on Form 3115, Application for Change in 
check the “Yes” box in the signature area of the return. This     Accounting Method. For more information, see Pub. 538, 
authorization applies only to the individual whose signature      Accounting Periods and Methods.

Instructions for Form 1041 (2023)                                                                                                9

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3. A trust that was treated as owned by the decedent if
Accounting Periods
the trust will receive the residue of the decedent's estate
For a decedent's estate, the moment of death determines the under the will (or, if no will is admitted to probate, is the trust
end of the decedent's tax year and the beginning of the primarily responsible for paying debts, taxes, and expenses
estate's tax year. As executor or administrator, you choose of administration) for any tax year ending before the date that
the estate's tax period when you file its first income tax return. is 2 years after the decedent's death.
The estate's first tax year may be any period of 12 months or
less that ends on the last day of a month. If you select the last For more information, see Form 1041-ES, Estimated
day of any month other than December, you are adopting a Income Tax for Estates and Trusts.
fiscal tax year.
Electronic Deposits
To change the accounting period of an estate, use Form A financial institution that has been designated as an
1128, Application To Adopt, Change, or Retain a Tax Year. authorized federal tax depository, and acts as a fiduciary for
Generally, a trust must adopt a calendar year. The at least 200 taxable trusts that are required to pay estimated
following trusts are exempt from this requirement. tax, is required to deposit the estimated tax payments
• A trust that is exempt from tax under section 501(a). electronically using the Electronic Federal Tax Payment
• A charitable trust described in section 4947(a)(1). System (EFTPS).
• A trust that is treated as wholly owned by a grantor under A fiduciary that isn't required to make electronic deposits
the rules of sections 671 through 679. of estimated tax on behalf of a trust or an estate may
voluntarily participate in EFTPS. To enroll in or get more
Rounding Off to Whole Dollars
information about EFTPS, go to EFTPS.gov or call
You may round off cents to whole dollars on the estate's or 800-555-4477. To contact EFTPS using Telecommunications
trust's return and schedules. If you do round to whole dollars, Relay Services (TRS) for people who are deaf, hard of
you must round all amounts. To round, drop amounts under hearing, or have a speech disability, dial 711 and then
50 cents and increase amounts from 50 to 99 cents to the provide the TRS assistant the 800-555-4477 number above
next dollar. For example, $1.39 becomes $1 and $2.50 or 800-733-4829. Also, see Pub. 966, Electronic Federal Tax
becomes $3. Payment System: A Guide to Getting Started.
If you have to add two or more amounts to figure the Depositing on time. For a deposit using EFTPS to be on
amount to enter on a line, include cents when adding the time, the deposit must be submitted by 8:00 p.m. Eastern
amounts and round off only the total. time the day before the due date of the deposit.

If you are entering amounts that include cents, make sure Section 643(g) Election
to include the decimal point. There is no cents column on the
form. Fiduciaries of trusts that pay estimated tax may elect under
section 643(g) to have any portion of their estimated tax
Estimated Tax payments allocated to any of the beneficiaries.
Generally, an estate or trust must pay estimated income tax The fiduciary of a decedent's estate may make a section
for 2024 if it expects to owe, after subtracting any withholding 643(g) election only for the final year of the estate.
and credits, at least $1,000 in tax, and it expects the
withholding and credits to be less than the smaller of: Make the election by filing Form 1041-T, Allocation of
1. 90% of the tax shown on the 2024 tax return (66 / % of 2 3 Estimated Tax Payments to Beneficiaries, by the 65th day
the tax if the estate or trust qualifies as a farmer or after the close of the estate's or trust's tax year. Then, include
fisherman); or that amount in box 13, code A, of Schedule K-1 (Form 1041)
for any beneficiaries for whom it was elected.
2. 100% of the tax shown on the 2023 tax return (110%
of that amount if the estate's or trust's AGI on that return is If Form 1041-T was timely filed, the payments are treated
more than $150,000, and less than / of gross income for 2 3 as paid or credited to the beneficiary on the last day of the tax
2023 and 2024 is from farming or fishing). year and must be included as an other amount paid, credited,
or required to be distributed on Form 1041, Schedule B,
However, if a return was not filed for 2023 or that return line 10. See the instructions for Schedule B, line 10, later.
didn't cover a full 12 months, item 2 doesn't apply.
Failure to make a timely election will result in the estimated
For this purpose, include household employment taxes in tax payments not being transferred to the beneficiary(ies)
the tax shown on the tax return, but only if either of the even if you entered the amount on Schedule K-1.
following is true.
• The estate or trust will have federal income tax withheld for See the instructions for Schedule G, Part II, line 11, for
2024 (see the instructions for Schedule G, Part II, line 14). more details.
• The estate or trust would be required to make estimated
tax payments for 2024 even if it didn't include household Interest and Penalties
employment taxes when figuring estimated tax.
Interest
Exceptions Interest is charged on taxes not paid by the due date, even if
Estimated tax payments aren't required from: an extension of time to file is granted.
1. An estate of a domestic decedent or a domestic trust Interest is also charged on penalties imposed for failure to
that had no tax liability for the full 12-month 2023 tax year; file, negligence, fraud, substantial valuation misstatements,
2. A decedent's estate for any tax year ending before the substantial understatements of tax, and reportable
date that is 2 years after the decedent's death; or transaction understatements. Interest is charged on the

10 Instructions for Form 1041 (2023)

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penalty from the due date of the return (including extensions). have been responsible for collecting, accounting for, or
The interest charge is figured at a rate determined under paying over these taxes, and who acted willfully in not doing
section 6621. so. The penalty is equal to the unpaid trust fund tax. See the
Instructions for Form 720; Pub. 15 (Circular E), Employer's
Late Filing of Return Tax Guide; or Pub. 51 (Circular A), Agricultural Employer's
The law provides a penalty of 5% of the tax due for each Tax Guide, for more details, including the definition of
month, or part of a month, for which a return isn't filed up to a responsible persons.
maximum of 25% of the tax due (15% for each month, or part
of a month, up to a maximum of 75% if the failure to file is Other Penalties
fraudulent). If the return is more than 60 days late, the Other penalties can be imposed for negligence, substantial
minimum penalty is the smaller of $485 or the tax due. understatement of tax, and fraud. See Pub. 17, Your Federal
Income Tax, for details on these penalties.
The penalty won't be imposed if you can show that the
failure to file on time was due to reasonable cause. If you Other Forms That May Be Required
receive a notice about penalty and interest after you file this Form W-2, Wage and Tax Statement, and Form W-3,
return, send us an explanation and we will determine if you Transmittal of Wage and Tax Statements.
meet reasonable-cause criteria. Don't attach an explanation
when you file Form 1041. Form 56, Notice Concerning Fiduciary Relationship. You
must notify the IRS of the creation or termination of a
Late Payment of Tax fiduciary relationship. You may use Form 56 to provide this
Generally, the penalty for not paying tax when due is / of 1% 1 2 notice to the IRS.
of the unpaid amount for each month or part of a month it Form 461, Limitation on Business Losses.
remains unpaid. The maximum penalty is 25% of the unpaid
amount. The penalty applies to any unpaid tax on the return. Form 706, United States Estate (and Generation-Skipping
Any penalty is in addition to interest charges on late Transfer) Tax Return; or Form 706-NA, United States Estate
payments. (and Generation-Skipping Transfer) Tax Return, Estate of
nonresident not a citizen of the United States.
If you include interest on either of these penalties
TIP with your payment, identify and enter these amounts Form 706-GS(D), Generation-Skipping Transfer Tax
in the bottom margin of Form 1041, page 1. Don't Return for Distributions.
include the interest or penalty amount in the balance of tax
Form 706-GS(D-1), Notification of Distribution From a
due on line 28.
Generation-Skipping Trust.
Failure To Provide Information Timely Form 706-GS(T), Generation-Skipping Transfer Tax
Return for Terminations.
You must provide Schedule K-1 (Form 1041), on or before
the day you are required to file Form 1041, to each Form 709, United States Gift (and Generation-Skipping
beneficiary who receives a distribution of property or an Transfer) Tax Return.
allocation of an item of the estate.
Form 720, Quarterly Federal Excise Tax Return. Use Form
For each failure to provide Schedule K-1 to a beneficiary 720 to report environmental excise taxes, communications
when due and each failure to include on Schedule K-1 all the and air transportation taxes, fuel taxes, luxury tax on
information required to be shown (or the inclusion of incorrect passenger vehicles, manufacturers' taxes, ship passenger
information), a $310 penalty may be imposed with regard to tax, and certain other excise taxes.
each Schedule K-1 for which a failure occurs. The maximum See Trust Fund Recovery Penalty, earlier.
penalty is $3,783,000 for all such failures during a calendar
year. If the requirement to report information is intentionally CAUTION!
disregarded, each $310 penalty is increased to $630 or, if
greater, 10% of the aggregate amount of items required to be Form 926, Return by a U.S. Transferor of Property to a
reported, and no maximum penalty applies. Foreign Corporation. Use this form to report certain
information required under section 6038B.
The penalty won't be imposed if the fiduciary can show
that not providing information timely and correctly was due to Form 940, Employer's Annual Federal Unemployment
reasonable cause and not due to willful neglect. (FUTA) Tax Return. The estate or trust may be liable for FUTA
tax and may have to file Form 940 if it paid wages of $1,500
Underpaid Estimated Tax or more in any calendar quarter during the calendar year (or
If the fiduciary underpaid estimated tax, use Form 2210, the preceding calendar year) or one or more employees
Underpayment of Estimated Tax by Individuals, Estates, and worked for the estate or trust for some part of a day in any 20
Trusts, to figure any penalty. Enter the amount of any penalty different weeks during the calendar year (or the preceding
on Form 1041, line 27. calendar year).
Form 941, Employer's QUARTERLY Federal Tax Return.
Trust Fund Recovery Penalty Employers must file this form quarterly to report income tax
This penalty may apply if certain excise, income, social withheld on wages and employer and employee social
security, and Medicare taxes that must be collected or security and Medicare taxes. Certain small employers must
withheld aren't collected or withheld, or these taxes aren't file Form 944, Employer's ANNUAL Federal Tax Return,
paid. These taxes are generally reported on Forms 720, 941, instead of Form 941. For more information, see the
943, 944, or 945. The trust fund recovery penalty may be Instructions for Form 944. Agricultural employers must file
imposed on all persons who are determined by the IRS to Form 943, Employer's Annual Federal Tax Return for

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Agricultural Employees, instead of Form 941, to report Form 8275-R, Regulation Disclosure Statement, is used to
income tax withheld and employer and employee social disclose any item on a tax return for which a position has
security and Medicare taxes on farmworkers. been taken that is contrary to Treasury regulations.
See Trust Fund Recovery Penalty, earlier. Form 8288, U.S. Withholding Tax Return for Certain
CAUTION! Dispositions by Foreign Persons; and Form 8288-A,
Statement of Withholding on Certain Dispositions by Foreign
Persons. Use these forms to report and transmit withheld tax
Form 945, Annual Return of Withheld Federal Income Tax. on the sale of U.S. real property by a foreign person. Also,
Use this form to report income tax withheld from nonpayroll use these forms to report and transmit tax withheld from
payments, including pensions, annuities, IRAs, gambling amounts distributed to a foreign beneficiary from a “U.S. real
winnings, and backup withholding. property interest account” that a domestic estate or trust is
See Trust Fund Recovery Penalty, earlier. required to establish under Regulations section 1.1445-5(c)
(1)(iii).
CAUTION!
Form 8300, Report of Cash Payments Over $10,000
Form 965-A, Individual Report of Net 965 Tax Liability. Received in a Trade or Business. Generally, this form is used
to report the receipt of more than $10,000 in cash or foreign
Form 982, Reduction of Tax Attributes Due to Discharge of currency in one transaction (or a series of related
Indebtedness (and Section 1082 Basis Adjustment). transactions).
Form 1040, U.S. Individual Income Tax Return. Form 8855, Election To Treat a Qualified Revocable Trust
Form 1040-NR, U.S. Nonresident Alien Income Tax as Part of an Estate. This election allows a QRT to be treated
Return. and taxed (for income tax purposes) as part of its related
estate during the election period.
Form 1040-SR, U.S. Tax Return for Seniors.
Form 8865, Return of U.S. Persons With Respect to
Form 1041-A, U.S. Information Return Trust Accumulation Certain Foreign Partnerships. The estate or trust may have to
of Charitable Amounts. file Form 8865 if it:
Form 1042, Annual Withholding Tax Return for U.S. 1. Controlled a foreign partnership (that is, owned more
Source Income of Foreign Persons; and Form 1042-S, than a 50% direct or indirect interest in a foreign partnership);
Foreign Person's U.S. Source Income Subject to Withholding. 2. Owned at least a 10% direct or indirect interest in a
Use these forms to report and transmit withheld tax on foreign partnership while U.S. persons controlled that
payments or distributions made to nonresident alien partnership;
individuals, foreign partnerships, or foreign corporations to 3. Had an acquisition, disposition, or change in
the extent such payments or distributions constitute gross proportional interest in a foreign partnership that:
income from sources within the United States that isn't
effectively connected with a U.S. trade or business. For more a. Increased its direct interest to at least 10%,
information, see sections 1441 and 1442, and Pub. 515, b. Reduced its direct interest of at least 10% to less than
Withholding of Tax on Nonresident Aliens and Foreign 10%, or
Entities. c. Changed its direct interest by at least a 10% interest;
Forms 1099-A, B, INT, LTC, MISC, NEC, OID, Q, R, S, and or
SA. You may have to file these information returns to report 4. Contributed property to a foreign partnership in
acquisitions or abandonments of secured property; proceeds exchange for a partnership interest if:
from broker and barter exchange transactions; interest a. Immediately after the contribution, the estate or trust
payments; payments of long-term care and accelerated owned, directly or indirectly, at least a 10% interest in the
death benefits; miscellaneous income payments; foreign partnership; or
nonemployee compensation; original issue discount;
distributions from Coverdell ESAs; distributions from b. The fair market value (FMV) of the property the estate
pensions, annuities, retirement or profit-sharing plans, IRAs or trust contributed to the foreign partnership, for a
(including SEPs, SIMPLEs, Roth IRAs, Roth Conversions, partnership interest, when added to other contributions of
and IRA recharacterizations), insurance contracts, etc.; property made to the foreign partnership during the
proceeds from real estate transactions; and distributions from preceding 12-month period, exceeds $100,000.
an HSA, Archer MSA, or Medicare Advantage MSA. Also, the estate or trust may have to file Form 8865 to
Also, use certain of these returns to report amounts report certain dispositions by a foreign partnership of
received as a nominee on behalf of another person, except property it previously contributed to that foreign partnership if
amounts reported to beneficiaries on Schedule K-1 (Form it was a partner at the time of the disposition.
1041). For more details, including penalties for failing to file Form
Form 8275, Disclosure Statement. File Form 8275 to 8865, see Form 8865 and its separate instructions.
disclose items or positions, except those contrary to a Form 8886, Reportable Transaction Disclosure Statement.
regulation, that are not otherwise adequately disclosed on a Use Form 8886 to disclose information for each reportable
tax return. The disclosure is made to avoid parts of the transaction in which the trust participated, directly or
accuracy-related penalty imposed for disregard of rules or indirectly. Form 8886 must be filed for each tax year that the
substantial understatement of tax. Form 8275 is also used for federal income tax liability of the estate or trust is affected by
disclosures relating to preparer penalties for its participation in the transaction. The estate or trust may
understatements due to unrealistic positions or disregard of have to pay a penalty if it has a requirement to file Form 8886
rules. but you fail to file it. The following are reportable transactions.

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• Any transaction that is the same as or substantially similar 1. Schedule I (Form 1041).
to tax avoidance transactions identified by the IRS as listed 2. Form 4952.
transactions.
• Any transaction offered under conditions of confidentiality 3. Schedule H (Form 1040).
and for which the estate or trust paid a minimum fee 4. Schedule D (Form 1041).
(confidential transaction). 5. Form 8949.
• Any transaction for which the estate or trust or a related 6. Form 8995 or Form 8995-A.
party has contractual protection against disallowance of the
tax benefits (transaction with contractual protection). 7. Form 4136.
• Any transaction resulting in a loss of at least $2 million in 8. Form 8978.
any single year or $4 million in any combination of years 9. Form 965-A.
($50,000 in any single year if the loss is generated by a
10. Form 8941.
section 988 transaction) (loss transactions).
• Any transaction substantially similar to one of the types of 11. Form 3800.
transactions identified by the IRS as a transaction of interest. 12. Form 8997.
See the Instructions for Form 8886 for more details and 13. Form 8960.
exceptions. 14. Schedule A (Form 8936).
Form 8918, Material Advisor Disclosure Statement. 15. Additional schedules in alphabetical order.
Material advisors who provide material aid, assistance, or 16. Additional forms in numerical order.
advice on organizing, managing, promoting, selling,
implementing, insuring, or carrying out any reportable 17. All other attachments.
transaction, and who directly or indirectly receive or expect to
Attachments
receive a minimum fee, must use Form 8918 to disclose any
reportable transaction under Regulations section If you need more space on the forms or schedules, attach
301.6111-3. For more information, see Form 8918 and its separate sheets. Use the same size and format as on the
instructions. printed forms. But show the totals on the printed forms.
Form 8938, Statement of Specified Foreign Financial Attach these separate sheets after all the schedules and
Assets. forms. Enter the estate's or trust's EIN on each sheet.
Form 8960, Net Investment Income Tax—Individuals, Don't file a copy of the decedent's will or the trust
Estates, and Trusts. instrument unless the IRS requests it.
Form 8971, Information Regarding Beneficiaries Acquiring
Property From a Decedent. Special Reporting Instructions
Form 8975, Country-by-Country Report.
Grantor type trusts, the S portion of ESBTs, and bankruptcy
Schedule A (Form 8975), Tax Jurisdiction and Constituent estates all have reporting requirements that are significantly
Entity Information. different than other subchapter J trusts and decedents’
Form 8978, Partner's Additional Reporting Year Tax. estates. Additionally, grantor type trusts have optional filing
methods available. Pooled income funds have many similar
Form 8990, Limitation on Business Interest Expense reporting requirements that other subchapter J trusts (other
Under Section 163(j). than grantor type trusts and ESBTs) have but there are some
Form 8992, U.S. Shareholder Calculation of Global very important differences. These reporting differences and
Intangible Low-Taxed Income (GILTI). optional filing methods are discussed below by entity.

Form 8995, Qualified Business Income Deduction Grantor Type Trusts
Simplified Computation.
A trust is a grantor trust if the grantor retains certain powers
Form 8995-A, Qualified Business Income Deduction. or ownership benefits. This can also apply to only a portion of
Form 8997, Initial and Annual Statement of Qualified a trust. See Grantor Type Trust, later, for details on what
Opportunity Fund (QOF) Investments. makes a trust a grantor trust.
In general, a grantor trust is ignored for income tax
Additional Information purposes and all of the income, deductions, etc., are treated
The following publications may assist you in preparing Form as belonging directly to the grantor. This also applies to any
1041. portion of a trust that is treated as a grantor trust.
• Pub. 550, Investment Income and Expenses.
• Pub. 559, Survivors, Executors, and Administrators. Note. If only a portion of the trust is a grantor type trust,
• Pub. 590-A, Contributions to Individual Retirement indicate both grantor trust and the other type of trust, for
Arrangements (IRAs). example, simple or complex trust, as the type of entities
• Pub. 590-B, Distributions from Individual Retirement checked in Section A on page 1 of Form 1041.
Arrangements (IRAs).
The following instructions apply only to grantor type
• Pub. 4895, Tax Treatment of Property Acquired From a
trusts that are not using an optional filing method.
Decedent Dying in 2010. CAUTION!

Assembly and Attachments How to report. If the entire trust is a grantor trust, fill in only
Assemble any schedules, forms, and attachments behind the entity information of Form 1041. Don't show any dollar
Form 1041 in the following order. amounts on the form itself; show dollar amounts only on an

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attachment to the form. Don't use Schedule K-1 (Form 1041) • All of the trust is treated as owned by the spouses, and
as the attachment. • The spouses file their income tax return jointly for that tax
If only part of the trust is a grantor type trust, the portion of year.
the income, deductions, etc., that is allocable to the
non-grantor part of the trust is reported on Form 1041, under Generally, if a trust is treated as owned by two or more
normal reporting rules. The amounts that are allocable grantors or other persons, the trustee may choose Optional
directly to the grantor are shown only on an attachment to the Method 3 as the trust's method of reporting instead of filing
form. Don't use Schedule K-1 (Form 1041) as the Form 1041.
attachment. However, Schedule K-1 is used to reflect any
income distributed from the portion of the trust that isn't Once you choose the trust's filing method, you must follow
taxable directly to the grantor or owner. the rules under Changing filing methods, later, if you want to
The fiduciary must give the grantor (owner) of the trust a change to another method.
copy of the attachment. Exceptions. The following trusts can't report using the
Attachment. On the attachment, show: optional filing methods.
• The name, identifying number, and address of the • A common trust fund (as defined in section 584(a)).
person(s) to whom the income is taxable; • A foreign trust or a trust that has any of its assets located
• The income of the trust that is taxable to the grantor or outside the United States.
another person under sections 671 through 678—report the • A QSST (as defined in section 1361(d)(3)).
income in the same detail as it would be reported on the • A trust all of which is treated as owned by one grantor or
grantor's return had it been received directly by the grantor; one other person whose tax year is other than a calendar
and year.
• Any deductions, credits, or elections that apply to this • A trust all of which is treated as owned by one or more
income. Report these deductions and credits in the same grantors or other persons, one of which isn't a U.S. person.
detail as they would be reported on the grantor's return had • A trust all of which is treated as owned by one or more
they been received directly by the grantor. grantors or other persons if at least one grantor or other
The income taxable to the grantor or another person under person is an exempt recipient for information reporting
sections 671 through 678 and the deductions and credits that purposes, unless at least one grantor or other person isn't an
apply to that income must be reported by that person on their exempt recipient and the trustee reports without treating any
own income tax return. of the grantors or other persons as exempt recipients.
Example. The John Doe Trust is a grantor type trust. Optional Method 1. For a trust treated as owned by one
During the year, the trust sold 100 shares of ABC stock for grantor or by one other person, the trustee must give all
$1,010 in which it had a basis of $10 and 200 shares of XYZ payers of income during the tax year the name and TIN of the
stock for $10 in which it had a $1,020 basis. grantor or other person treated as the owner of the trust and
The trust doesn't report these transactions on Form 1041. the address of the trust. This method may be used only if the
Instead, a schedule is attached to the Form 1041 showing owner of the trust provides the trustee with a signed Form
each stock transaction separately and in the same detail as W-9. In addition, unless the grantor or other person treated
John Doe (grantor and owner) will need to report these as owner of the trust is the trustee or a co-trustee of the trust,
transactions on his Form 8949, Sales and Other Dispositions the trustee must give the grantor or other person treated as
of Capital Assets; and Schedule D (Form 1040). The trust owner of the trust a statement that:
doesn't net the capital gains and losses, nor does it issue • Shows all items of income, deduction, and credit of the
John Doe a Schedule K-1 (Form 1041) showing a $10 trust;
long-term capital loss. • Identifies the payer of each item of income;
• Explains how the grantor or other person treated as owner
QSSTs. Income allocated to S corporation stock held by the of the trust takes those items into account when figuring the
trust is treated as owned by the income beneficiary of the grantor's or other person's taxable income or tax; and
portion of the trust that owns the stock. Report this income • Informs the grantor or other person treated as the owner of
following the rules discussed above for grantor type trusts. A the trust that those items must be included when figuring
QSST can't elect any of the optional filing methods discussed taxable income and credits on their income tax return.
below.
Grantor trusts that haven't applied for an EIN and are
However, the trust, and not the income beneficiary, is TIP going to file under Optional Method 1 don't need an
treated as the owner of the S corporation stock for figuring EIN for the trust as long as they continue to report
and attributing the tax results of a disposition of the stock. For under that method.
example, if the disposition is a sale, the QSST election ends
as to the stock sold, and any gain or loss recognized on the Optional Method 2. For a trust treated as owned by one
sale will be that of the trust. For more information on QSSTs, grantor or by one other person, the trustee must give all
see Regulations section 1.1361-1(j). payers of income during the tax year the name, address, and
TIN of the trust. The trustee must also file with the IRS the
Optional Filing Methods for Certain Grantor Type appropriate Forms 1099 to report the income or gross
Trusts proceeds paid to the trust during the tax year that show the
trust as the payer and the grantor, or other person treated as
Generally, if a trust is treated as owned by one grantor or owner, as the payee. The trustee must report each type of
other person, the trustee may choose Optional Method 1 or income in the aggregate and each item of gross proceeds
Optional Method 2 as the trust's method of reporting instead separately. The due date for any Forms 1099 required to be
of filing Form 1041. Spouses will be treated as one grantor for filed with the IRS by a trustee under this method is February
purposes of these two optional methods if: 28, 2024 (March 31, 2024, if filed electronically).

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In addition, unless the grantor, or other person treated as For more information, see section 3406 and its
owner of the trust, is the trustee or a co-trustee of the trust, regulations.
the trustee must give the grantor or other person treated as
owner of the trust a statement that: Pooled Income Funds
• Shows all items of income, deduction, and credit of the If you are filing for a pooled income fund, attach a statement
trust; to support the following.
• Explains how the grantor or other person treated as owner • The calculation of the yearly rate of return.
of the trust takes those items into account when figuring the • The computation of the deduction for distributions to the
grantor's or other person's taxable income or tax; and beneficiaries.
• Informs the grantor or other person treated as the owner of • The computation of any charitable deduction.
the trust that those items must be included when figuring See section 642 and the regulations thereunder for more
taxable income and credits on their income tax return. This information.
statement satisfies the requirement to give the recipient
copies of the Forms 1099 filed by the trustee. You don't have to complete Schedule A or B of Form 1041.
Optional Method 3. For a trust treated as owned by two or Also, you must file Form 5227 for the pooled income fund.
more grantors or other persons, the trustee must give all However, if all amounts were transferred in trust before May
payers of income during the tax year the name, address, and 27, 1969, or if an amount was transferred to the trust after
TIN of the trust. The trustee must also file with the IRS the May 26, 1969, for which no deduction was allowed under any
appropriate Forms 1099 to report the income or gross of the sections listed under section 4947(a)(2), then Form
proceeds paid to the trust by all payers during the tax year 5227 does not have to be filed.
attributable to the part of the trust treated as owned by each
grantor, or other person, showing the trust as the payer and Note. Form 1041-A is no longer filed by pooled income
each grantor, or other person treated as owner of the trust, as funds.
the payee. The trustee must report each type of income in the
aggregate and each item of gross proceeds separately. The Electing Small Business Trusts (ESBTs)
due date for any Forms 1099 required to be filed with the IRS Special rules apply when figuring the tax on the S portion of
by a trustee under this method is February 28, 2024 (March an ESBT. The S portion of an ESBT is the portion of the trust
31, 2024, if filed electronically). that consists of stock in one or more S corporations and isn't
In addition, the trustee must give each grantor or other treated as a grantor type trust. The tax on the S portion:
person treated as owner of the trust a statement that: • Must be figured separately from the tax on the remainder
• Shows all items of income, deduction, and credit of the of the ESBT (if any) and attached to the return; and
trust attributable to the part of the trust treated as owned by • Is entered on Schedule G, Part I, line 4.
the grantor or other person;
The tax on the remainder (non-S portion) of the ESBT is
• Explains how the grantor or other person treated as owner
figured in the normal manner on Form 1041.
of the trust takes those items into account when figuring the
grantor's or other person's taxable income or tax; and Tax computation attachment. Attach to the return the tax
• Informs the grantor or other person treated as the owner of computation for the S portion of the ESBT.
the trust that those items must be included when figuring If you need to complete and attach a tax form or
taxable income and credits on their income tax return. This worksheet for the S portion of the trust, enter “ESBT” in the
statement satisfies the requirement to give the recipient top margin of the tax form, worksheet, or attachment.
copies of the Forms 1099 filed by the trustee.
To compute the tax on the S portion:
Changing filing methods. A trustee who previously had • Treat that portion of the ESBT as if it were a separate trust;
filed Form 1041 can change to one of the optional methods • Include only the income, losses, deductions, and credits
by filing a final Form 1041 for the tax year that immediately allocated to the ESBT as an S corporation shareholder and
precedes the first tax year for which the trustee elects to gain or loss from the disposition of S corporation stock;
report under one of the optional methods. On the front of the • Aggregate items of income, losses, deductions, and
final Form 1041, the trustee must enter “Pursuant to section credits allocated to the ESBT as an S corporation
1.671-4(g), this is the final Form 1041 for this grantor trust,” shareholder if the S portion of the ESBT has stock in more
and check the Final return box in item F. than one S corporation;
For more details on changing reporting methods, including • Deduct state and local income taxes directly related to the
changes from one optional method to another, see S portion or allocated to the S portion if the allocation is
Regulations section 1.671-4(g). reasonable in light of all the circumstances and
administrative expenses that wouldn't have been incurred if
Backup withholding. The following grantor trusts are the S corporation shares were not held by the trust;
treated as payors for purposes of backup withholding. • Deduct interest expense paid or accrued on indebtedness
1. A trust established after 1995, all of which is owned by incurred to acquire stock in an S corporation; and
two or more grantors (treating spouses filing a joint return as • Deduct charitable contributions attributable to the S
one grantor). portion. See Pub. 526 to figure the amount of the deduction if
2. A trust with 10 or more grantors established after 1983 either of the following apply.
but before 1996. 1. Cash contributions or contributions of ordinary income
property are more than 30% of the AGI of the S portion.
The trustee must withhold a certain percentage of
reportable payments made to any grantor who is subject to 2. Gifts of capital gain property are more than 20% of the
backup withholding. AGI of the S portion.
• Don't claim a deduction for capital losses in excess of
capital gains;

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• Don't claim an income distribution deduction or an Accounting Period
exemption amount;
• Don't claim an exemption amount in figuring the alternative A bankruptcy estate is allowed to have a fiscal year. However,
minimum tax (AMT); and this period can't be longer than 12 months.
• Don't use the tax rate schedule to figure the tax. The tax is
37% of the S portion's taxable income except in figuring the When To File
maximum tax on qualified dividends and capital gains.
For additional information, see Regulations section File Form 1041 on or before the 15th day of the 4th month
1.641(c)-1. following the close of the tax year. Use Form 7004 to apply for
Other information. When figuring the tax and DNI on the an automatic 6-month extension of time to file.
remaining (non-S) portion of the trust, disregard the S
corporation items. Disclosure of Return Information
Don't apportion to the beneficiaries any of the S
corporation items. Under section 6103(e)(5), tax returns of individual debtors
who have filed for bankruptcy under chapter 7 or 11 of title 11
If the ESBT consists entirely of stock in one or more S are, upon written request, open to inspection by or disclosure
corporations, don't make any entries on lines 1–23 to the trustee.
of page 1. Instead:
• Complete the entity portion; The returns subject to disclosure to the trustee are those
• Follow the instructions above for figuring the tax on the S for the year the bankruptcy begins and prior years. Use Form
corporation items; 4506, Request for Copy of Tax Return, to request copies of
• Enter the ESBT tax on Schedule G, Part I, line 4; the individual debtor's tax returns.
• Carry the Total tax from line 9 of Schedule G, Part I, to
line 24 on page 1; and If the bankruptcy case wasn't voluntary, disclosure can't be
• Complete the rest of the return. made before the bankruptcy court has entered an order for
The grantor portion (if any) of an ESBT will follow the rules relief, unless the court rules that the disclosure is needed for
discussed under Grantor Type Trusts, earlier. determining whether relief should be ordered.

Bankruptcy Estates Transfer of Tax Attributes From the Individual
The bankruptcy estate that is created when an individual Debtor to the Bankruptcy Estate
debtor files a petition under either chapter 7 or 11 of title 11 of
the U.S. Code is treated as a separate taxable entity. The The bankruptcy estate succeeds to the following tax
bankruptcy estate is administered by a trustee or a attributes of the individual debtor.
debtor-in-possession. If the case is later dismissed by the 1. NOL carryovers.
bankruptcy court, the individual debtor is treated as if the
bankruptcy petition had never been filed. 2. Charitable contribution carryovers.
3. Recovery of tax benefit items.
A separate taxable entity isn't created if a partnership or
corporation files a petition under any chapter of title 11 of the 4. Credit carryovers.
U.S. Code. 5. Capital loss carryovers.
For additional information about bankruptcy estates, see 6. Basis, holding period, and character of assets.
Pub. 908, Bankruptcy Tax Guide. 7. Method of accounting.
8. Unused passive activity losses.
Who Must File
9. Unused passive activity credits.
Every trustee (or debtor-in-possession) for an individual's
bankruptcy estate under chapter 7 or 11 of title 11 of the U.S. 10. Unused section 465 losses.
Code must file a return if the bankruptcy estate has gross
income of $13,850 or more for tax years beginning in 2023. Income, Deductions, and Credits

Failure to do so may result in an estimated Request for Under section 1398(c), the taxable income of the bankruptcy
Administrative Expenses being filed by the IRS in the estate is generally figured in the same manner as that of an
bankruptcy proceeding or a motion to compel filing of the individual. The gross income of the bankruptcy estate
return. includes any income included in property of the estate as
The filing of a tax return for the bankruptcy estate defined in U.S. Code, title 11, sections 541, 1115, and 1186.

CAUTION individual tax obligations.
! doesn't relieve the individual debtor(s) of their In certain chapter 11 cases, under section 1115 of title 11,
property of the bankruptcy estate includes (a) earnings from
services performed by the debtor after the beginning of the
EIN case (both wages and self-employment income) and before
Every bankruptcy estate of an individual required to file a the case is closed, dismissed, or converted to a case under a
return must have its own EIN. The SSN of the individual different chapter; and (b) property described in section 541 of
debtor can't be used as the EIN for the bankruptcy estate. title 11 and income earned therefrom that the debtor acquires
after the beginning of the case and before the case is closed,
dismissed, or converted. If section 1115 of title 11 applies,
the bankruptcy estate's gross income includes, as described
above, (a) the debtor's earnings from services performed

16 Instructions for Form 1041 (2023)

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after the beginning of the case, and (b) the income from Excess credits, such as the foreign tax credit, may also be
property acquired after the beginning of the case. carried back to pre-bankruptcy years of the individual debtor.
Standard deduction. A bankruptcy estate that doesn't
The income from property owned by the debtor when the itemize deductions is allowed a standard deduction of
case began is also included in the bankruptcy estate's gross $13,850 for tax year 2023.
income. However, if this property is exempted from the
bankruptcy estate or is abandoned by the trustee or Discharge of indebtedness. In a title 11 case, gross
debtor-in-possession, the income from the property isn't income doesn't include amounts that would normally be
included in the bankruptcy estate's gross income. Also included in gross income resulting from the discharge of
included in income is gain from the sale of the bankruptcy indebtedness. However, any amounts excluded from gross
estate's property. To figure gain, the trustee or income must be applied to reduce certain tax attributes in a
debtor-in-possession must determine the correct basis of the certain order. Attach Form 982 to show the reduction of tax
property. attributes.

To determine whether any amount paid or incurred by the Tax Rate Schedule
bankruptcy estate is allowable as a deduction or credit, or is
treated as wages for employment tax purposes, treat the Figure the tax for the bankruptcy estate using the tax rate
amount as if it were paid or incurred by the individual debtor schedule below. Enter the tax on Form 1040 or 1040-SR,
in the same trade or business or other activity the debtor line 16.
engaged in before the bankruptcy proceedings began.
If taxable income is:
Administrative expenses. The bankruptcy estate is Of the
allowed a deduction for any administrative expense allowed Over— But not over The tax is: amount over
—
under section 503 of title 11 of the U.S. Code, and any fee or —
charge assessed under chapter 123 of title 28 of the U.S. $0 $11,000 10% $0
11,000 44,725 $1,100.00 + 12% 11,000
Code, to the extent not disallowed under an Internal Revenue 44,725 95,375 5,147.00 + 22% 44,725
Code provision (for example, section 263, 265, or 275). 95,375 182,100 16,290.00 + 24% 95,375
Bankruptcy administrative expenses and fees, including 182,100 231,250 37,104.00 + 32% 182,100
accounting fees, attorney fees, and court costs, are 231,250 346,875 52,832.00 + 35% 231,250
346,875 ...... 93,300.75 + 37% 346,875
deductible on Schedule 1 (Form 1040), Part II, line 24z, as
allowable in arriving at AGI because they would not have
been incurred if property had not been held by the
bankruptcy estate. See section 67(e) and Final Regulations - Prompt Determination of Tax Liability
TD9918.
Administrative expenses of the bankruptcy estate To request a prompt determination of the tax liability of the
attributable to conducting a trade or business or for the bankruptcy estate, the trustee or debtor-in-possession must
production of estate rents or royalties are deductible in file a written request for the determination with the IRS. The
arriving at AGI on Form 1040, Schedules C, E, and F. request must be submitted in duplicate and executed under
Administrative expense loss. When figuring an NOL, penalties of perjury. The request must include a statement
nonbusiness deductions (including administrative expenses) indicating that it is a request for prompt determination of tax
are limited under section 172(d)(4) to the bankruptcy estate's liability and (a) the return type, and all the tax periods for
nonbusiness income. The excess nonbusiness deductions which prompt determination is sought; (b) the name and
are an administrative expense loss that may be carried back location of the office where the return was filed; (c) the
to each of the 3 preceding tax years and forward to each of debtor's name; (d) the debtor's SSN, TIN, or EIN; (e) the type
the 7 succeeding tax years of the bankruptcy estate. The of bankruptcy estate; (f) the bankruptcy case number; and (g)
amount of an administrative expense loss that may be carried the court where the bankruptcy is pending. Send the request
to any tax year is determined after the NOL deductions to the Centralized Insolvency Operation, P.O. Box 7346,
allowed for that year. An administrative expense loss is Philadelphia, PA 19101-7346 (marked “Request for Prompt
allowed only to the bankruptcy estate and can't be carried to Determination”).
any tax year of the individual debtor. The IRS will notify the trustee or debtor-in-possession
Carryback of NOLs and credits. within 60 days from receipt of the request if the return filed by
the trustee or debtor-in-possession has been selected for
Generally, an NOL arising in a tax year beginning in examination or has been accepted as filed. If the return is
! 2021 or later may not be carried back and instead selected for examination, it will be examined as soon as
CAUTION must be carried forward indefinitely. However,
possible. The IRS will notify the trustee or
farming losses arising in tax years beginning in 2021 or later debtor-in-possession of any tax due within 180 days from
may be carried back 2 years and carried forward indefinitely. receipt of the request or within any additional time permitted
See Pub. 536 and Pub. 225, Farmer’s Tax Guide, for more by the bankruptcy court.
information.
If the bankruptcy estate itself incurs an NOL (apart from See Rev. Proc. 2006-24, 2006-22 I.R.B. 943, available at
losses carried forward to the estate from the individual IRS.gov/irb/2006-22_IRB/ar12.html, modified by
debtor), it can carry back its NOLs not only to previous tax Announcement 2011-77, available at IRS.gov/irb/
years of the bankruptcy estate, but also to tax years of the 2011-51_IRB/ar13.
individual debtor prior to the year in which the bankruptcy
proceedings began.

Instructions for Form 1041 (2023) 17

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Special Filing Instructions for Bankruptcy Estates Address
Use Form 1041 only as a transmittal for Form 1040 or Include the suite, room, or other unit number after the street
1040-SR. In the top margin of Form 1040 or 1040-SR, enter address. If the post office doesn't deliver mail to the street
“Attachment to Form 1041. DO NOT DETACH.” Attach Form address and the fiduciary has a P.O. box, show the box
1040 or 1040-SR to Form 1041. Complete only the number instead.
identification area at the top of Form 1041. Enter the name of If you want a third party (such as an accountant or an
the individual debtor in the following format: “John Q. Public attorney) to receive mail for the estate or trust, enter on the
Bankruptcy Estate.” Beneath, enter the name of the trustee in street address line “C/O” followed by the third party's name
the following format: “Avery Snow, Trustee.” In item D, enter and street address or P.O. box.
the date the petition was filed or the date of conversion to a
chapter 7 or 11 case. If the estate or trust has had a change of address
(including a change to an “in care of” name and address) and
Enter on Form 1041, line 24, the total tax from line 24 of did not file Form 8822-B, Change of Address or Responsible
Form 1040 or 1040-SR. Complete lines 25 through 30 of Party — Business, check the Change in fiduciary's address
Form 1041, and sign and date it. box in item F.
In a chapter 11 case, the bankruptcy estate's gross If the estate or trust has a change of mailing address
income may be affected by section 1115 or 1186 of title 11 of (including a new "in care of" name and address) or
the U.S. Code. See Income, Deductions, and Credits, earlier. responsible party after filing its return, file Form 8822-B to
The debtor may receive a Form W-2, 1099-INT, 1099-DIV, notify the IRS of the change.
1099-MISC, or 1099-NEC or other information return
reporting wages or other income to the debtor for the entire A. Type of Entity
year, even though some or all of this income is includible in Check the appropriate box(es) that describes the entity for
the bankruptcy estate's gross income under section 1115 of which you are filing the return.
title 11 of the U.S. Code. If this happens, the income reported
to the debtor on the Form W-2 or 1099, or other information In some cases, more than one box is checked. Check all
return (and the withheld income tax shown on these forms) boxes that apply to your trust. For example, if only a portion of
must be reasonably allocated between the debtor and the a trust is a grantor type trust or if only a portion of an ESBT is
bankruptcy estate. The debtor-in-possession (or the the S portion, then more than one box is checked.
chapter 11 trustee, if one was appointed) must attach a Note. Determination of entity status is made on an annual
schedule that shows (a) all the income reported on the Form basis.
W-2, Form 1099, or other information return; (b) the portion of
this income includible in the bankruptcy estate's gross There are special reporting requirements for grantor
income; and (c) all the withheld income tax, if any, and the ! type trusts, pooled income funds, ESBTs, and
portion of withheld tax reasonably allocated to the bankruptcy CAUTION bankruptcy estates. See Special Reporting
estate. Also, the debtor-in-possesion (or the chapter 11 Instructions, earlier.
trustee, if one was appointed) must attach a copy of the Form
W-2, if any, issued to the debtor for the tax year if the Form Decedent's Estate
W-2 reports wages to the debtor and some or all of the
An estate of a deceased person is a taxable entity separate
wages are includible in the bankruptcy estate's gross income
from the decedent. It generally continues to exist until the
because of section 1115 of title 11 of the U.S. Code. For
final distribution of the assets of the estate is made to the
more details, including acceptable allocation methods, see
heirs and other beneficiaries. The income earned from the
Notice 2006-83, 2006-40 I.R.B. 596, available at IRS.gov/irb/
property of the estate during the period of administration or
2006-40_IRB/ar12.html.
settlement must be accounted for and reported by the estate.

Specific Instructions Simple Trust
A trust may qualify as a simple trust if:
Name of Estate or Trust 1. The trust instrument requires that all income must be
Copy the exact name of the estate or trust from the Form distributed currently;
SS-4, Application for Employer Identification Number, that 2. The trust instrument doesn't provide that any amounts
you used to apply for the EIN. If the name of the trust was are to be paid, permanently set aside, or used for charitable
changed during the tax year for which you are filing, enter the purposes; and
trust's new name and check the “Change in trust's name” box
in item F. 3. The trust doesn't distribute amounts allocated to the
corpus of the trust.
If a grantor type trust (discussed later), enter the name,
identification number, and address of the grantor(s) or other Complex Trust
owner(s) in parentheses after the name of the trust. A complex trust is any trust that doesn't qualify as a simple
trust as explained above.
Name and Title of Fiduciary
Enter the name and title of the fiduciary. If the name entered Qualified Disability Trust
is different from the name on the prior year's return, see A qualified disability trust is any non-grantor trust:
Change in Fiduciary's Name and Change in Fiduciary, later.
1. Described in 42 U.S.C. 1396p(c)(2)(B)(iv) and
established solely for the benefit of an individual under 65
years of age who is disabled, and

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2. All the beneficiaries of which are determined by the           life interest is figured using the yearly rate of return earned by 
Commissioner of Social Security to have been disabled for         the trust. See section 642(c) and the related regulations for 
some part of the tax year within the meaning of 42 U.S.C.         more information.
1382c(a)(3).
                                                                  B. Number of Schedules K-1 Attached
A trust will not fail to meet item 2 above just because the 
                                                                  Every trust or decedent's estate claiming an income 
trust's corpus may revert to a person who isn't disabled after 
                                                                  distribution deduction on page 1, line 18, must enter the 
the trust ceases to have any disabled beneficiaries.
                                                                  number of Schedules K-1 (Form 1041) that are attached to 
ESBT (S Portion Only)                                             Form 1041.

The S portion of an ESBT is the portion of the trust that         C. Employer Identification Number
consists of S corporation stock and that isn't treated as         Every estate or trust that is required to file Form 1041 must 
owned by the grantor or another person. See Electing Small        have an EIN. An EIN may be applied for in the following ways.
Business Trusts (ESBTs), earlier, for more information about        Online at IRS.gov/EIN. The EIN is issued immediately 
                                                                  •
an ESBT.                                                          once the application information is validated.
Grantor Type Trust                                                • By mailing or faxing Form SS-4.
A grantor type trust is a legal trust under applicable state law    If the estate or trust hasn't received its EIN by the time the 
that isn't recognized as a separate taxable entity for income     return is due, enter “Applied for” and the date you applied in 
tax purposes because the grantor or other substantial owners      the space for the EIN. For more details, see Pub. 583, 
have not relinquished complete dominion and control over          Starting a Business and Keeping Records.
the trust.
                                                                  D. Date Entity Created
Generally, for transfers made in trust after March 1, 1986,       Enter the date the trust was created, or, if a decedent's 
the grantor is treated as the owner of any portion of a trust in  estate, the date of the decedent's death.
which they have a reversionary interest in either the income 
or corpus therefrom, if, as of the inception of that portion of   E. Nonexempt Charitable and 
the trust, the value of the reversionary interest is more than 
5% of the value of that portion. Also, the grantor is treated as  Split-Interest Trusts
holding any power or interest that was held by either the 
grantor's spouse at the time that the power or interest was       Section 4947(a)(1) Trust
created or who became the grantor's spouse after the              Check this box if the trust is a nonexempt charitable trust 
creation of that power or interest. See Grantor Type Trusts,      within the meaning of section 4947(a)(1).
earlier, for more information.                                      A nonexempt charitable trust is a trust:
Pre-need funeral trusts. The purchasers of pre-need               • That isn't exempt from tax under section 501(a);
funeral services are the grantors and the owners of pre-need      • In which all of the unexpired interests are devoted to one or 
funeral trusts established under state laws. See Rev. Rul.        more charitable purposes described in section 170(c)(2)(B); 
87-127, 1987-2 C.B. 156. However, the trustees of pre-need        and
funeral trusts can elect to file the return and pay the tax for   • For which a deduction was allowed under section 170 (for 
qualified funeral trusts. For more information, see Form          individual taxpayers) or similar Code section for personal 
1041-QFT.                                                         holding companies, foreign personal holding companies, or 
                                                                  estates or trusts (including a deduction for estate or gift tax 
Nonqualified deferred compensation plans.      Taxpayers          purposes).
may adopt and maintain grantor trusts in connection with 
nonqualified deferred compensation plans (sometimes               Nonexempt charitable trust treated as a private founda-
referred to as “rabbi trusts”). Rev. Proc. 92-64, 1992-2 C.B.     tion. If a nonexempt charitable trust is treated as though it 
422, provides a “model grantor trust” for use in rabbi trust      were a private foundation under section 509, then the 
arrangements. The procedure also provides guidance for            fiduciary must file Form 990-PF, Return of Private 
requesting rulings on the plans that use these trusts.            Foundation, in addition to Form 1041.
QSSTs.    The beneficiary of a QSST is treated as the               If a nonexempt charitable trust is treated as though it were 
substantial owner of that portion of the trust which consists of  a private foundation, and it has no taxable income under 
stock in an S corporation for which an election under section     subtitle A, it may check the box on Form 990-PF, Part VI-A, 
1361(d)(2) has been made. See QSSTs, earlier.                     line 15, and enter the tax-exempt interest received or accrued 
                                                                  during the year on that line, instead of filing Form 1041 to 
Bankruptcy Estate                                                 meet its section 6012 filing requirement for that tax year.
A chapter 7 or 11 bankruptcy estate is a separate and distinct      Excise taxes.  If a nonexempt charitable trust is treated as 
taxable entity from the individual debtor for federal income      a private foundation, then it is subject to the same excise 
tax purposes. See Bankruptcy Estates, earlier.                    taxes under chapters 41 and 42 that a private foundation is 
                                                                  subject to. If the nonexempt charitable trust is liable for any of 
For more information, see section 1398 and Pub. 908.              these taxes (except the section 4940 tax), then it reports 
                                                                  these taxes on Form 4720. Taxes paid by the trust on Form 
Pooled Income Fund                                                4720 or on Form 990-PF (the section 4940 tax) can't be taken 
A pooled income fund is a split-interest trust with a remainder   as a deduction on Form 1041.
interest for a public charity and a life income interest retained 
by the donor or for another person. The property is held in a     Not a Private Foundation
pool with other pooled income fund property and doesn't           Check this box if the nonexempt charitable trust (section 
include any tax-exempt securities. The income for a retained      4947(a)(1)) isn't treated as a private foundation under section 

Instructions for Form 1041 (2023)                                                                                               19

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509. For more information, see Regulations section                 In the top margin of your corrected Schedule H, enter 
53.4947-1.                                                         “CORRECTED” and the date you discovered the error. Also, 
                                                                   on an attachment, explain the reason for your correction. If 
Other returns that must be filed. If a nonexempt charitable 
                                                                   you owe tax, pay the tax in full with your amended Form 
trust isn't treated as though it were a private foundation, the 
                                                                   1041. If you overpaid tax on a previously filed Schedule H, 
fiduciary must file Form 990, Return of Organization Exempt 
                                                                   depending on whether you choose the adjustment or claim 
From Income Tax; or Form 990-EZ, Short Form Return of 
                                                                   for refund process to correct the error, you must either repay 
Organization Exempt From Income Tax, in addition to Form 
                                                                   or reimburse the employee's share of social security and 
1041, if the trust meets the filing requirements for either of 
                                                                   Medicare taxes or get the employee's consent to the filing of 
those forms.
                                                                   a refund claim for their share. See Pub. 926, Household 
  If a nonexempt charitable trust isn't treated as though it       Employer's Tax Guide, for more information.
were a private foundation, and it has no taxable income 
under subtitle A, it may answer “Yes” on Form 990, Part V,         Amended Schedule K-1 (Form 1041).       If the amended 
line 12a, and enter the tax-exempt interest received or            return results in a change to income, or a change in 
accrued during the year on Form 990, Part V, line 12b,             distribution of any income or other information provided to a 
instead of filing Form 1041 to meet its section 6012 filing        beneficiary, an amended Schedule K-1 (Form 1041) must 
requirement for that tax year (or if Form 990-EZ is filed          also be filed with the amended Form 1041 and given to each 
instead of Form 990, you may check the box on Form                 beneficiary. Check the “Amended K-1” box at the top of the 
990-EZ, line 43, and enter the tax-exempt interest received or     amended Schedule K-1.
accrued during the year on that line).
                                                                   Final Return
Section 4947(a)(2) Trust                                           Check this box if this is a final return because the estate or 
Check this box if the trust is a split-interest trust described in trust has terminated. Also, check the “Final K-1” box at the 
section 4947(a)(2).                                                top of Schedule K-1.
  A split-interest trust is a trust that:                          If, on the final return, there are excess deductions, an 
• Isn't exempt from tax under section 501(a);                      unused capital loss carryover, or an NOL carryover, see the 
• Has some unexpired interests that are devoted to                 instructions for box 11 of Schedule K-1, later.
purposes other than religious, charitable, or similar purposes 
                                                                   Change in Trust's Name
described in section 170(c)(2)(B); and
• Has amounts transferred in trust after May 26, 1969, for         If the name of the trust has changed from the name shown on 
which a deduction was allowed under section 170 (for               the prior year's return (or Form SS-4 if this is the first return 
individual taxpayers) or similar Code sections for personal        being filed), be sure to check this box.
holding companies, foreign personal holding companies, or 
estates or trusts (including a deduction for estate or gift tax    Change in Fiduciary
purposes).                                                         If a different fiduciary enters their name on the line for Name 
                                                                   and title of fiduciary than was shown on the prior year's return 
Other returns that must be filed. The fiduciary of a               (or Form SS-4 if this is the first return being filed) and you 
split-interest trust must file Form 5227. However, see the         didn't file a Form 8822-B, be sure to check this box. If there is 
Instructions for Form 5227 for the exception that applies to       a change in the fiduciary whose address is used as the 
split-interest trusts other than section 664 CRTs.                 mailing address for the estate or trust after the return is filed, 
                                                                   use Form 8822-B to notify the IRS.
F. Initial Return, Amended Return, etc.
                                                                   Change in Fiduciary's Name
Amended Return
                                                                   If the fiduciary changed their name from the name they 
If you are filing an amended Form 1041:                            entered on the prior year's return (or Form SS-4 if this is the 
• Check the “Amended return” box in item F,                        first return being filed), be sure to check this box.
• Complete the entire return,
• Correct the appropriate lines with the new information, and      Change in Fiduciary's Address
• Refigure the estate's or trust's tax liability.
                                                                   If the same fiduciary who filed the prior year's return (or Form 
  Note. If you are amending the return for an NOL                  SS-4 if this is the first return being filed) files the current 
carryback, also check the “Net operating loss carryback” box       year's return and changed the address on the return 
in item F.                                                         (including a change to an "in care of" name and address), 
                                                                   and didn't report the change on Form 8822-B, check this box.
  If the total tax on line 24 is larger on the amended return 
than on the original return, you should generally pay the          If the address shown on Form 1041 changes after you file 
difference with the amended return. However, you should            the form (including a change to an "in care of" name and 
adjust this amount if there is any increase or decrease in the     address), file Form 8822-B to notify the IRS of the change.
total payments shown on line 26.
                                                                   G. Section 645 Election
  Attach a sheet that explains the reason for the                  If a section 645 election was made by filing Form 8855, check 
amendments and identifies the lines and amounts being              the box in item G. See Special Rule for Certain Revocable 
changed on the amended return.                                     Trusts under Who Must File, earlier, and Form 8855 for more 
Amended Schedule H (Form 1040).           If you discover an       information about this election.
error on a Schedule H (Form 1040), Household Employment 
Taxes, that you previously filed with Form 1041, file an 
“Amended” Form 1041 and attach a corrected Schedule H.

20                                                                                        Instructions for Form 1041 (2023)

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Income Line 2a—Total Ordinary Dividends
Report the estate's or trust's share of all ordinary dividends
Determining Qualified Business Income (QBI) received during the tax year.
The estate's or trust's QBI includes items of income, gain, For the year of the decedent's death, Forms 1099-DIV
deduction, and loss that are effectively connected with the issued in the decedent's name may include dividends earned
conduct of a trade or business within the United States and after the date of death that should be reported on the income
included or allowed in determining taxable income for the tax return of the decedent's estate. When preparing the
year. This includes the estate's or trust's share of items of decedent's final income tax return, report on Schedule B
income, gain, deduction, and loss from trades or business (Form 1040), line 5, the ordinary dividends shown on Form
conducted by partnerships (other than publicly traded 1099-DIV. Under the last entry on line 5, subtotal all the
partnerships (PTPs)), S corporations, and other estates or dividends reported on line 5. Below the subtotal, enter “Form
trusts. For more information, see section 199A, the 1041” and the name and address shown on Form 1041 for
Instructions for Form 8995, and the Instructions for Form the decedent's estate. Also, show the part of the ordinary
8995-A. dividends reported on Form 1041 and subtract it from the
subtotal.
Special Rule for Blind Trust
If you are reporting income from a qualified blind trust (under Report capital gain distributions on Schedule D
the Ethics in Government Act of 1978), don't identify the TIP (Form 1041), line 13.
payer of any income to the trust but complete the rest of the
return as provided in the instructions. Also enter “Blind Trust”
at the top of page 1. Line 2b—Qualified Dividends
Enter the beneficiary's allocable share of qualified dividends
Extraterritorial Income Exclusion on line 2b(1) and enter the estate's or trust's allocable share
The extraterritorial income exclusion isn't allowed for on line 2b(2).
transactions after 2006. However, income from certain If the estate or trust received qualified dividends that were
long-term sales and leases may still qualify for the exclusion. derived from IRD, you must reduce the amount on line 2b(2)
For details and to figure the amount of the exclusion, see by the portion of the estate tax deduction claimed on Form
Form 8873, Extraterritorial Income Exclusion, and its 1041, page 1, line 19, that is attributable to those qualified
separate instructions. The estate or trust must report the dividends. Don't reduce the amounts on line 2b by any other
extraterritorial income exclusion on line 15a of Form 1041, allocable expenses.
page 1.
Note. The beneficiary's share (as figured above) may differ
Although the extraterritorial income exclusion is entered from the amount entered on line 2b of Schedule K-1 (Form
on line 15a, it is an exclusion from income and should be 1041).
treated as tax-exempt income when completing other parts of
the return. Qualified dividends. Qualified dividends are eligible for a
lower tax rate than other ordinary income. Generally, these
Line 1—Interest Income dividends are reported to the estate or trust in box 1b of
Report the estate's or trust's share of all taxable interest Form(s) 1099-DIV. See Pub. 550 for the definition of qualified
income that was received during the tax year. Examples of dividends if the estate or trust received dividends not
taxable interest include interest from: reported on Form 1099-DIV.
• Accounts (including certificates of deposit and money Exception. Some dividends may be reported to the estate
market accounts) with banks, credit unions, and thrift or trust as in box 1b of Form 1099-DIV but aren't qualified
institutions; dividends. These include the following.
• Notes, loans, and mortgages; • Dividends received on any share of stock that the estate or
• U.S. Treasury bills, notes, and bonds; trust held for less than 61 days during the 121-day period that
• U.S. savings bonds; began 60 days before the ex-dividend date. The ex-dividend
• Original issue discount; and date is the first date following the declaration of a dividend on
• Income received as a regular interest holder of a real which the purchaser of a stock isn't entitled to receive the
estate mortgage investment conduit (REMIC). next dividend payment. When counting the number of days
the stock was held, include the day the estate or trust
For taxable bonds acquired after 1987, amortizable bond disposed of the stock but not the day it acquired the stock.
premium is treated as an offset to the interest income instead However, you can't count certain days during which the
of as a separate interest deduction. See Pub. 550. estate's or trust's risk of loss was diminished. See Pub. 550
for more details.
For the year of the decedent's death, Forms 1099-INT • Dividends attributable to periods totaling more than 366
issued in the decedent's name may include interest income days that the estate or trust received on any share of
earned after the date of death that should be reported on the preferred stock held for less than 91 days during the 181-day
income tax return of the decedent's estate. When preparing period that began 90 days before the ex-dividend date. When
the decedent's final income tax return, report on Schedule B counting the number of days the stock was held, include the
(Form 1040), line 1, the total interest shown on Form day the estate or trust disposed of the stock but not the day it
1099-INT. Under the last entry on line 1, subtotal all the acquired the stock. However, you can't count certain days
interest reported on line 1. Below the subtotal, enter “Form during which the estate's or trust's risk of loss was
1041” and the name and address shown on Form 1041 for diminished. See Pub. 550 for more details. Preferred
the decedent's estate. Also, show the part of the interest dividends attributable to periods totaling less than 367 days
reported on Form 1041 and subtract it from the subtotal. are subject to the 61-day holding period rule above.

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• Dividends on any share of stock to the extent that the property other than capital assets and also from involuntary
estate or trust is under an obligation (including a short sale) conversions (other than casualty or theft).
to make related payments with respect to positions in
substantially similar or related property. Line 8—Other Income
• Payments in lieu of dividends, but only if you know or have Enter other items of income not included on lines 1, 2a, and 3
reason to know that the payments are not qualified dividends. through 7. List the type and amount on an attached schedule
If you have an entry on line 2b(2), be sure you use if the estate or trust has more than one item.
TIP Schedule D (Form 1041), the Schedule D Tax Items to be reported on line 8 include the following.
Worksheet, or the Qualified Dividends Tax • Unpaid compensation received by the decedent's estate
Worksheet, whichever applies, to figure the estate's or trust's that is IRD.
tax. Figuring the estate's or trust's tax liability in this manner • Any part of a total distribution shown on Form 1099-R,
will usually result in a lower tax. Distributions From Pensions, Annuities, Retirement or
Profit-Sharing Plans, IRAs, Insurance Contracts, etc., that is
Line 3—Business Income or (Loss) treated as ordinary income. For more information, see Form
If the estate operated a business, report the income and 4972, Tax on Lump-Sum Distributions, and its instructions.
expenses on Schedule C (Form 1040), Profit or Loss From • Taxable contributions received during the tax year by an
Business. Enter the net profit or (loss) from Schedule C on Alaska Native Settlement Trust from an Alaska Native
line 3. Corporation. Report gain from taxable contributions of
noncash property on Schedule D (Form 1041).
Line 4—Capital Gain or (Loss) • The amount of payroll tax credit taken by an employer on
its 2023 employment tax returns (Forms 941, 943, and 944)
Enter the gain from Schedule D (Form 1041), Part III, line 19, for qualified paid sick and qualified paid family leave under
column (3), or the loss from Part IV, line 20. the Families First Coronavirus Response Act (FFCRA) and
If you deferred a capital gain into a QOF, you must file your the American Rescue Plan Act of 2021 (ARP) (both the
return with Schedule D, Form 8949, and Form 8997 attached. nonrefundable and refundable portions). These amounts
You will need to file Form 8997 annually until you dispose of must be included in gross income for the tax year that
the investment. See the Form 8997 instructions. includes the last day of the calendar quarter with respect to
which the credit is allowed. A credit is available only if the
Don't substitute Schedule D (Form 1040) for leave was taken sometime after March 31, 2020, and before
! Schedule D (Form 1041). October 1, 2021, and only after the qualified leave wages
CAUTION were paid, which might under certain circumstances not
occur until a quarter after September 30, 2021, including
Line 5—Rents, Royalties, Partnerships, Other quarters during 2022. Accordingly, all lines related to
Estates and Trusts, etc. qualified sick and family leave wages remain on the
Use Schedule E (Form 1040), Supplemental Income and employment tax returns for 2023.
Loss, to report the estate's or trust's share of income or
(losses) from rents, royalties, partnerships, S corporations, Note. Beginning in tax year 2021, there is no current year
other estates and trusts, and REMICs. Also use Schedule E section 965(a) income inclusion reported on line 8. However,
(Form 1040) to report farm rental income and expenses see the instructions for Schedule G, Part I, line 8, later, for
based on crops or livestock produced by a tenant. Enter the information about a triggering event for a section 965(i) net
net profit or (loss) from Schedule E on line 5. See the tax liability.
Instructions for Schedule E (Form 1040) for reporting
Deductions
requirements.
If the estate or trust received a Schedule K-1 from a Depreciation, Depletion, and Amortization
partnership, S corporation, or other flow-through entity, use A trust or decedent's estate is allowed a deduction for
the corresponding lines on Form 1041 to report the interest, depreciation, depletion, and amortization only to the extent
dividends, capital gains, etc., from the flow-through entity. the deductions aren't apportioned to the beneficiaries. An
estate or trust isn't allowed to make an election under section
Line 6—Farm Income or (Loss) 179 to expense depreciable business assets.
If the estate or trust operated a farm, use Schedule F (Form The estate's or trust's share of depreciation, depletion,
1040), Profit or Loss From Farming, to report farm income and amortization is generally reported on the appropriate
and expenses. Enter the net profit or (loss) from Schedule F lines of Schedule C, E, or F (Form 1040), the net income or
on line 6. loss from which is shown on line 3, 5, or 6 of Form 1041. If
If an estate or trust has farm rental income and the deduction isn't related to a specific business or activity,
then report it on line 15a.
! expenses based on crops or livestock produced by a
CAUTION tenant, report the income and expenses on
Depreciation. For a decedent's estate, the depreciation
Schedule E (Form 1040). Don't use Form 4835, Farm Rental deduction is apportioned between the estate and the heirs,
Income and Expenses, or Schedule F (Form 1040) to report legatees, and devisees on the basis of the estate's income
such income and expenses and don't include the net profit or allocable to each.
(loss) from such income and expenses on line 6.
For a trust, the depreciation deduction is apportioned
between the income beneficiaries and the trust on the basis
Line 7—Ordinary Gain or (Loss) of the trust income allocable to each, unless the governing
Enter from line 17 of Form 4797, Sales of Business Property, instrument (or local law) requires or permits the trustee to
the ordinary gain or loss from the sale or exchange of maintain a depreciation reserve. If the trustee is required to

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maintain a reserve, the deduction is first allocated to the trust, Accrued Expenses
up to the amount of the reserve. Any excess is allocated Generally, an accrual basis taxpayer can deduct accrued
among the income beneficiaries and the trust in the same expenses in the tax year that (a) all events have occurred that
manner as the trust's accounting income. See Regulations determine the liability, and (b) the amount of the liability can
section 1.167(h)-1(b). be figured with reasonable accuracy. However, all the events
Depletion. For mineral or timber property held by a that establish liability are treated as occurring only when
decedent's estate, the depletion deduction is apportioned economic performance takes place. There are exceptions for
between the estate and the heirs, legatees, and devisees on recurring items. See section 461(h).
the basis of the estate's income from such property allocable
to each. Limitations on Deductions
For mineral or timber property held in trust, the depletion
deduction is apportioned between the income beneficiaries At-Risk Loss Limitations
and the trust based on the trust income from such property Generally, the amount the estate or trust has “at-risk” limits
allocable to each, unless the governing instrument (or local the loss it can deduct for any tax year. Use Form 6198,
law) requires or permits the trustee to maintain a reserve for At-Risk Limitations, to figure the deductible loss for the year
depletion. If the trustee is required to maintain a reserve, the and file it with Form 1041. For more information, see Pub.
deduction is first allocated to the trust, up to the amount of 925, Passive Activity and At-Risk Rules.
the reserve. Any excess is allocated among the beneficiaries
and the trust in the same manner as the trust's accounting Passive Activity Loss and Credit Limitations
income. See Regulations section 1.611-1(c)(4). In general. Section 469 and the regulations thereunder
Amortization. The deduction for amortization is apportioned generally limit losses from passive activities to the amount of
between an estate or trust and its beneficiaries under the income derived from all passive activities. Similarly, credits
same principles used to apportion the deductions for from passive activities are generally limited to the tax
depreciation and depletion. attributable to such activities. These limitations are first
applied at the estate or trust level.
The deduction for the amortization of reforestation
expenditures under section 194 is allowed only to an estate. Generally, an activity is a passive activity if it involves the
conduct of any trade or business, and the taxpayer does not
Allocable share from a pass-through entity. materially participate in the activity. Passive activities don't
Depreciation, depletion, and amortization received from a include working interests in oil and gas properties. See
pass-through entity on a Schedule K-1 are apportioned and section 469(c)(3).
reported in the same manner as discussed above. A section
179 expense received from a pass-through entity on a Note. Material participation standards for estates and trusts
Schedule K-1 isn't deductible by the estate or trust. haven't been established by regulations.
For a grantor trust, material participation is determined at
Allocation of Deductions for Tax-Exempt Income the grantor level.
Generally, no deduction that would otherwise be allowable is
If the estate or trust distributes an interest in a passive
allowed for any expense (whether for business or for the
activity, the basis of the property immediately before the
production of income) that is allocable to tax-exempt income.
distribution is increased by the passive activity losses
Examples of tax-exempt income include:
allocable to the interest, and such losses can't be deducted.
• Certain death benefits (section 101),
See section 469(j)(12).
• Interest on state or local bonds (section 103),
• Compensation for injuries or sickness (section 104), and Losses from passive activities are first subject to the
• Income from discharge of indebtedness in a title 11 case TIP at-risk rules. When the losses are deductible under
(section 108). the at-risk rules, the passive activity rules then apply.

Exception. State income taxes and business expenses that Rental activities. Generally, rental activities are passive
are allocable to tax-exempt interest are deductible. activities, whether or not the taxpayer materially participates.
Expenses that are directly allocable to tax-exempt income However, certain taxpayers who materially participate in real
are allocated only to tax-exempt income. A reasonable property trades or businesses aren't subject to the passive
proportion of expenses indirectly allocable to both activity limitations on losses from rental real estate activities
tax-exempt income and other income must be allocated to in which they materially participate. For more details, see
each class of income. section 469(c)(7).
For tax years of an estate ending less than 2 years after
Deductions That May Be Allowable for Estate
the decedent's date of death, up to $25,000 of deductions
Tax Purposes and deduction equivalents of credits from rental real estate
Administration expenses and casualty and theft losses activities in which the decedent actively participated are
deductible on Form 706 may be deducted, to the extent allowed. Any excess losses or credits are suspended for the
otherwise deductible for income tax purposes, on Form 1041 year and carried forward.
if the fiduciary files a statement waiving the right to deduct
Portfolio income. Portfolio income isn't treated as income
the expenses and losses on Form 706. The statement must
from a passive activity, and passive losses and credits
be filed before the expiration of the statutory period of
generally may not be applied to offset it. Portfolio income
limitations for the tax year the deduction is claimed. See Pub.
generally includes interest, dividends, royalties, and income
559 for more information.
from annuities. Portfolio income of an estate or trust must be
accounted for separately.

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Forms to file. See Form 8582, Passive Activity Loss 2. Any qualified residence interest (see later), and
Limitations, to figure the amount of losses allowed from 3. Any interest payable under section 6601 on any unpaid
passive activities. See Form 8582-CR, Passive Activity Credit portion of the estate tax attributable to the value of a
Limitations, to figure the amount of credit allowed for the reversionary or remainder interest in property for the period
current year. during which an extension of time for payment of such tax is
in effect.
Business Interest
Business interest expense could be limited. For more Limitation on deduction of business interest. Business
information about limitations on deductions for business interest expense is limited to the sum of business interest
interest, see section 163(j) and Line 10—Interest, later. income, 30% of the adjusted taxable income, and floor plan
financing interest. Business interest expense includes any
Transactions Between Related Taxpayers interest paid or accrued on indebtedness properly allocable
Under section 267, a trust that uses the accrual method of to a trade or business. A taxpayer, other than a tax shelter,
accounting may only deduct business expenses and interest that meets the gross receipts test is not required to limit
owed to a related party in the year the payment is included in business interest expense under section 163(j). A taxpayer
the income of the related party. For this purpose, a related meets the gross receipts test if the taxpayer has average
party includes: annual gross receipts of $29 million or less for the 3 prior tax
years. Gross receipts include the aggregate gross receipts
1. A grantor and a fiduciary of any trust; from all persons treated as a single employer such as a
2. A fiduciary of a trust and a fiduciary of another trust, if controlled group of corporations, commonly controlled
the same person is a grantor of both trusts; partnerships or proprietorships, and affiliated service groups.
3. A fiduciary of a trust and a beneficiary of such trust; If the taxpayer fails to meet the gross receipts test, Form
8990 is generally required.
4. A fiduciary of a trust and a beneficiary of another trust,
if the same person is a grantor of both trusts; Investment interest. Generally, investment interest is
5. A fiduciary of a trust and a corporation more than 50% interest (including amortizable bond premium on taxable
in value of the outstanding stock of which is owned, directly bonds acquired after October 22, 1986, but before January 1,
or indirectly, by or for the trust or by or for a person who is a 1988) that is paid or incurred on indebtedness that is properly
grantor of the trust; and allocable to property held for investment. Investment interest
doesn't include any qualified residence interest, or interest
6. An executor of an estate and a beneficiary of that that is taken into account under section 469 in figuring
estate, except for a sale or exchange to satisfy a pecuniary income or loss from a passive activity.
bequest (that is, a bequest of a sum of money).
Generally, net investment income (NII) is the excess of
Line 10—Interest investment income over investment expenses. Investment
expenses (other than interest) are deductible only to the
Enter the amount of interest (subject to limitations) paid or extent they are allowable under section 67(e).
incurred by the estate or trust on amounts borrowed by the
estate or trust, or on debt acquired by the estate or trust (for The amount of the investment interest deduction may be
example, outstanding obligations from the decedent) that limited. Use Form 4952, Investment Interest Expense
isn't claimed elsewhere on the return. Deduction, to figure the allowable investment interest
deduction.
If the proceeds of a loan were used for more than one If you must complete Form 4952, check the box on line 10
purpose (for example, to purchase a portfolio investment and of Form 1041 and attach Form 4952. Then, add the
to acquire an interest in a passive activity), the fiduciary must deductible investment interest to the other types of
make an interest allocation according to the rules in deductible interest and enter the total on line 10.
Temporary Regulations section 1.163-8T.
Qualified residence interest. Interest paid or incurred by
Don't include interest paid on indebtedness incurred or an estate or trust on indebtedness secured by a qualified
continued to purchase or carry obligations on which the residence of a beneficiary of an estate or trust is treated as
interest is wholly exempt from income tax. qualified residence interest if the residence would be a
Personal interest isn't deductible. Examples of personal qualified residence (that is, the principal residence or the
interest include interest paid on: secondary residence selected by the beneficiary) if owned by
• Revolving charge accounts used to purchase personal-use the beneficiary. The beneficiary must have a present interest
property; in the estate or trust or an interest in the residuary of the
• Personal notes for money borrowed from a bank, a credit estate or trust. See Pub. 936, Home Mortgage Interest
union, or other person; Deduction, for an explanation of the general rules for
• Installment loans on personal-use property; and deducting home mortgage interest.
• Underpayments of federal, state, or local income taxes. See section 163(h)(3) for a definition of qualified
residence interest and for limitations on indebtedness.
Interest that is paid or incurred on indebtedness allocable
to a trade or business (including a rental activity) should be Line 11—Taxes
deducted on the appropriate line of Schedule C, E, or F
(Form 1040), the net income or loss from which is shown on The deduction for state and local taxes is limited to
line 3, 5, or 6 of Form 1041. ! $10,000. The limitation applies to the total of your
CAUTION state and local income taxes (or general sales taxes,
Types of interest to include on line 10 are: if elected instead of income taxes), real estate taxes, and
1. Any investment interest (subject to limitations—see personal property taxes. The limitation does not apply to
below), foreign income taxes, and state and local taxes paid or

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accrued in carrying on a trade or business or for the 2. In return for the cash contribution, you received a state
production of income. or local tax credit.
Enter any deductible taxes paid or incurred during the tax 3. You must reduce your charitable contribution
year that aren't deductible elsewhere on Form 1041. deduction by the amount of the state or local tax credit you
Deductible taxes include the following. receive.
• State and local income taxes. You can deduct state and If you meet these conditions, and to the extent you apply the
local income taxes unless you elect to deduct state and local state or local tax credit to this or a prior year's state or local
general sales taxes. You can't deduct both. tax liability, you may include this amount on line 11. To the
• State and local general sales taxes. You can elect to extent you apply a portion of the credit to offset your state or
deduct state and local general sales taxes instead of state local tax liability in a subsequent year (as permitted by law),
and local income taxes. Generally, you can elect to deduct you may treat this amount as state or local tax paid in the
the actual state and local general sales taxes (including year the credit is applied. For more information about this
compensating use taxes) you paid in 2023 if the tax rate was safe harbor and examples, see Notice 2019-12.
the same as the general sales tax rate. However, sales taxes
on food, clothing, medical supplies, and motor vehicles are Line 12—Fiduciary Fees
deductible as a general sales tax even if the tax rate was less
than the general sales tax rate. Sales taxes on motor vehicles Enter the deductible fees paid or incurred to the fiduciary for
are also deductible as a general sales tax if the tax rate was administering the estate or trust during the tax year.
more than the general sales tax rate, but the tax is deductible Fiduciary expenses include probate court fees and costs,
only up to the amount of tax that would have been imposed at fiduciary bond premiums, legal publication costs of notices to
the general sales tax rate. Motor vehicles include cars, creditors or heirs, the cost of certified copies of the
motorcycles, motor homes, recreational vehicles, sport utility decedent's death certificate, and costs related to fiduciary
vehicles, trucks, vans, and off-road vehicles. Also include any accounts.
state and local general sales taxes paid for a leased motor
Fiduciary fees deducted on Form 706 can't be
vehicle.
TIP deducted on Form 1041.
Do not include sales taxes paid on items used in a trade or
business. An estate or trust cannot use the Optional State
Sales Tax Tables for individuals in the Instructions for Note. Fiduciary fees are allowable under section 67(e) if
Schedule A (Form 1040), Itemized Deductions, to figure its they are costs that are paid or incurred in connection with the
deduction. administration of an estate or a non-grantor trust that would
• State and local real property taxes. not have been incurred if the property were not held in such
estate or trust. See Final Regulations - TD9918 and
Note. The deduction for foreign real property taxes is no Regulations section 1.67-4 for more information.
longer allowed.
• State and local personal property taxes. Line 14—Attorney, Accountant, and Return
• Foreign or U.S. territory income taxes. You may want to Preparer Fees
take a credit for the tax instead of a deduction. See the Expenses for preparation of fiduciary income tax returns, the
instructions for Schedule G, Part I, line 2a, later, for more decedent's final individual income tax returns, and all estate
details. and GST tax returns are fully deductible. However, expenses
• The generation-skipping transfer (GST) tax imposed on for preparing all other tax returns, including gift tax returns,
income distributions. are considered costs commonly and customarily incurred by
Don't deduct: individuals and are not deductible. For more information, see
• Federal income taxes; Final Regulations - TD9918 and Regulations section 1.67-4.
• Estate, inheritance, legacy, succession, and gift taxes;
• Federal duties and excise taxes; or Line 15a—Other Deductions
• Foreign real property taxes. Attach your own statement, listing by type and amount all
allowable deductions that aren't deductible elsewhere on
Do not deduct the estate's or trust's deduction for social Form 1041.
security and Medicare taxes by the amount claimed on its
employment tax returns for the nonrefundable and refundable Allowable deductions include all deductions listed in
portions of the FFCRA and the ARP credits for qualified sick section 67(b) (including estate taxes attributable to IRD under
and family leave wages. Instead, report this amount as section 691(c)), and other costs allowable under section
income on line 8. 67(e) paid or incurred in connection with the administration of
the estate or trust that would not have been incurred if the
Safe harbor for certain charitable contributions made in property were not held in the estate or trust.
exchange for a state or local tax credit. If you made a
charitable contribution in exchange for a state or local tax Don't include any losses on worthless bonds and similar
credit and your charitable contribution deduction must be obligations and nonbusiness bad debts. Report these losses,
reduced as a result of receiving or expecting to receive the as applicable, on Form 8949.
tax credit, you may qualify for a safe harbor that allows you to Don't deduct medical or funeral expenses on Form 1041.
treat some or all of the disallowed charitable contribution as a Medical expenses of the decedent paid by the estate may be
payment of state and local taxes. The safe harbor applies if deductible on the decedent's income tax return for the year
you meet the following conditions. incurred. See section 213(c). Funeral expenses are
1. You made a cash contribution to an entity described in deductible only on Form 706.
section 170(c). Other costs paid or incurred by estates and non-grantor
trusts. Under section 67(e), deductions are allowable for

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costs which are paid or incurred by an estate or non-grantor commonly or customarily by individuals, then (except to the
trust in connection with the administration of the estate or extent provided otherwise by guidance published in the
trust and would not have been incurred if the property were Internal Revenue Bulletin) the single fee, commission, or
not held in such estate or trust. other expense (bundled fee) must be allocated between the
In determining whether a cost is deductible by an estate or costs that are incurred commonly or customarily by
non-grantor trust, it must be determined whether the cost individuals, such costs not being deductible, and costs that
would be “commonly or customarily” incurred by a are not incurred commonly or customarily by individuals,
hypothetical individual owning the same property. If the cost such costs being deductible.
would be deductible by a hypothetical individual, it is not There is an exception to the allocation rule if a bundled fee
deductible by the estate or non-grantor trust. is not computed on an hourly basis. In this situation, only the
It is the type of product or service rendered to the estate or portion of that fee that is attributable to investment advice is
non-grantor trust in exchange for the cost, rather than the not deductible. The remaining portion deductible.is
description of the cost of that product or service, that is Out-of-pocket expenses billed to the estate or non-grantor
determinative. trust are treated as separate from the bundled fee and are not
Costs that are incurred commonly or customarily by subject to allocation.
individuals include costs incurred in defense of a claim Estates and non-grantor trusts cannot deduct payments
against the estate, the decedent, or the non-grantor trust that made from the bundled fee to third parties if such payments
are unrelated to the existence, validity, or administration of would not have been deductible if they had been paid directly
the estate or trust. These amounts are not allowable by the estate or non-grantor trust.
deductions. Any reasonable method may be used to allocate a
Ownership costs. Ownership costs are costs that are bundled fee, including without limitation the allocation of a
chargeable to or incurred by an owner of property simply by portion of a fiduciary commission that is a bundled fee to
reason of being the owner of the property. These costs are investment advice. For more information, see Regulations
commonly or customarily incurred by a hypothetical section 1.67-4(c)(4).
individual owner of such property and are not deductible by Note. The reasonable method standard does not apply to
an estate or non-grantor trust. Under section 67(b), they determine the portion of the bundled fee attributable to
include, but are not limited to, condominium fees, insurance payments made to third parties commonly or customarily
premiums, maintenance and lawn services, automobile incurred by an individual or to any other separately assessed
registration and insurance costs, and partnership costs expense commonly or customarily incurred by an individual,
deemed to be passed through to and reportable by a partner. because those payments and expenses are readily
Other expenses incurred merely by reason of the ownership identifiable without any discretion on the part of the fiduciary
of property may be fully deductible under other provisions of or return preparer.
the Code. For more information, see Regulations section 1.67-4.
Appraisal fees. Appraisal fees incurred to determine the
FMV of assets as of the decedent's date of death (or the Other Deductions Reported on Line 15a
alternate valuation date), to determine value for purposes of
making distributions, or as otherwise required to properly Bond premium(s). For taxable bonds acquired before
prepare the estate's or trust's tax returns, or a GST tax return, October 23, 1986, if the fiduciary elected to amortize the
are not incurred commonly or customarily by an individual premium, report the amortization on this line. If you made the
and are deductible. The cost of appraisals for other purposes election to amortize the premium, the basis in the taxable
(for example, insurance) is commonly or customarily incurred bond must be reduced by the amount of amortization.
by individuals and is not an allowable deduction. For tax-exempt bonds, you can't deduct the premium that
Investment advisory fees. Fees for investment advice, is amortized. Although the premium can't be deducted, you
including any related services that would be provided to any must amortize the tax-exempt bond by the amount of
individual investor as part of an investment advisory fee, are premium amortized.
incurred commonly or customarily by a hypothetical For more information, see section 171 and Pub. 550.
individual investor and are not deductible. However, certain If you claim a bond premium deduction for the estate or
incremental costs of investment advice beyond the amount trust, figure the deduction on a separate sheet and attach it to
that would normally be charged to an individual investor are Form 1041.
deductible.
Casualty and theft losses. Use Form 4684, Casualties and
An incremental cost is a special, additional charge that is Thefts, to figure any deductible casualty and theft losses.
added solely because the investment advice is rendered to a
trust or estate rather than to an individual, including balancing Estate's or trust's share of amortization, depreciation,
beyond the usual varying interests of current beneficiaries and depletion not claimed elsewhere. If you can't deduct
and remaindermen. The deductible portion of the investment the estate's or trust's apportioned share of amortization,
advisory fees is limited to the amount of those fees, if any, depreciation, and depletion as rent or royalty expenses on
that exceeds the fees normally charged to an individual Schedule E (Form 1040), or as business or farm expenses on
investor. See Regulations section 1.67-4(b)(4). Schedule C or F (Form 1040), itemize the estate's or trust's
apportioned share of the deductions on an attached sheet
Bundled fees. If an estate or non-grantor trust pays a single and include them on line 15a.
fee, commission, or other expense, such as a fiduciary's
commission, attorney's fee, or accountant's fee for both costs Note. Don't report the beneficiary's apportioned share of
that are incurred commonly or customarily by individuals and depreciation, depletion, and amortization on line 15a. Report
costs (other than a de minimis amount) that are not incurred

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the beneficiary's apportioned share of deductions in box 9 of Also, a deduction is allowed for the GST tax imposed as a
Schedule K-1 (Form 1041). result of a taxable termination or a direct skip occurring as a
Itemize each beneficiary's apportioned share of the result of the death of the transferor. See section 691(c)(3).
deductions and report them in the appropriate box of Enter the estate's or trust's share of these deductions on
Schedule K-1 (Form 1041). line 19.

Section 179D. Enter any applicable deduction under Line 20—Qualified Business Income Deduction
section 179D for costs of energy efficient commercial To figure your QBI deduction, use Form 8995 or Form
business property placed in service during the tax year. 8995-A, as applicable.
Complete and attach Form 7205, Energy Efficient
Commercial Buildings Deduction. Use Form 8995 if:
Line 15b—Net Operating Loss Deduction • You have QBI (loss), real estate investment trust (REIT)
dividends, or PTP income (loss);
An estate or trust is allowed an NOLD under section 172. • Your 2023 taxable income before the QBI deduction is less
than or equal to $182,100; and
If you claim an NOLD for the estate or trust, figure the You aren’t a patron in a specified agricultural or
•
deduction on a separate sheet and attach it to the return. horticultural cooperative.

Line 18—Income Distribution Deduction
If you don’t meet these requirements, use Form 8995-A.
If the estate or trust was required to distribute income Attach whichever form you use (Form 8995 or 8995-A) to
currently or if it paid, credited, or was required to distribute your return. Also attach Schedule C, E, or F (Form 1040),
any other amounts to beneficiaries during the tax year, whichever form you use to report information about your QBI.
complete Schedule B to determine the estate's or trust's See the instructions for Forms 8995 and 8995-A for more
income distribution deduction. However, if you are filing for a information for figuring and reporting your QBI deduction.
pooled income fund, don't complete Schedule B. Instead,
attach a statement to support the computation of the income Note. Report the beneficiary’s apportioned share of items of
distribution deduction. For more information, see Pooled QBI (loss) subject to beneficiary specific determinations, W-2
Income Funds, earlier. wages, unadjusted basis immediately after acquisition (UBIA)
of qualified property, qualified REIT dividends, and qualified
If the estate or trust claims an income distribution PTP income on a statement attached to Schedule K-1 (Form
deduction, complete and attach: 1041). See the instructions for box 14, code I, of
• Part I (through line 24) and Part II of Schedule I (Form Schedule K-1 (Form 1041), later.
1041) to refigure the deduction on a minimum tax basis, and
• Schedule K-1 (Form 1041) for each beneficiary to which a Line 21—Exemption
distribution was made or required to be made.
Decedents' estates. A decedent's estate is allowed a $600
Cemetery perpetual care fund. On line 18, deduct the exemption.
amount, not more than $5 per gravesite, paid for
maintenance of cemetery property. To the right of the entry Trusts required to distribute all income currently. A trust
space for line 18, enter the number of gravesites. Also enter whose governing instrument requires that all income be
“Section 642(i) trust” in parentheses after the trust's name at distributed currently is allowed a $300 exemption, even if it
the top of Form 1041. You don't have to complete Schedule B distributed amounts other than income during the tax year.
of Form 1041, and Schedule K-1 (Form 1041). Qualified disability trusts. A qualified disability trust is
Don't enter less than zero on line 18. allowed a $4,700 exemption. This amount is not subject to
phaseout.
Line 19—Estate Tax Deduction Including Certain A qualified disability trust is any trust:
Generation-Skipping Transfer Taxes 1. Described in 42 U.S.C. 1396p(c)(2)(B)(iv) and
If the estate or trust includes IRD in its gross income, and established solely for the benefit of an individual under 65
such amount was included in the decedent's gross estate for years of age who is disabled, and
estate tax purposes, the estate or trust is allowed to deduct in 2. All of the beneficiaries of which are determined by the
the same tax year that the income is included that portion of Commissioner of Social Security to have been disabled for
the estate tax imposed on the decedent's estate that is some part of the tax year within the meaning of 42 U.S.C.
attributable to the inclusion of the IRD in the decedent's 1382c(a)(3).
estate. For an example of the computation, see Regulations
section 1.691(c)-1 and Pub. 559. A trust will not fail to meet item 2 above just because the
trust's corpus may revert to a person who isn't disabled after
If any amount properly paid, credited, or required to be the trust ceases to have any disabled beneficiaries.
distributed by an estate or trust to a beneficiary consists of
IRD received by the estate or trust, don't include such All other trusts. A trust not described above is allowed a
amounts in determining the estate tax deduction for the $100 exemption.

estate or trust. Figure the deduction on a separate sheet. Tax and Payments
Attach the sheet to your return.
If you claim a deduction for estate tax attributable to Line 23—Taxable Income
! qualified dividends or capital gains, you may have to Minimum taxable income. Line 23 can't be less than the
CAUTION adjust the amount on Form 1041, page 1, line 2b(2);
larger of:
or Schedule D (Form 1041), line 22.

Instructions for Form 1041 (2023) 27

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• The inversion gain of the estate or trust, as figured under Line 28—Tax Due
section 7874, if the estate or trust is an expatriated entity or a You must pay the tax in full when the return is filed. You may
partner in an expatriated entity; or pay by EFTPS. For more information about EFTPS, see
• The sum of the excess inclusions of the estate or trust from Electronic Deposits, earlier. Also, you may pay by check or
Schedule Q (Form 1066), Quarterly Notice to Residual money order or by credit or debit card.
Interest Holder of REMIC Taxable Income or Net Loss
Allocation, line 2c. To pay by check or money order. If you pay by check or
money order:
Net operating loss (NOL). If line 23 (figured without regard Make it payable to “United States Treasury”;
•
to the minimum taxable income rule stated above) is a loss, Make sure the name of the estate or trust appears on the
•
the estate or trust may have an NOL. Don't include the payment;
deductions claimed on lines 13, 18, and 21 when figuring the Write the estate’s or trust’s EIN and “2023 Form 1041” on
•
amount of the NOL. the payment;
Generally, an NOL can only be carried forward to • Consider completing the 2023 Form 1041-V; and
subsequent years and cannot be carried back. The 2-year • Enclose, but don't attach, the payment (and Form 1041-V,
carryback period only applies to the portion of an NOL if completed) with Form 1041.
attributable to a farming loss. For more information, see Pub. Note. The IRS can't accept a single check (including a
536. cashier's check) for amounts of $100,000,000 ($100 million)
Complete Schedule A of Form 1045, Application for or more. If you're sending $100 million or more by check,
Tentative Refund, to figure the amount of the NOL that is you'll need to spread the payments over two or more checks
available for carryback or carryover. Use Form 1045 or file an with each check made out for an amount less than $100
amended return to apply for a refund based on an NOL million. The $100 million or more amount limit doesn't apply
carryback. For more information, see the Instructions for to other methods of payment (such as electronic payments),
Form 1045. so please consider paying by means other than checks.
On the termination of the estate or trust, any unused NOL To pay by credit or debit card. For information on paying
carryover that would be allowable to the estate or trust in a your taxes electronically, including by credit or debit card, go
later tax year but for the termination is allowed to the to IRS.gov/E-pay.
beneficiaries succeeding to the property of the estate or trust.
See the instructions for box 11, codes E and F, of Line 30a—Credited to 2024 Estimated Tax
Schedule K-1 (Form 1041), later. Enter the amount from line 29 that you want applied to the
Excess deductions on termination. If the estate or trust estate's or trust's 2024 estimated tax.
has for its final year deductions (excluding the charitable
deduction and personal exemption) in excess of its gross Schedule A—Charitable Deduction
income, the excess deductions are allowed to the
beneficiaries succeeding to the property of the estate or trust General Instructions
and retain their separate character as an amount allowed in
arriving at AGI, a non-miscellaneous itemized deduction, or a Generally, any part of the gross income of an estate or trust
miscellaneous itemized deduction. In general, an unused (other than a simple trust) that, under the terms of the will or
NOL carryover that is allowed to beneficiaries (as explained governing instrument, is paid (or treated as paid) during the
above) can't also be treated as an excess deduction. tax year for a charitable purpose specified in section 170(c) is
However, if the final year of the estate or trust is also the last allowed as a deduction to the estate or trust. It isn't
year of the NOL carryover period, the NOL carryover not necessary that the charitable organization be created or
absorbed in that tax year by the estate or trust is included as organized in the United States.
an excess deduction. See the instructions for box 11, codes A pooled income fund or a section 4947(a)(1) nonexempt
A and B, of Schedule K-1 (Form 1041), later. charitable trust treated as a private foundation must attach a
separate sheet to Form 1041 instead of using Schedule A of
Line 25—Current Payment on Deferred Net 965 Form 1041 to figure the charitable deduction.
Tax Liability Additional return to be filed by trusts. Trusts, other than
If you made a payment with respect to a current net 965 tax split-interest trusts or nonexempt charitable trusts, that claim
liability, enter the amount of the payment from Form 965-A, a charitable deduction also file Form 1041-A unless the trust
Part II, column (k). is required to distribute currently to the beneficiaries all the
income for the year determined under section 643(b) and
Line 27—Estimated Tax Penalty related regulations.
If line 28 is at least $1,000 and more than 10% of the tax Pooled income funds and charitable lead trusts also file
shown on Form 1041, or the estate or trust underpaid its Form 5227. See Form 5227 for information about any
2023 estimated tax liability for any payment period, it may exceptions.
owe a penalty. See Form 2210 to determine whether the
estate or trust owes a penalty and to figure the amount of the Election to treat contributions as paid in the prior tax
penalty. year. The fiduciary of an estate or trust may elect to treat as
paid during the tax year any amount of gross income
Note. The penalty may be waived or reduced under certain received during that tax year or any prior tax year that was
conditions. See Pub. 505, Tax Withholding and Estimated paid in the next tax year for a charitable purpose.
Tax, and the Instructions for Form 2210 for details. For example, if a calendar year estate or trust makes a
qualified charitable contribution on February 7, 2024, from

28 Instructions for Form 1041 (2023)

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income earned in 2023 or prior, then the fiduciary can elect to Don't include any capital gains for the tax year allocated to
treat the contribution as paid in 2023. corpus and paid or permanently set aside for charitable
To make the election, the fiduciary must file a statement purposes. Instead, enter these amounts on line 4.
with Form 1041 for the tax year in which the contribution is
treated as paid. This statement must include: Line 2—Tax-Exempt Income Allocable to
1. The name and address of the fiduciary; Charitable Contributions
2. The name of the estate or trust;
3. An indication that the fiduciary is making an election Any estate or trust that pays or sets aside any part of its
under section 642(c)(1) for contributions treated as paid income for a charitable purpose must reduce the deduction
during such tax year; by the portion allocable to any tax-exempt income. If the
governing instrument specifically provides as to the source
4. The name and address of each organization to which from which amounts are paid, permanently set aside, or to be
any such contribution is paid; and used for charitable purposes, the specific provisions control.
5. The amount of each contribution and date of actual In all other cases, determine the amount of tax-exempt
payment or, if applicable, the total amount of contributions income allocable to charitable contributions by multiplying
paid to each organization during the next tax year, to be line 1 by a fraction, the numerator of which is the total
treated as paid in the prior tax year. tax-exempt income of the estate or trust, and the
denominator of which is the gross income of the estate or
The election must be filed by the due date (including trust. Don't include in the denominator any losses allocated to
extensions) for Form 1041 for the next tax year. If the original corpus.
return was filed on time, you may make the election on an
amended return filed no later than 6 months after the due
date of the return (excluding extensions). Enter “Filed Line 4—Capital Gains for the Tax Year Allocated to
pursuant to section 301.9100-2” at the top of the amended Corpus and Paid or Permanently Set Aside for
return and file it at the same address you used for your Charitable Purposes
original return.
For more information about the charitable deduction, see Enter the total of all capital gains for the tax year that are:
section 642(c) and the related regulations. • Allocated to corpus, and
• Paid or permanently set aside for charitable purposes.
Specific Instructions
Line 1—Amounts Paid or Permanently Set Aside Line 6—Section 1202 Exclusion Allocable to
for Charitable Purposes From Gross Income Capital Gains Paid or Permanently Set Aside for
Charitable Purposes
Enter amounts that were paid for a charitable purpose out of
the estate's or trust's gross income, including any capital If the exclusion of gain from the sale or exchange of qualified
gains that are attributable to income under the governing small business (QSB) stock was claimed, enter the part of
instrument or local law. Include amounts paid during the tax the gain included on Schedule A, lines 1 and 4, that was
year from gross income received in a prior tax year, but only if excluded under section 1202.
no deduction was allowed for any prior tax year for these
amounts.
Schedule B—Income Distribution
Estates, and certain trusts, may claim a deduction for Deduction
amounts permanently set aside for a charitable purpose from
gross income. Such amounts must be permanently set aside General Instructions
during the tax year to be used exclusively for religious, If the estate or trust was required to distribute income
charitable, scientific, literary, or educational purposes, or for currently or if it paid, credited, or was required to distribute
the prevention of cruelty to children or animals, or for the any other amounts to beneficiaries during the tax year,
establishment, acquisition, maintenance, or operation of a complete Schedule B to determine the estate's or trust's
public cemetery not operated for profit. income distribution deduction.
For a trust to qualify, the trust may not be a simple trust, Note. Use Schedule I (Form 1041) to compute the DNI and
and the set-aside amounts must be required by the terms of a income distribution deduction on a minimum tax basis.
trust instrument that was created on or before October 9,
Pooled income funds. Don't complete Schedule B for
1969.
these funds. Instead, attach a separate statement to support
the computation of the income distribution deduction. See
Further, the trust instrument must provide for an Pooled Income Funds, earlier, for more information.
irrevocable remainder interest to be transferred to or for the
use of an organization described in section 170(c) or the trust Separate share rule. If a single trust or an estate has more
must have been created by a grantor who was at all times than one beneficiary, and if different beneficiaries have
after October 9, 1969, under a mental disability to change the substantially separate and independent shares, their shares
terms of the trust. are treated as separate trusts or estates for the sole purpose
of determining the DNI allocable to the respective
Also, certain testamentary trusts that were established by beneficiaries.
a will that was executed on or before October 9, 1969, may If the separate share rule applies, figure the DNI allocable
qualify. See Regulations section 1.642(c)-2(b). to each beneficiary on a separate sheet and attach the sheet

Instructions for Form 1041 (2023) 29

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to this return. Any deduction or loss that is applicable solely If the exclusion of gain from the sale or exchange of QSB
to one separate share of the trust or estate isn't available to stock was claimed, don't reduce the gain on line 3 by any
any other share of the same trust or estate. amount excluded under section 1202.
For more information, see section 663(c) and related
regulations. Line 5
Withholding of tax on foreign persons. The fiduciary may
be liable for withholding tax on distributions to beneficiaries In figuring the amount of long-term and short-term capital
who are foreign persons. For more information, see Pub. 515, gain for the tax year included on Schedule A, line 1, the
and Forms 1042 and 1042-S. specific provisions of the governing instrument control if the
instrument specifically provides as to the source from which
Specific Instructions amounts are paid, permanently set aside, or to be used for
charitable purposes.
Line 1—Adjusted Total Income
In all other cases, determine the amount to enter by
Generally, enter on Schedule B, line 1, the amount from multiplying line 1 of Schedule A by a fraction, the numerator
line 17 on page 1 of Form 1041. However, if both line 4 and of which is the amount of net capital gains that are included in
line 17 on page 1 of Form 1041 are losses, enter on the accounting income of the estate or trust (that is, not
Schedule B, line 1, the smaller of those losses. If line 4 is allocated to corpus) and are distributed to charities, and the
zero or a gain and line 17 is a loss, enter zero on line 1 of denominator of which is all items of income (including the
Schedule B. amount of such net capital gains) included in the DNI.

If you are filing for a simple trust, subtract from adjusted Reduce the amount on line 5 by any allocable section
total income any extraordinary dividends or taxable stock 1202 exclusion.
dividends included on page 1, line 2, and determined under
the governing instrument and applicable local law to be Line 8—Accounting Income
allocable to corpus.
If you are filing for a decedent's estate or a simple trust, skip
Line 2—Adjusted Tax-Exempt Interest this line. If you are filing for a complex trust, enter the income
for the tax year determined under the terms of the governing
To figure the adjusted tax-exempt interest, follow the steps instrument and applicable local law. Don't include
below. extraordinary dividends or taxable stock dividends
determined under the governing instrument and applicable
Step 1. Add tax-exempt interest income on line 2 of local law to be allocable to corpus.
Schedule A, any expenses allowable under section 212
allocable to tax-exempt interest, and any interest expense Lines 9 and 10
allocable to tax-exempt interest.
Don't include any:
Step 2. Subtract the Step 1 total from the amount of • Amount that was deducted on the prior year's return that
tax-exempt interest (including exempt-interest dividends) was required to be distributed in the prior year,
received. • Amount that is paid or permanently set aside for charitable
purposes or otherwise qualifying for the charitable deduction,
Section 212 expenses that are directly allocable to or
tax-exempt interest are allocated only to tax-exempt interest. • Amount that is properly paid or credited as a gift or
A reasonable proportion of section 212 expenses that are bequest of a specific amount of money or specific property.
indirectly allocable to both tax-exempt interest and other
income must be allocated to each class of income. Note. An amount that can be paid or credited only from
income isn't considered a gift or bequest. Also, to qualify as a
Figure the interest expense allocable to tax-exempt gift or bequest, the amount must be paid in three or fewer
interest according to the guidelines in Rev. Proc. 72-18, installments.
1972-1 C.B. 740.
Line 9—Income Required To Be Distributed
See Regulations sections 1.643(a)-5 and 1.265-1 for more Currently
information.
Line 9 is to be completed by all simple trusts as well as
Line 3 complex trusts and decedents’ estates that are required to
distribute income currently, whether it is distributed or not.
Include all capital gains, whether or not distributed, that are The determination of whether trust income is required to be
attributable to income under the governing instrument or local distributed currently depends on the terms of the governing
law. For example, if the trustee distributed 50% of the current instrument and the applicable local law.
year's capital gains to the income beneficiaries (and reflects
this amount on Schedule D (Form 1041), line 19, column (1)), The line 9 distributions are referred to as “first-tier
but under the governing instrument all capital gains are distributions” and are deductible by the estate or trust to the
attributable to income, then include 100% of the capital gains extent of the DNI. The beneficiary includes such amounts in
on line 3. If the amount on Schedule D (Form 1041), line 19, their income to the extent of their proportionate share of the
column (1), is a net loss, enter zero. DNI.

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Line 10—Other Amounts Paid, Credited, or distribution that is less than the DNI), then figure the
Otherwise Required To Be Distributed adjustment by multiplying line 2 by a fraction, the numerator
of which is the total distributions (line 11), and the
Line 10 is to be completed only by a decedent's estate or denominator of which is the DNI (line 7). Enter the result on
complex trust. These distributions consist of any other line 12.
amounts paid, credited, or required to be distributed and are
referred to as “second-tier distributions.” Such amounts If line 11 includes tax-exempt income other than
include annuities to the extent not paid out of income, tax-exempt interest, figure line 12 by subtracting the total of
mandatory and discretionary distributions of corpus, and the following from tax-exempt income included on line 11.
distributions of property in kind. 1. The charitable contribution deduction allocable to such
tax-exempt income.
If Form 1041-T was timely filed to elect to treat estimated 2. Expenses allocable to tax-exempt income.
tax payments as made by a beneficiary, the payments are
treated as paid or credited to the beneficiary on the last day
of the tax year and must be included on line 10. Expenses that are directly allocable to tax-exempt income
are allocated only to tax-exempt income. A reasonable
Unless a section 643(e)(3) election is made, the value of proportion of expenses indirectly allocable to both
all noncash property actually paid, credited, or required to be tax-exempt income and other income must be allocated to
distributed to any beneficiaries is the smaller of: each class of income.
1. The estate's or trust's adjusted basis in the property
immediately before distribution, plus any gain or minus any Schedule G—Tax Computation and
loss recognized by the estate or trust on the distribution
Payments
(basis of beneficiary); or
2. The FMV of such property. Part I—Tax Computation
If a section 643(e)(3) election is made by the fiduciary, then
the amount entered on line 10 will be the FMV of the property. Line 1a
2023 Tax Rate Schedule. For tax years beginning in 2023,
A fiduciary of a complex trust or a decedent's estate may figure the tax using the following Tax Rate Schedule and
elect to treat any amount paid or credited to a beneficiary enter the tax on line 1a. However, see the Instructions for
within 65 days following the close of the tax year as being Schedule D (Form 1041) and the Qualified Dividends Tax
paid or credited on the last day of that tax year. To make this Worksheet, later.
election, see Question 6 under Other Information, later.
2023 Tax Rate Schedule
The beneficiary includes the amounts on line 10 in their If taxable
income only to the extent of their proportionate share of the income is:
DNI. Of the
Over— But not over
Complex trusts. If the second-tier distributions exceed the — Its tax is: amount over
—
DNI allocable to the second tier, the trust may have an $0 $2,900 10% $0
accumulation distribution. See the line 11 instructions below. 2,900 10,550 $290 + 24% 2,900
10,550 14,450 $2,126 + 35% 10,550
14,450 ----- $3,491 + 37% 14,450
Line 11—Total Distributions

If line 11 is more than line 8, and you are filing for a complex
trust that has previously accumulated income, see the Schedule D (Form 1041) and Schedule D Tax Work-
instructions for Schedule J, later, to see if you must complete sheet. Use Part V of Schedule D (Form 1041), or the
Schedule J (Form 1041), Accumulation Distribution for Schedule D Tax Worksheet, whichever is applicable, to figure
Certain Complex Trusts. the estate's or trust's tax if the estate or trust files Schedule D
(Form 1041) and has:
Line 12—Adjustment for Tax-Exempt Income • A net capital gain and any taxable income, or
• Qualified dividends on line 2b(2) of Form 1041 and any
In figuring the income distribution deduction, the estate or taxable income.
trust isn't allowed a deduction for any item of the DNI that isn't Qualified Dividends Tax Worksheet. If you don't have to
included in the gross income of the estate or trust. Thus, for complete Part I or Part II of Schedule D and the estate or trust
purposes of figuring the allowable income distribution has an amount entered on line 2b(2) of Form 1041 and any
deduction, the DNI (line 7) is figured without regard to any taxable income (line 23), then figure the estate's or trust's tax
tax-exempt interest. using the worksheet, later, and enter the tax on line 1a.
If tax-exempt interest is the only tax-exempt income Note. You must reduce the amount you enter on line 2b(2) of
included in the total distributions (line 11), and the DNI Form 1041 by the portion of the section 691(c) deduction
(line 7) is less than or equal to line 11, then enter on line 12 claimed on line 19 of Form 1041 if the estate or trust received
the amount from line 2. qualified dividends that were IRD.
If tax-exempt interest is the only tax-exempt income Line 1c—Alternative minimum tax. Attach Schedule I
included in the total distributions (line 11), and the DNI is (Form 1041) if any of the following apply.
more than line 11 (that is, the estate or trust made a • The estate or trust must complete Schedule B.

Instructions for Form 1041 (2023) 31

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Qualified Dividends Tax Worksheet—Schedule G, Part I, Line 1a                                                                 Keep for Your Records
Caution: Don’t use this worksheet if the estate or trust must complete Schedule D (Form 1041).
  1. Enter the amount from Form 1041, line 23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  1.   
  2. Enter the amount from Form 1041, line 2b(2) . . . . . . . .                             2.  
  3. If you are claiming investment interest expense on Form 
     4952, enter the amount from line 4g; otherwise, 
     enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.  
  4. Subtract line 3 from line 2. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . .                 4.   
  5. Subtract line 4 from line 1. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . .                 5.   
  6. Enter the smaller of the amount on line 1 or $3,000  . . . . . . . . . . . . . . . . . . . .                        6.   
  7. Enter the smaller of the amount on line 5 or line 6 . . . . . . . . . . . . . . . . . . . . . .                     7.   
  8. Subtract line 7 from line 6. If zero or less, enter -0-. This amount is taxed at 0% . . . . . . . . . . . . . . . .                                   8.    
  9. Enter the smaller of line 1 or line 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         9.   
10.  Subtract line 8 from line 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     10.  
11.  Enter the smaller of line 1 or $14,650 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              11.  
12.  Add lines 5 and 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.  
13.  Subtract line 12 from line 11. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . .                   13.  
14.  Enter the smaller of line 10 or line 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             14.  
15.  Multiply line 14 by 15% (0.15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      15.  
16.  Enter the amount from line 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        16.  
17.  Add lines 8 and 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  17.  
18.  Subtract line 17 from line 16. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . .                   18.  
19.  Multiply line 18 by 20% (0.20) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      19.  
20.  Figure the tax on the amount on line 5. Use the 2023 Tax Rate Schedule . . . . . . . . . . . . . . . . . . . . . .                                    20.  
21.  Add lines 15, 19, and 20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    21.  
22.  Figure the tax on the amount on line 1. Use the 2023 Tax Rate Schedule . . . . . . . . . . . . . . . . . . . . . .                                    22.  
23.  Tax on all taxable income. Enter the smaller of line 21 or line 22 here and on 
     Schedule G, line 1a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.  

• The estate or trust claims a credit on line 2b, 2c, or 2d of                               Line 2b—General Business Credit
Schedule G.
• The estate's or trust's share of alternative minimum taxable                                          Don't include any amounts that are allocated to a 
income (line 27 of Schedule I (Form 1041)) exceeds $28,400.                                      !      beneficiary. Credits that are allocated between the 
Enter the amount from line 54 of Schedule I (Form 1041) on                                      CAUTION estate or trust and the beneficiaries are listed in the 
line 1c.                                                                                     instructions for box 13 of Schedule K-1, later. Generally, 
                                                                                             these credits are apportioned on the basis of the income 
Line 1d—Total. If the amount from line 14 of Form 8978 is a                                  allocable to the estate or trust and the beneficiaries.
positive amount, include it in the total reported on line 1d. On 
the dotted line next to line 1d, enter “From Form 8978” and                                      Enter on line 2b the estate's or trust's total general 
the amount. Attach Form 8978.                                                                business credit allowed for the current year from Form 3800. 
                                                                                             The estate or trust must file Form 3800 to claim any of the 
Line 2a—Foreign Tax Credit                                                                   general business credits. Generally, if the estate's or trust's 
                                                                                             only source of a credit is from a pass-through entity and the 
Attach Form 1116, Foreign Tax Credit (Individual, Estate, or 
                                                                                             beneficiary isn't entitled to an allocable share of a credit, you 
Trust), if you elect to claim credit for income or profits taxes 
                                                                                             aren't required to complete the source form for that credit. 
paid or accrued to a foreign country or a U.S. territory. The 
                                                                                             However, certain credits have limitations and special 
estate or trust may claim credit for that part of the foreign 
                                                                                             computations that may require you to complete the source 
taxes not allocable to the beneficiaries (including charitable 
                                                                                             form. See the Instructions for Form 3800 for more 
beneficiaries). Enter the estate's or trust's share of the credit 
                                                                                             information.
on line 2a. See Pub. 514, Foreign Tax Credit for Individuals, 
for details.                                                                                 Line 2c—Credit for Prior Year Minimum Tax
                                                                                             An estate or trust that paid AMT in a previous year may be 
                                                                                             eligible for a minimum tax credit in 2023. See Form 8801, 

32                                                                                                                            Instructions for Form 1041 (2023)

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ESBT Tax Worksheet—Schedule G, Part I, Line 4                                                                 Keep for Your Records
 ESBT Tax Computation
1.   Ordinary income (loss) from Schedule K-1 (Form 1120-S) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                           1.    
2a.  Total ordinary dividends from Schedule K-1 (Form 1120-S) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                           2a.   
2b.  Qualified dividends from Schedule K-1 (Form 1120-S) . . . . . . . . . . . . . . . . . . .          2b.   
3.   Capital gain. See instructions and attach Schedule D (Form 1041) . . . . . . . . . . . . . . . . . . . . . . . . . . . .                               3.    
4.   Other income (loss) reported on Schedule K-1 (Form 1120-S) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                               4.    
5.   Total income. Add lines 1, 2a, 3, and 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            5.    
6.   Other allowable deductions from Schedule K-1 (Form 1120-S) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                               6.    
7.   Administrative expenses (allocated to the S portion) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     7.    
8.   State and local income taxes (allocated to the S portion) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      8.    
9.   Interest expense on indebtedness to acquire S corporation stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                              9.    
10.  Charitable contribution deduction. Check here if deduction includes prior year carryover [    ] . . . . . .                                            10.  
11.  Qualified business income deduction (S portion). Attach Form 8995 or 8995-A . . . . . . . . . . . . . . . . .                                          11.  
12.  Total deductions. Add lines 6 through 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               12.  
13.  Taxable income (S portion). Subtract line 12 from line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     13.  
14a. Tax. Tax on taxable income. See instructions  . . . . . . . . . . . . . . . . . . . . . . . . . .  14a.  
14b. Alternative minimum tax (S portion). Attach Schedule I (Form 1041) . . . . . . .                   14b.  
14c. Total. Add lines 14a and 14b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14c.        
15a. Foreign tax credit (S portion). Attach Form 1116 . . . . . . . . . . . . . . . . . . . . . . . .   15a.  
15b. General business credit (S portion). Attach Form 3800 . . . . . . . . . . . . . . . . . .          15b.  
15c. Credit for prior year minimum tax (S portion). Attach Form 8801 . . . . . . . . . . .              15c.  
15d. Bond credits (S portion). Attach Form 8912 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15d.  
15e. Total credits. Add lines 15a through 15d . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15e.                
16.  Recapture taxes (S portion). Check if from: Form 4255 [    ] or Form 8611 [    ]  . . . . . . . . . . . . . . . . . .                                  16.  
17.  Total ESBT tax. Subtract line 15e from line 14c and add line 16. Enter here and on Form 1041, 
     Schedule G, Part I, line 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.  

Credit for Prior Year Minimum Tax—Individuals, Estates, and       Line 4—Tax on the ESBT Portion of the Trust
Trusts.                                                           Use the ESBT Tax Worksheet above to figure the ESBT tax. 
                                                                  Enter the amount from line 17 of the ESBT Tax Worksheet on 
Line 2d—Bond Credits
                                                                  line 4.
Complete and attach Form 8912, Credit to Holders of Tax 
Credit Bonds, if the estate or trust claims a credit for holding  See Electing Small Business Trusts (ESBTs), earlier, for 
a tax credit bond. Also, be sure to include the credit in         the special tax computation rules that apply to the portion of 
interest income.                                                  an ESBT consisting of stock in one or more S corporations.

Line 2e—Total Credits                                             Line 5—Net Investment Income Tax (NIIT)
To claim a credit allowable to the estate or trust other than the Enter the amount of NIIT calculated and attach Form 8960. 
credits entered on lines 2a through 2d, include the allowable     See the Instructions for Form 8960 to calculate the tax, and 
credit in the total for line 2e. Complete and attach the          Net Investment Income Tax (NIIT), later, for more information.
appropriate form and enter the form number and amount of 
the allowable credit on the dotted line to the left of the entry  Line 6a—Recapture of Investment Credit
space.                                                            If the estate or trust disposed of investment credit property or 
                                                                  changed its use before the end of the recapture period, see 
If the amount from line 14 of Form 8978 is a negative             Form 4255, Recapture of Investment Credit, to figure the 
amount, treat it as a positive amount and add it to the total     recapture tax allocable to the estate or trust. Include the tax 
reported on line 2e. On the dotted line next to line 2e, enter    on line 6a and enter “ICR” on the dotted line to the left of the 
“From Form 8978” and the amount. Attach Form 8978.                entry space.

Instructions for Form 1041 (2023)                                                                                                                                 33

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Line 6b—Recapture of Low-Income Housing Enter on line 7 any household employment taxes owed
Credit from Schedule H (Form 1040), Part I, line 8d, or Part III,
line 26.
If the estate or trust disposed of property (or there was a
reduction in the qualified basis of the property) on which the Note. See Amended Schedule H (Form 1040 ) under F.
low-income housing credit was claimed, see Form 8611, Initial Return, Amended Return, etc., earlier, for information
Recapture of Low-Income Housing Credit, to figure any on filing an amended Schedule H (Form 1040) for a Form
recapture tax allocable to the estate or trust. Include the tax 1041.
on line 6b and enter “LIHCR” on the dotted line to the left of
the entry space. Line 8—Other Taxes and Amounts Due
Line 6c—Other Recapture Taxes Triggering event under section 965(i). If you had a
triggering event under section 965(i) during the year, enter on
Recapture of qualified electric vehicle credit. If the line 8 the current year tax liability from the triggered deferred
estate or trust claimed the qualified electric vehicle credit in a net 965 tax liability from Form 965-A, Part IV, column (f).
prior tax year for a vehicle that ceased to qualify for the credit, ESBTs. If a triggering event occurred in the S portion of
part or all of the credit may have to be recaptured. See the ESBT, also include on the attachment that shows the
Regulations section 1.30-1(b) for details. If the estate or trust amount of the net 965 tax liability attributable to the S portion
owes any recapture tax, include it on line 6c and enter of the trust the triggered deferred net 965 tax liability from
“QEVCR” on the dotted line to the left of the entry space. Form 965-A, Part IV, column (f).
Recapture of the new markets credit. If the estate or trust Interest on deferred tax attributable to installment sales
owes any new markets recapture tax, include it on line 6c and of certain timeshares and residential lots and certain
enter “NMCR” on the dotted line to the left of the entry space. nondealer real property installment obligations. If an
For more information, including how to figure the recapture obligation arising from the disposition of real property to
amount, see section 45D(g). which section 453(l) or 453A applies is outstanding at the
Recapture of the credit for employer-provided childcare close of the year, the estate or trust must include the interest
facilities and services. If the facility ceased to operate as a due under section 453(l)(3)(B) or 453A(c), whichever is
qualified childcare facility or there was a change in applicable, in the amount to be entered on Form 1041,
ownership, part or all of the credit may have to be recaptured. Schedule G, line 8, with the notation “Section 453(l) interest”
See Form 8882, Credit for Employer-Provided Childcare or “Section 453A(c) interest,” whichever is applicable. Attach
Facilities and Services, for details. If the estate or trust owes a schedule showing the computation.
any recapture tax, include it on line 6c and enter “ECCFR” on Form 4970, Tax on Accumulation Distribution of Trusts.
the dotted line to the left of the entry space. Include on this line any tax due on an accumulation
Recapture of the alternative motor vehicle credit. See distribution from a trust. To the left of the entry space, enter
section 30B(h)(8) for details. Include the tax on line 6c and “From Form 4970” and the amount of the tax.
enter “AMVCR” on the dotted line to the left of the entry Form 8697, Interest Computation Under the Look-Back
space. Method for Completed Long-Term Contracts. Include the
Recapture of the alternative fuel vehicle refueling prop- interest due under the look-back method of section 460(b)
erty credit. See section 30C(e)(5) for details. Include the tax (2). To the left of the entry space, enter “From Form 8697”
on line 6c and enter “ARPCR” on the dotted line to the left of and the amount of interest due.
the entry space. Form 8866, Interest Computation Under the Look-Back
Recapture of the section 45Q carbon oxide sequestra- Method for Property Depreciated Under the Income
tion credit. See Form 8933, Part III, line 22. Include the Forecast Method. Include the interest due under the
section 45Q recapture amount on line 6c and enter “COSCR” look-back method of section 167(g)(2). To the left of the entry
on the dotted line to the left of the entry space. space, enter “From Form 8866” and the amount of interest
due.
Line 7—Household Employment Taxes Interest on deferral of gain from certain constructive
If any of the following apply, get Schedule H (Form 1040) and ownership transactions. Include the interest due under
its instructions to see if the estate or trust owes these taxes. section 1260(b) on any deferral of gain from certain
1. The estate or trust paid any one household employee constructive ownership transactions. To the left of the entry
cash wages of $2,600 or more in 2023. Cash wages include space, enter “1260(b)” and the amount of interest due.
wages paid by checks, money orders, etc. When figuring the Form 5329, Additional Taxes on Qualified Plans (Includ-
amount of cash wages paid, combine cash wages paid by ing IRAs) and Other Tax-Favored Accounts. If the estate
the estate or trust with cash wages paid to the household or trust fails to receive the minimum distribution under section
employee in the same calendar year by the household of the 4974, use Form 5329 to pay the excise tax. To the left of the
decedent or beneficiary for whom the administrator, executor, entry space, enter “From Form 5329” and the amount of the
or trustee of the estate or trust is acting. tax.
2. The estate or trust withheld federal income tax during
2023 at the request of any household employee. Additional tax on the early disposition of noncash prop-
erty for which a section 247(g)(3) election was made by
3. The estate or trust paid total cash wages of $1,000 or an Alaska Native Settlement Trust. This additional 10%
more in any calendar quarter of 2022 or 2023 to household tax only should be shown on an amended return filed by a
employees. Settlement Trust for the year in which the Settlement Trust
received a contribution of noncash property from an Alaska
Native Corporation and elected to defer the recognition of

34 Instructions for Form 1041 (2023)

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Form 8978 Worksheet—Schedule G, Part I, Line 8                                                   Keep for Your Records
Use this worksheet if (a) Schedule G, line 3, is zero; (b) after line 3 was reduced to zero, you have a negative 
amount from Form 8978, line 14, that was not used to reduce line 3 to zero; and (c) you have chapter 1 taxes 
entered on Schedule G, line 4; Schedule G, lines 6a–6c; Schedule G, line 8; and/or tax and interest from Form 
8621.
1.   Enter the total amount of chapter 1 taxes from Schedule G, line 4; Schedule G, lines 6a–6c; 
     Schedule G, line 8; and tax and interest from Form 8621 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                    1.  
2.   Enter the negative amount from Form 8978, line 14, that has not already been used to reduce 
     Schedule G, line 3, to zero . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              2. (   )
3.   Combine line 1 and line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                3.  
4.   Enter the amount of non-chapter 1 taxes included on Schedule G, line 8  . . . . . . . . . . . . . . . . . . . . .                                                4.  
5.   If line 3 is negative, enter as a negative the amount from line 1. Otherwise, enter the amount from 
     line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5. (   )
6.   Combine line 4 and line 5. Enter the result on Schedule G, line 8. This amount may be a negative 
     number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     6.  

income related to such property, but disposed of the property            Don't include on Form 1041 estimated tax paid by an 
within the first tax year subsequent to the tax year the         !       individual before death. Instead, include those 
Settlement Trust received the property. Determine the            CAUTION payments on the decedent's final income tax return.
increase in tax due to the inclusion of the deferred income 
and include on this line the additional tax due, equal to 10%    Line 11—Estimated Tax Payments Allocated to 
of the increase in tax due to the inclusion of the deferred 
income. The increase in tax due to the inclusion of the          Beneficiaries (From Form 1041-T)
deferred income, which is the base amount for the                The trustee (or executor, for the final year of the estate) may 
computation of the additional 10% tax shown on this line,        elect under section 643(g) to have any portion of its 
should be shown elsewhere on Schedule G. If the amended          estimated tax treated as a payment of estimated tax made by 
return also shows changes to income, deductions, or credits      a beneficiary or beneficiaries. The election is made on Form 
unrelated to the inclusion of the deferred income, attach a      1041-T, which must be filed by the 65th day after the close of 
schedule showing the computation of the additional tax due       the trust's tax year. Form 1041-T shows the amounts to be 
only to the inclusion of the deferred income. To the left of the allocated to each beneficiary. This amount is reported in 
entry space, enter “Section 247(g)(3) tax.”                      box 13, code A, of the beneficiary's Schedule K-1 (Form 
                                                                 1041).
Form 8978 Worksheet. If you have a negative amount from 
Form 8978, line 14, that was not used to reduce Schedule G,      Attach Form 1041-T to your return only if you haven't yet 
line 3, to zero, and you have chapter 1 taxes and/or tax and     filed it; however, attaching Form 1041-T to Form 1041 doesn't 
interest from Form 8621, Information Return by a                 extend the due date for filing Form 1041-T. If you have 
Shareholder of a Passive Foreign Investment Company or           already filed Form 1041-T, don't attach a copy to your return.
Qualified Electing Fund, then complete the Form 8978                     Failure to file Form 1041-T by the due date (March 5, 
Worksheet—Schedule G, Part I, Line 8 to figure the amount        !       2024, for calendar year estates and trusts) will result 
to enter on line 8.                                              CAUTION in an invalid election. An invalid election will require 
                                                                 the filing of an amended Schedule K-1 for each beneficiary 
Line 9—Total Tax                                                 who was allocated a payment of estimated tax.
Add Schedule G, Part I, lines 3 through 8. Enter the total on 
Schedule G, Part I, line 9; and page 1 of Form 1041, line 24.
                                                                 Line 13—Tax Paid With Form 7004
Part II—Payments                                                 If you filed Form 7004 to request an extension of time to file 
                                                                 Form 1041, enter the amount that you paid with the extension 
Line 10—2023 Estimated Tax Payments and                          request.
Amount Applied From 2022 Return
                                                                 Line 14—Federal Income Tax Withheld
Enter the amount of any estimated tax payment you made 
with Form 1041-ES for 2023 plus the amount of any                Use line 14 to claim a credit for any federal income tax 
overpayment from the 2022 return that was applied to the         withheld (and not repaid) by (a) an employer on wages and 
2023 estimated tax.                                              salaries of a decedent received by the decedent's estate; (b) 
                                                                 a payer of certain gambling winnings (for example, state 
If the estate or trust is the beneficiary of another trust and   lottery winnings); or (c) a payer of distributions from 
received a payment of estimated tax that was credited to the     pensions, annuities, retirement or profit-sharing plans, IRAs, 
trust (as reflected on the Schedule K-1 issued to the trust),    insurance contracts, etc., received by a decedent's estate or 
then report this amount separately with the notation “Section    trust. Attach a copy of Form W-2, Form W-2G, or Form 
643(g)” in the space next to line 10 and include this amount in  1099-R to the front of the return.
the amount entered on line 10.

Instructions for Form 1041 (2023)                                                                                                                                             35

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Except for backup withholding (as explained below), Calculation of NII. In general, an estate’s or trust’s NII is
! withheld income tax can't be passed through to calculated in the same way as an individual's. However, there
CAUTION beneficiaries on either Schedule K-1 or Form 1041-T.
are special rules for the calculation of NII in the case of an
ESBT. See the Instructions for Form 8960 and Regulations
Backup withholding. If the estate or trust received a 2023 section 1.1411-3(e) for information on the calculation (and
Form 1099 showing federal income tax withheld (that is, Regulations section 1.1411-3(c)(1) for information on the
backup withholding) on interest income, dividends, or other ESBT calculation).
income, check the box and include the amount withheld on
income retained by the estate or trust in the total for line 14. Distributions on NII. The NIIT is imposed on estates and
Report in box 13, code B, of Schedule K-1 (Form 1041) trusts to the extent they have undistributed NII. In order to
any credit for backup withholding on income distributed to the arrive at the estate’s or trust’s undistributed NII, the estate’s
beneficiary. or trust’s NII is reduced for (1) distributions of NII to
beneficiaries, and (2) NII allocable to charities when the
Line 15—Current Net 965 Tax Liability—Eligible estate or trust is allowed a deduction under section 642(c).
The instructions for Form 8960, line 18b, provide more
for Installment Payment Election information on the calculation of undistributed NII.
If you have a section 965(i) net tax liability for which a
triggering event has occurred in the current year and you are NII allocable to the deduction under section 642(c). An
making a section 965(h) election with respect to that section estate’s, trust’s, or pooled income fund’s NII is reduced by the
965 net tax liability, enter this amount from Form 965-A, Part amount of NII allocable to the charitable deduction allowed
I, column (f). under section 642(c). In the case of an estate, trust, or
pooled income fund that has NII and non-NII income in a year
Line 16—Credit for Tax Paid on Undistributed when a section 642(c) deduction is claimed, the amount of
the NII deduction allocable to the section 642(c) deduction
Capital Gains
will be less than the amount reported on Form 1041,
Attach Copy B of Form 2439, Notice to Shareholder of Schedule A, line 7 (or on the separate calculation in the case
Undistributed Long-Term Capital Gains. of a pooled income fund).
Line 17—Credit for Federal Tax on Fuels Beneficiary reporting. In general, the amount of the
Enter any credit for federal excise taxes paid on fuels that are income distribution deduction (from Form 1041, Schedule B,
ultimately used for nontaxable purposes (for example, an line 15) that reduces the estate’s or trust’s NII will be the
off-highway business use). Attach Form 4136, Credit for amount of NII that will be taxable to the beneficiaries on their
Federal Tax Paid on Fuels. See Pub. 510, Excise Taxes, for Schedules K-1 (Form 1041).
more information. The Schedule K-1 has code H in box 14 to report the
amount of NII distributed to the beneficiary. The amount
Line 18a—Elective Payment Election Amount reported in code H represents an adjustment (either positive
From Form 3800 or negative) that the beneficiary must use in completing its
Form 8960 (if necessary). In the case where the trust’s
Enter any elective payment election amount from Form 3800,
income distribution deduction allowed in calculating
Part III, line 6, column (i).
undistributed NII is less than the amount on Schedule B,
Line 18b—Other Credits or Payments line 15, then code H will show a negative number that is the
difference between the two amounts. In the case of an estate
Enter the refundable portion of the qualified sick and family or trust that issues more than one Schedule K-1 for a year,
leave credit from Schedule H (Form 1040), Part I, lines 8e the sum of the amounts reported in code H on all of the
and 8f, on line 18b only if qualified sick and family leave Schedules K-1 will be the difference between Schedule B,
wages were paid in 2023 for leave taken before April 1, 2021, line 15, and the amount deducted on Form 8960, line 18b, for
or for leave taken after March 31, 2021, and before October amounts of NII distributed to a beneficiary.
1, 2021.
The beneficiary's NII will equal all taxable amounts
TIP reported on the Schedule K-1, adjusted by the
Net Investment Income Tax (NIIT) amount reported in box 14, code H.
Certain estates and trusts may be subject to the NIIT. Estates
and trusts use Form 8960 to report their NII and calculate the The only instance where code H will be a positive
tax. The amount of NIIT payable by the estate or trust is TIP number is when:
reported on Form 1041, Schedule G, line 5.
• The estate or trust owns directly, or indirectly, an (a)
The NIIT is imposed on estates and trusts to the extent interest in a section 1291 fund, or (b) interest in a controlled
that they have undistributed NII and AGI exceeding $14,450. foreign corporation or qualified electing fund and no election
See Definitions, earlier, for the calculation of an estate’s or under Regulations section 1.1411-10(g) has been made with
trust’s AGI. The following types of estates and trusts may owe respect to that interest; and
the NIIT in addition to their regular income tax liability. • The distribution from one of the entities described above is
• Decedents’ estates. (a) NII to the estate or trust, but not included in its taxable
• Simple and complex trusts. income; and (b) the distributions from the estate or trust to
• ESBTs. the beneficiary(ies) in the year exceed the amount of the
• Pooled income funds. income distribution deduction allowed for regular tax
• Bankruptcy estates. purposes (from Schedule B, line 15).
However, in the case of bankruptcy estates, the AGI
threshold is $125,000.

36 Instructions for Form 1041 (2023)

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Special rules. In the final year of an estate or trust, If you are required to file FinCEN Form 114 but don't,
deductions in excess of income may be reported to the ! you may have to pay a penalty of up to $10,000 (or
beneficiary in box 11 of Schedule K-1. These deductions CAUTION more in some cases).
may also be deductible by the beneficiary for NIIT purposes.
In this situation, the terminating estate or trust should provide Question 4
the beneficiary information regarding whether the amounts The estate or trust may be required to file Form 3520, Annual
reported in box 11, codes A through E, include any amounts Return To Report Transactions With Foreign Trusts and
that are deductible for NIIT purposes. See Regulations Receipt of Certain Foreign Gifts, if:
section 1.1411-4(g)(4). • It directly or indirectly transferred property or money to a
foreign trust—for this purpose, any U.S. person who created
Other Information a foreign trust is considered a transferor;
• It is treated as the owner of any part of the assets of a
Question 1 foreign trust under the grantor trust rules; or
If the estate or trust received tax-exempt income, figure the • It received a distribution from a foreign trust.
allocation of expenses between tax-exempt and taxable An owner of a foreign trust must ensure that the trust
income on a separate sheet and attach it to the return. Enter TIP files an annual information return on Form 3520-A.
only the deductible amounts on the return. Don't figure the
allocation on the return itself. For more information, see
Allocation of Deductions for Tax-Exempt Income, earlier. Question 5
Report the amount of tax-exempt interest income received An estate or trust claiming an interest deduction for qualified
or accrued in the space provided below Question 1. residence interest (as defined in section 163(h)(3)) on
seller-provided financing must include on an attachment to
Also, include any exempt-interest dividends the estate or the 2023 Form 1041 the name, address, and TIN of the
trust received as a shareholder in a mutual fund or other person to whom the interest was paid or accrued (that is, the
regulated investment company (RIC). seller).
Question 2 If the estate or trust received or accrued such interest, it
must provide identical information on the person liable for
All salaries, wages, and other compensation for personal such interest (that is, the buyer). This information doesn't
services must be included on the return of the person who need to be reported if it duplicates information already
earned the income, even if the income was irrevocably reported on Form 1098.
assigned to a trust by a contract assignment or similar
arrangement. Question 6
The grantor or person creating the trust is considered the To make the section 663(b) election to treat any amount paid
owner if they keep “beneficial enjoyment” of or substantial or credited to a beneficiary within 65 days following the close
control over the trust property. The trust's income, of the tax year as being paid or credited on the last day of
deductions, and credits are allocable to the owner. that tax year, check the box. This election can be made by
the fiduciary of a complex trust or the executor of a
If you checked “Yes” for Question 2, see Special Reporting decedent's estate. For the election to be valid, you must file
Instructions, earlier. Form 1041 by the due date (including extensions). Once
made, the election is irrevocable.
Question 3
Check the “Yes” box and enter the name of the foreign Question 7
country if either (1) or (2) below applies. To make the section 643(e)(3) election to recognize gain on
1. The estate or trust owns more than 50% of the stock in property distributed in kind, check the box and see the
any corporation that owns one or more foreign bank Instructions for Schedule D (Form 1041).
accounts.
2. At any time during the year, the estate or trust had an Question 9
interest in or signature or other authority over a bank, Generally, a beneficiary is a skip person if the beneficiary is in
securities, or other financial account in a foreign country. a generation that is 2 or more generations below the
generation of the transferor to the trust.
Exception. Check “No” if either of the following applies to
the estate or trust. To determine if a beneficiary that is a trust is a skip person,
• The combined value of the accounts was $10,000 or less and for exceptions to the general rules, see the definition of a
during the whole year. skip person in the instructions for Schedule R of Form 706.
• The accounts were with a U.S. military banking facility
operated by a U.S. financial institution. Question 10
If you checked “Yes” for Question 3, electronically file A domestic trust that is a specified domestic entity must file
FinCEN Form 114, Report of Foreign Bank and Financial Form 8938 along with Form 1041 for the tax year. Form 8938
Accounts (FBAR), with the Department of the Treasury using must be filed each year the value of the trust's specified
FinCEN's BSA E-Filing System. Because FinCEN Form 114 foreign financial assets meets or exceeds the reporting
isn't a tax form, don't file it with Form 1041. threshold. A trust exceeds the threshold amount if the total
value of the specified foreign financial assets is more than
Go to FinCEN.gov for more information. $50,000 on the last day of the tax year or more than $75,000
at any time during the tax year. For more information on
domestic trusts that are specified domestic entities, the filing

Instructions for Form 1041 (2023) 37

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threshold, and the types of foreign financial assets that must        or trust must report the transfer in of that liability on Part IV of 
be reported, see the Instructions for Form 8938.                      Form 965-A. See the Instructions for Form 965-A for 
                                                                      additional information.
A domestic trust that is required to file Form 8938 along 
with Form 1041 for the tax year must check “Yes” to Question          Question 13
10.
                                                                      Digital assets are any digital representations of value that are 
Question 11a                                                          recorded on a cryptographically secured distributed ledger or 
                                                                      any similar technology. For example, digital assets include 
A distribution of S corporation stock by an estate or trust that 
                                                                      non-fungible tokens (NFTs) and virtual currencies, such as 
results in a change of ownership for federal income tax 
                                                                      cryptocurrencies and stablecoins. If a particular asset has the 
purposes is a triggering event described in Regulations 
                                                                      characteristics of a digital asset, it will be treated as a digital 
section 1.965-7(c)(3). If the estate or trust transfers less than 
                                                                      asset for federal income tax purposes.
all of its shares of stock of the S corporation, the transfer will 
be a triggering event only with respect to the portion of the           Check the “Yes” box next to the question on digital assets 
estate’s or trust’s section 965(i) net tax liability that is properly if at any time during 2023, you (a) received (as a reward, 
allocable to the transferred shares. If the person who                award, or payment for property or services); or (b) sold, 
received the distribution of S corporation stock is an eligible       exchanged, or otherwise disposed of a digital asset (or any 
section 965(i) transferee, the estate or trust may enter into a       financial interest in any digital asset).
transfer agreement with the eligible section 965(i) transferee 
to prevent the assessment of the estate’s or trust’s section            For example, check “Yes” if at any time during 2023 you:
965(i) net tax liability in the tax year that includes the            • Received digital assets as payment for property or 
triggering event.                                                     services provided;
                                                                      • Received digital assets as a result of a reward or award;
The estate or trust must report in Part IV, column (g), of            • Received new digital assets as a result of mining, staking, 
Form 965-A the transfer out of the section 965 tax liability          and similar activities;
properly allocable to S corporation shares for which the              • Received digital assets as a result of a hard fork;
estate or trust entered into a transfer agreement with an             • Disposed of digital assets in exchange for property or 
eligible section 965(i) transferee. See the Instructions for          services;
Form 965-A for additional information.                                • Disposed of a digital asset in exchange or trade for another 
        The transfer agreement must be filed within 30 days           digital asset;
                                                                      • Sold a digital asset; or
!       of the triggering event. See Form 965-D, Transfer             • Otherwise disposed of any other financial interest in a 
CAUTION Agreement Under Section 965(i)(2), and the related 
instructions for additional information.                              digital asset.
                                                                        You have a financial interest in a digital asset if you are the 
Question 11b                                                          owner of record of a digital asset, or have an ownership stake 
If the estate or trust distributed S corporation shares and the       in an account that holds one or more digital assets, including 
estate or trust did not enter into a timely transfer agreement        the rights and obligations to acquire a financial interest, or 
for all shares transferred during the tax year, the transfer of       you own a wallet that holds digital assets.
shares not covered by a transfer agreement is a triggering              The following actions or transactions in 2023, alone, 
event. See Triggering event under section 965(i), earlier.            generally don’t require you to check “Yes”:
The estate or trust may file a consent agreement under                • Holding a digital asset in a wallet or account;
section 965(i)(4)(D) to make the election under section               • Transferring a digital asset from one wallet or account you 
965(h) to pay in installments the triggered section 965(i) net        own or control to another wallet or account that you own or 
tax liability. See Form 965-E, Consent Agreement Under                control; or
Section 965(i)(4)(D), and the related instructions for how to         • Purchasing digital assets using U.S. or other real currency, 
file the consent agreement. See Triggered deferred S                  including through the use of electronic platforms such as 
corporation-related net 965 tax liability under Part I in the         PayPal and Venmo.
Instructions for Form 965-A for how to make the installment             Do not leave the question unanswered. You must answer 
election.                                                             “Yes” or “No” checking the appropriate box. For more 
        The due date of the original Form 965-E is within 30          information, go to IRS.gov/VirtualCurrencyFAQs.
!       days of the triggering event.                                 How to report digital asset transactions.  If, in 2023, you 
CAUTION                                                               disposed of any digital asset, which you held as a capital 
        The due date of the election to pay in installments is        asset, through a sale, trade, exchange, payment, or other 
                                                                      transfer, check “Yes” and use Form 8949 to calculate your 
!       the due date of the return for the tax year, including        capital gain or loss and report that gain or loss on 
CAUTION extensions. The actual payment of the first 
installment is due no later than the due date of the return for       Schedule D (Form 1041).
the tax year without extensions, even if the election is made           If you received any digital asset as compensation for 
on a return filed by the extended due date.                           services or disposed of any digital asset that you held for sale 
                                                                      to customers in a trade or business, you must report the 
Question 12                                                           income as you would report other income of the same type.

Check the “Yes” box if the estate or trust entered into a             Question 14
transfer agreement as an eligible 965(i) transferee.
                                                                      If the deemed owner of a grantor portion of the ESBT is a 
If, during the tax year, the estate or trust entered into a           nonresident alien, the items of income, deduction, and credit 
transfer agreement as an eligible 965(i) transferee, the estate       from that grantor portion must be reallocated to the S portion. 

38                                                                                              Instructions for Form 1041 (2023)

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See Schedule G, Part I, line 4, Tax on the ESBT Portion of the Generally, amounts accumulated before a beneficiary
Trust, earlier, for how to figure the tax on the S portion of the reaches age 21 may be excluded by the beneficiary. See
trust. sections 665 and 667(c) for exceptions relating to multiple
trusts. The trustee reports to the IRS the total amount of the
Question 15 accumulation distribution before any reduction for income
The S portion of the ESBT must take into account the accumulated before the beneficiary reaches age 21. If the
qualified items of income, gain, deduction, and loss and other multiple trust rules don't apply, the beneficiary claims the
items from any S corporation owned by the ESBT, and any exclusion when filing Form 4970, as you may not be aware
qualified items of income, gain, deduction, and loss and other that the beneficiary may be a beneficiary of other trusts with
items reallocated to the S portion. See Question 14, earlier. other trustees.
For purposes of determining whether the taxable income of
an ESBT exceeds the threshold amount, the S portion and For examples of accumulation distributions that include
the non-S portion of an ESBT are treated as a single trust. payments from one trust to another trust, and amounts
See Regulations section 1.199A-6(d)(3)(vi). distributed for a dependent's support, see Regulations
section 1.665(b)-1A(b).

Schedule J (Form Part II—Ordinary Income Accumulation
1041)—Accumulation Distribution for Distribution
Enter the applicable year at the top of each column for each
Certain Complex Trusts throwback year.
General Instructions
Line 6—DNI for Earlier Years
Use Schedule J (Form 1041) to report an accumulation
distribution for a domestic complex trust that was: Enter the applicable amounts as follows:
• Previously treated at any time as a foreign trust (unless an
exception is provided in future regulations); or Throwback year(s) Amount from line
• Created before March 1, 1984, unless that trust would not 1969–1977 . . . . . . . . Form 1041, Schedule C, line 5
be aggregated with other trusts under the rules of section 1978–1979 . . . . . . . . Form 1041, line 61
643(f) if that section applied to the trust. 1980 . . . . . . . . . . . . Form 1041, line 60
1981–1982 . . . . . . . . Form 1041, line 58
An accumulation distribution is the excess of amounts 1983–1996 . . . . . . . . Form 1041, Schedule B, line 9
properly paid, credited, or required to be distributed (other 1997–2022 . . . . . . . . Form 1041, Schedule B, line 7
than income required to be distributed currently) over the DNI
of the trust reduced by income required to be distributed
currently. To have an accumulation distribution, the For information about throwback years, see the
distribution must exceed the accounting income of the trust. instructions for line 13. For purposes of line 6, in figuring the
DNI of the trust for a throwback year, subtract any estate tax
Specific Instructions
deduction for IRD if the income is includible in figuring the
Part I—Accumulation Distribution in 2023 DNI of the trust for that year.

Line 1—Distribution Under Section 661(a)(2) Line 7—Distributions Made During Earlier Years

Enter the amount from Form 1041, Schedule B, line 10, for Enter the applicable amounts as follows:

2023. This is the amount properly paid, credited, or required Throwback year(s) Amount from line
to be distributed other than the amount of income for the
current tax year required to be distributed currently. 1969–1977 . . . . . . . . Form 1041, Schedule C, line 8
1978 . . . . . . . . . . . . Form 1041, line 64
1979 . . . . . . . . . . . . Form 1041, line 65
Line 2—Distributable Net Income 1980 . . . . . . . . . . . . Form 1041, line 64
1981–1982 . . . . . . . . Form 1041, line 62
1983–1996 . . . . . . . . Form 1041, Schedule B, line 13
Enter the amount from Form 1041, Schedule B, line 7, for 1997–2022 . . . . . . . . Form 1041, Schedule B, line 11
2023. This is the amount of DNI for the current tax year
determined under section 643(a).

Line 3—Distribution Under Section 661(a)(1) Line 11—Prior Accumulation Distribution Thrown
Back to Any Throwback Year
Enter the amount from Form 1041, Schedule B, line 9, for
2023. This is the amount of income for the current tax year Enter the amount of prior accumulation distributions thrown
required to be distributed currently. back to the throwback years. Don't enter distributions
excluded under section 663(a)(1) for gifts, bequests, etc.
Line 5—Accumulation Distribution
Line 13—Throwback Years
If line 11 of Form 1041, Schedule B, is more than line 8 of
Form 1041, Schedule B, complete the rest of Schedule J and Allocate the amount on line 5 that is an accumulation
file it with Form 1041, unless the trust has no previously distribution to the earliest applicable year first, but don't
accumulated income. allocate more than the amount on line 12 for any throwback

Instructions for Form 1041 (2023) 39

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year. An accumulation distribution is thrown back first to the      Throwback year(s)                       Amount from line
earliest preceding tax year in which there is undistributed net     1969–1976  . . . . . . . . .            Form 1041, page 1, line 24
income (UNI). Then, it is thrown back beginning with the next       1977 . . . . . . . . . . . . .          Form 1041, page 1, line 26
earliest year to any remaining preceding tax years of the           1978–1979  . . . . . . . . .            Form 1041, line 27
trust. The portion of the accumulation distribution allocated to    1980–1984  . . . . . . . . .            Form 1041, line 26c
the earliest preceding tax year is the amount of the UNI for        1985–1986  . . . . . . . . .            Form 1041, line 25c
                                                                    1987 . . . . . . . . . . . . .          Form 1041, line 22c
that year. The portion of the accumulation distribution             1988–2022  . . . . . . . . .           Form 1041, Schedule G, line 1a
allocated to any remaining preceding tax year is the amount 
by which the accumulation distribution is larger than the total 
of the UNI for all earlier preceding tax years.
                                                                    Line 19—Trust's Share of Net Short-Term Gain
A tax year of a trust during which the trust was a simple 
trust for the entire year isn't a preceding tax year unless (a)     For each throwback year, enter the smaller of the capital gain 
during that year, the trust received outside income; or (b) the     from the two lines indicated. If there is a capital loss or a zero 
trustee didn't distribute all of the trust's income that was        on either or both of the two lines indicated, enter zero on 
required to be distributed currently for that year. In this case,   line 19.
UNI for that year must not be more than the greater of the          Throwback year(s)                       Amount from line
outside income or income not distributed during that year.          1969–1970  . . . . . . . . . . . . .   Schedule D, line 10, column 2, or
                                                                                                           Schedule D, line 12, column 2
The term “outside income” means amounts that are                    1971–1978  . . . . . . . . . . . . .   Schedule D, line 14, column 2, or
included in the DNI of the trust for that year but that aren't                                             Schedule D, line 16, column 2
“income” of the trust as defined in Regulations section             1979 . . . . . . . . . . . . . . . . . Schedule D, line 18, column (b), or
1.643(b)-1. Some examples of outside income are (a)                                                        Schedule D, line 20, column (b)
income taxable to the trust under section 691, (b) unrealized       1980–1981  . . . . . . . . . . . . .   Schedule D, line 14, column (b), or
accounts receivable that were assigned to the trust, and (c)                                               Schedule D, line 16, column (b)
                                                                    1982 . . . . . . . . . . . . . . . . . Schedule D, line 16, column (b), or
distributions from another trust that include the DNI or UNI of                                            Schedule D, line 18, column (b)
the other trust.                                                    1983–1996  . . . . . . . . . . . . .   Schedule D, line 15, column (b), or
                                                                                                           Schedule D, line 17, column (b)
Line 16—Tax-Exempt Interest Included on Line 13                     1997–2002  . . . . . . . . . . . . .   Schedule D, line 14, column (2), or
                                                                                                           Schedule D, line 16, column (2)
For each throwback year, divide line 15 by line 6 and multiply      2003 . . . . . . . . . . . . . . . . . Schedule D, line 14a, column (2), or
                                                                                                           Schedule D, line 16a, column (2)
the result by the following:                                        2004–2012  . . . . . . . . . . . . .   Schedule D, line 13, column (2), or
                                                                                                           Schedule D, line 15, column (2)
Throwback year(s)                               Amount from line    2013–2022  . . . . . . . .             Schedule D, line 17, column (2), or
1969–1977  . . . . . . . .       Form 1041, Schedule C, line 2(a)                                          Schedule D, line 19, column (2)
1978–1979  . . . . . . . .                     Form 1041, line 58(a)
1980 . . . . . . . . . . . .                   Form 1041, line 57(a)
1981–1982  . . . . . . . .                     Form 1041, line 55(a)
1983–2022  . . . . . . . .       Form 1041, Schedule B, line 2      Line 20—Trust's Share of Net Long-Term Gain

                                                                    Enter the applicable amounts as follows:
Part III—Taxes Imposed on Undistributed Net                         Throwback year(s)                       Amount from line
Income                                                              1969–1970  . . . . . . . . . . . .     50% of Schedule D, line 13(e)
For the regular tax computation, if there is a capital gain,        1971–1977  . . . . . . . . . . . .     50% of Schedule D, line 17(e)
complete lines 18 through 25 for each throwback year. If the        1978 . . . . . . . . . . . . . . . .   Schedule D, line 17(e) or line
trustee elected the alternative tax on capital gains, complete                                             31, whichever is applicable,
lines 26 through 31 instead of lines 18 through 25 for each                                                 less Form 1041, line 23
                                                                    1979 . . . . . . . . . . . . . . . .   Schedule D, line 25 or line 27,
applicable year. If there is no capital gain for any year, or                                              whichever is applicable, less
there is a capital loss for every year, enter on Part II, line 9,                                           Form 1041, line 23
the amount of the tax for each year identified in the               1980–1981  . . . . . . . . . . . .      Schedule D, line 21, less
instruction for line 18 and don't complete Part III. If the trust                                           Schedule D, line 22
received an accumulation distribution from another trust, see       1982 . . . . . . . . . . . . . . . .    Schedule D, line 23, less
                                                                                                            Schedule D, line 24
Regulations section 1.665(b)-1A.                                    1983–1986  . . . . . . . . . . . .      Schedule D, line 22, less
                                                                                                            Schedule D, line 23
Note. The alternative tax on capital gains was repealed for         1987–1996  . . . . . . . . . . . .      Schedule D, the smaller 
tax years beginning after December 31, 1978. The maximum                                                    of any gain on line 16 
rate on net capital gain for 1981, 1987, and 1991 through                                                    or line 17, column (b)
2022 isn't an alternative tax for this purpose.                     1997–2001  . . . . . . . . . . . .      Schedule D, the smaller
                                                                                                            of any gain on line 15c or
                                                                                                            line 16, column (2)
Line 18—Regular Tax                                                 2002 . . . . . . . . . . . . . . . .    Schedule D, the smaller
                                                                                                            of any gain on line 15a or
Enter the applicable amounts as follows:                                                                    line 16, column (2)
                                                                    2003 . . . . . . . . . . . . . . . .    Schedule D, the smaller

40                                                                                                     Instructions for Form 1041 (2023)

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Throwback year(s)                        Amount from line           Part IV—Allocation to Beneficiary
                                         of any gain on line 15a or Complete Part IV for each beneficiary. If the accumulation 
                                         line 16a, column (2)       distribution is allocated to more than one beneficiary, attach 
2004–2012  . . . . . . . . . . . .       Schedule D, the smaller 
                                         of any gain on line 14a    an additional copy of Schedule J with Part IV completed for 
                                          or line 15, column (2)    each additional beneficiary. Give each beneficiary a copy of 
2013–2022  . . . . . . . . . . . .       Schedule D, the smaller    their respective Part IV information. If more than 5 throwback 
                                         of any gain on line 18a or years are involved, use another Schedule J, completing Parts 
                                         line 19, column (2)        II and III for each additional throwback year.
                                                                    If the beneficiary is a nonresident alien individual or a 
                                                                    foreign corporation, see section 667(e) about retaining the 
Line 22—Taxable Income                                              character of the amounts distributed to determine the amount 
                                                                    of the U.S. withholding tax.
Enter the applicable amounts as follows:
                                                                    The beneficiary uses Form 4970 to figure the tax on the 
Throwback year(s)                        Amount from line           distribution. The beneficiary also uses Form 4970 for the 
1969–1976  . . . . . . . . . .          Form 1041, page 1, line 23  section 667(b)(6) tax adjustment if an accumulation 
1977 . . . . . . . . . . . . . .        Form 1041, page 1, line 25  distribution is subject to estate or GST tax. This is because 
1978–1979  . . . . . . . . . .           Form 1041, line 26         the trustee can't be the estate or GST tax return filer.
1980–1984  . . . . . . . . . .           Form 1041, line 25
1985–1986  . . . . . . . . . .           Form 1041, line 24
1987 . . . . . . . . . . . . . .         Form 1041, line 21         Schedule K-1 (Form 
1988–1996  . . . . . . . . . .           Form 1041, line 22
1997 . . . . . . . . . . . . . .         Form 1041, line 23         1041)—Beneficiary's Share of 
1998–2018  . . . . . . . . . .           Form 1041, line 22
2019–2022  . . . . . . . . . .           Form 1041, line 23         Income, Deductions, Credits, etc.

                                                                    General Instructions
                                                                    Use Schedule K-1 (Form 1041) to report the beneficiary's 
Line 26—Tax on Income Other Than Long-Term                          share of income, deductions, and credits from a trust or a 
Capital Gain                                                        decedent's estate.
                                                                             Grantor type trusts don't use Schedule K-1 (Form 
Enter the applicable amounts as follows:
                                                                             1041) to report the income, deductions, or credits of 
Throwback year(s)                        Amount from line           CAUTION! the grantor (or other person treated as owner). See 
                                                                    Grantor Type Trusts, earlier.
1969 . . . . . . . . . . . . . .         Schedule D, line 20
1970 . . . . . . . . . . . . . .         Schedule D, line 19
1971 . . . . . . . . . . . . . .         Schedule D, line 50
1972–1975  . . . . . . . . . .           Schedule D, line 48        Who Must File
1976–1978  . . . . . . . . . .           Schedule D, line 27
                                                                    The fiduciary (or one of the joint fiduciaries) must file 
                                                                    Schedule K-1. A copy of each beneficiary's Schedule K-1 is 
                                                                    attached to the Form 1041 filed with the IRS, and each 
Line 27—Trust's Share of Net Short-Term Gain                        beneficiary is given a copy of their respective Schedule K-1. 
                                                                    One copy of each Schedule K-1 must be retained for the 
If there is a loss on any of the following lines, enter zero on     fiduciary's records.
line 27 for the applicable throwback year. Otherwise, enter 
the applicable amounts as follows:                                  Beneficiary's Identifying Number

Throwback year(s)                        Amount from line           As a payer of income, you are required to request and 
1969–1970  . . . . . . .             Schedule D, line 10, column 2  provide a proper identifying number for each recipient of 
1971–1978  . . . . . . .             Schedule D, line 14, column 2  income. Enter the beneficiary's number on the respective 
                                                                    Schedule K-1 when you file Form 1041. Individuals and 
                                                                    business recipients are responsible for giving you their TINs 
                                                                    upon request. You may use Form W-9 to request the 
Line 28—Trust's Share of Taxable Income Less 
                                                                    beneficiary's identifying number.
Section 1202 Deduction
                                                                    Penalty. You may be charged a $50 penalty for each failure 
Enter the applicable amounts as follows:                            to provide a required TIN, unless reasonable cause is 
                                                                    established for not providing it. Explain any reasonable cause 
Throwback year(s)                        Amount from line           in a signed affidavit and attach it to this return.
1969 . . . . . . . . . . . . . . . .     Schedule D, line 19        Truncating recipient's identification number on benefi-
1970 . . . . . . . . . . . . . . . .     Schedule D, line 18        ciary's statement.  The estate or trust can truncate a 
1971 . . . . . . . . . . . . . . . .     Schedule D, line 38        beneficiary’s identifying number on the Schedule K-1 the 
1972–1975  . . . . . . . . . . . .       Schedule D, line 39
1976–1978  . . . . . . . . . . . .       Schedule D, line 21        estate or trust sends to the beneficiary. Truncation isn't 
                                                                    allowed on the Schedule K-1 the estate or trust files with the 
                                                                    IRS. Also, the estate or trust can't truncate its own 
                                                                    identification number on any form.

Instructions for Form 1041 (2023)                                                                                               41

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To truncate, where allowed, replace the first five digits of     Past years. Don't include in the beneficiary's income any 
the nine-digit number with asterisks (*) or Xs (for example, an  amounts deducted on Form 1041 for an earlier year that were 
SSN xxx-xx-xxxx would appear as ***-**-xxxx or                   credited or required to be distributed in that earlier year.
XXX-XX-xxxx). For more information, see Regulations 
section 301.6109-4.                                              Character of income.   The beneficiary's income is 
                                                                 considered to have the same proportion of each class of 
                                                                 items entering into the computation of DNI that the total of 
Substitute Forms
                                                                 each class has to the DNI (for example, half dividends and 
                                                                 half interest if the income of the estate or trust is half 
You don't need IRS approval to use a substitute Schedule K-1     dividends and half interest).
if it is an exact copy of the IRS schedule. The boxes must use 
                                                                 Allocation of deductions.    Generally, items of deduction 
the same numbers and titles and must be in the same order 
                                                                 that enter into the computation of DNI are allocated among 
and format as on the comparable IRS Schedule K-1. The 
                                                                 the items of income to the extent such allocation isn't 
substitute schedule must include the OMB number and the 
                                                                 inconsistent with the rules set out in section 469 and its 
six-digit form ID code in the upper right-hand corner of the 
                                                                 regulations, relating to passive activity loss limitations, in the 
schedule.
                                                                 following order.
You must provide each beneficiary with the Instructions for      First, all deductions directly attributable to a specific class 
Schedule K-1 (Form 1041) for a Beneficiary Filing Form 1040      of income are deducted from that income. For example, 
or 1040-SR, or other prepared specific instructions for each     rental expenses, to the extent allowable, are deducted from 
item reported on the beneficiary's Schedule K-1.                 rental income.
                                                                 Second, deductions that aren't directly attributable to a 
Inclusion of Amounts in Beneficiaries' Income                    specific class of income may generally be allocated to any 
                                                                 class of income, as long as a reasonable portion is allocated 
Simple trust. The beneficiary of a simple trust must include     to any tax-exempt income. Deductions considered not 
in their gross income the amount of the income required to be    directly attributable to a specific class of income under this 
distributed currently, whether or not distributed, or if the     rule include fiduciary fees, and state income and personal 
income required to be distributed currently to all beneficiaries property taxes. The charitable deduction, however, must be 
exceeds the DNI, their proportionate share of the DNI. The       ratably apportioned among each class of income included in 
determination of whether trust income is required to be          DNI.
distributed currently depends on the terms of the trust 
                                                                 Finally, any excess deductions that are directly attributable 
instrument and applicable local law. See Regulations section 
                                                                 to a class of income may be allocated to another class of 
1.652(c)-4 for a comprehensive example.
                                                                 income. However, in no case can excess deductions from a 
Estates and complex trusts. The beneficiary of a                 passive activity be allocated to income from a nonpassive 
decedent's estate or complex trust must include in their gross   activity, or to portfolio income earned by the estate or trust. 
income the sum of:                                               Excess deductions attributable to tax-exempt income can't 
1. The amount of the income required to be distributed           offset any other class of income.
currently, or if the income required to be distributed currently In no case can deductions be allocated to an item of 
to all beneficiaries exceeds the DNI (figured without taking     income that isn't included in the computation of DNI, or 
into account the charitable deduction), their proportionate      attributable to corpus.
share of the DNI (as so figured); and                            You can't show any negative amounts for any class of 
2. All other amounts properly paid, credited, or required        income shown in boxes 1 through 8 of Schedule K-1. 
to be distributed, or if the sum of the income required to be    However, for the final year of the estate or trust, certain 
distributed currently and other amounts properly paid,           deductions or losses can be passed through to the 
credited, or required to be distributed to all beneficiaries     beneficiary(ies). See the instructions for box 11 for more 
exceeds the DNI, their proportionate share of the excess of      information on these deductions and losses. Also, the 
DNI over the income required to be distributed currently.        beneficiary's share of depreciation and depletion is 
                                                                 apportioned separately. These deductions may be allocated 
See Regulations section 1.662(c)-4 for a comprehensive           to the beneficiary(ies) in amounts greater than their income. 
example.                                                         See Depreciation, Depletion, and Amortization, earlier, and 
For complex trusts that have more than one beneficiary,          Rev. Rul. 74-530, 1974-2 C.B. 188.
and if different beneficiaries have substantially separate and 
independent shares, their shares are treated as separate         Beneficiary's Tax Year
trusts for the sole purpose of determining the amount of DNI 
allocable to the respective beneficiaries. A similar rule 
applies to treat substantially separate and independent          The beneficiary's income from the estate or trust must be 
shares of different beneficiaries of an estate as separate       included in the beneficiary's tax year during which the tax 
estates. For examples of the application of the separate         year of the estate or trust ends. See Pub. 559 for more 
share rule, see the regulations under section 663(c).            information, including the effect of the death of a beneficiary 
                                                                 during the tax year of the estate or trust.
Gifts and bequests. Don't include in the beneficiary's 
income any gifts or bequests of a specific sum of money or of    General Reporting Information
specific property under the terms of the governing instrument    If the return is for a fiscal year or a short tax year, fill in the tax 
that are paid or credited in three installments or less.         year space at the top of each Schedule K-1. On each 
Amounts that can be paid or credited only from income of         Schedule K-1, enter the information about the estate or trust 
the estate or trust don't qualify as a gift or bequest of a      and the beneficiary in Parts I and II (items A through H). In 
specific sum of money.                                           Part III, enter the beneficiary's share of each item of income, 

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deduction, credit, and any other information the beneficiary Part III. Beneficiary's Share of Current Year
needs to file their income tax return. Income, Deductions, Credits, and Other Items
Codes. In box 9 and boxes 11 through 14, identify each item Box 1—Interest
by entering a code in the column to the left of the entry space
for the dollar amount. These codes are identified in these Enter the beneficiary's share of the taxable interest income
instructions and on the back of the Schedule K-1. minus allocable deductions.
Attached statements. Enter an asterisk (*) after the code, if
any, in the column to the left of the dollar amount entry space Box 2a—Total Ordinary Dividends
for each item for which you have attached a statement
providing additional information. For those informational Enter the beneficiary's share of ordinary dividends minus
items that can't be reported as a single dollar amount, enter allocable deductions.
the code and asterisk (*) in the left-hand column and enter
“STMT” in the entry space to the right to indicate that the Box 2b—Total Qualified Dividends
information is provided on an attached statement. More than
one attached statement can be placed on the same sheet of Enter the beneficiary's share of qualified dividends minus
paper and should be identified in alphanumeric order by box allocable deductions.
number followed by the letter code (if any). For example: “Box
9, Code A—Depreciation” (followed by the information the
Box 3—Net Short-Term Capital Gain
beneficiary needs).
Too few entry spaces on Schedule K-1? If the estate or Enter the beneficiary's share of the net short-term capital
trust has more coded items than the number of spaces in gain from Schedule D (Form 1041), line 17, column (1),
box 9 or boxes 11 through 14, don't enter a code or dollar minus allocable deductions. Don't enter a loss in box 3. If, for
amount in the last entry space of the box. In the last entry the final year of the estate or trust, there is a capital loss
space, enter an asterisk (*) in the left column and enter carryover, enter in box 11, code C, the beneficiary's share of
“STMT” in the entry space to the right. Report the additional short-term capital loss carryover. However, if the beneficiary
items on an attached statement and provide the box number, is a corporation, enter in box 11, code C, the beneficiary's
code, description, and dollar amount or information for each share of all short- and long-term capital loss carryovers as a
additional item. For example: “Box 13, Code H—Biofuel single item. See section 642(h) and related regulations for
Producer Credit, $500.00.” more information.

Specific Instructions Boxes 4a Through 4c—Net Long-Term Capital Gain

Part I. Information About the Estate or Trust Enter the beneficiary's share of the net long-term capital gain
On each Schedule K-1, enter the name, address, and from Schedule D (Form 1041), lines 18a through 18c, column
identifying number of the estate or trust. Also, enter the name (1), minus allocable deductions.
and address of the fiduciary.
Don't enter a loss in boxes 4a through 4c. If, for the final
Item D year of the estate or trust, there is a capital loss carryover,
enter in box 11, code D, the beneficiary's share of the
If the fiduciary of a trust or decedent's estate filed Form long-term capital loss carryover. (If the beneficiary is a
1041-T, you must check this box and enter the date it was corporation, see the instructions for box 3.) See section
filed. 642(h) and related regulations for more information.
Gains or losses from the complete or partial disposition of
Item E a rental, rental real estate, or trade or business activity that is
a passive activity must be shown on an attachment to
If this is the final year of the estate or trust, you must check Schedule K-1.
this box.
Note. If this is the final K-1 for the beneficiary, check the Box 5—Other Portfolio and Nonbusiness Income
“Final K-1” box at the top of Schedule K-1.
Enter the beneficiary's share of annuities, royalties, or any
Part II. Information About the Beneficiary other income, minus allocable deductions (other than directly
Complete a Schedule K-1 for each beneficiary. On each apportionable deductions), that isn't subject to any passive
Schedule K-1, enter the beneficiary's name, address, and activity loss limitation rules at the beneficiary level. Use boxes
identifying number. 6 through 8 to report income items subject to the passive
activity rules at the beneficiary's level.
Item H
Boxes 6 Through 8—Ordinary Business Income,
Check the “Foreign beneficiary” box if the beneficiary is a Rental Real Estate, and Other Rental Income
nonresident alien individual, a foreign corporation, or a
foreign estate or trust. Otherwise, check the “Domestic Enter the beneficiary's share of trade or business, rental real
beneficiary” box. estate, and other rental income, minus allocable deductions
(other than directly apportionable deductions). To assist the
beneficiary in figuring any applicable passive activity loss
limitations, also attach a separate schedule showing the

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beneficiary's share of income derived from each trade or for the estate tax paid attributable to such income (see the
business, rental real estate, and other rental activity. line 19 instructions), then the beneficiary is allowed an estate
tax deduction in proportion to their share of the distribution
Box 9—Directly Apportioned Deductions that consists of such income. For an example of the
computation, see Regulations section 1.691(c)-2. Figure the
The limitations on passive activity losses and credits computation on a separate sheet and attach it to the return.
! under section 469 apply to estates and trusts.
CAUTION Estates and trusts that distribute income to
Box 11, Code A—Excess Deductions on
beneficiaries are allowed to apportion depreciation,
depletion, and amortization deductions to the beneficiaries. Termination—Section 67(e) Expenses
These deductions are referred to as “directly apportionable
deductions.” If this is the final return of the estate or trust, and there are
excess deductions on termination (see the instructions for
Rules for treating a beneficiary's income and directly line 23), enter the beneficiary's share of excess deductions
apportionable deductions from an estate or trust and other for section 67(e) expenses (amounts allowed in arriving at
rules for applying the passive loss and credit limitations to AGI) in box 11, using code A. See Final Regulations -
beneficiaries of estates and trusts haven't yet been issued. TD9918 for examples of allowable excess deductions on
termination of an estate or trust.
Any directly apportionable deduction, such as
depreciation, is treated by the beneficiary as having been Note. The beneficiary may deduct the excess deductions
incurred in the same activity as incurred by the estate or trust. shown in box 11, code A, as an adjustment to income on
However, the character of such deduction may be Schedule 1 (Form 1040), Part II, line 24k.
determined as if the beneficiary incurred the deduction
directly. Excess deductions on termination occur only during the
last tax year of the trust or decedent's estate when the total
To assist the beneficiary in figuring any applicable passive deductions (excluding the charitable deduction and
activity loss limitations, also attach a separate schedule exemption) are greater than the gross income during that tax
showing the beneficiary's share of directly apportionable year.
deductions derived from each trade or business, rental real
estate, and other rental activity. Generally, a deduction based on an NOL carryover isn't
available to a beneficiary as an excess deduction. However, if
Enter the beneficiary's share of directly apportioned the last tax year of the estate or trust is also the last year in
deductions using codes A through C. which an NOL carryover may be taken (see section 172(b)),
Depreciation (code A). Enter the beneficiary's share of the the NOL carryover is considered an excess deduction on the
depreciation deductions directly apportioned to each activity termination of the estate or trust to the extent it isn't absorbed
reported in boxes 5 through 8. See Depreciation, Depletion, by the estate or trust during its final tax year. For more
and Amortization, earlier, for a discussion of how the information, see Regulations section 1.642(h)-4 for a
depreciation deduction is apportioned between the discussion of the allocation of the carryover among the
beneficiaries and the estate or trust. Report any AMT beneficiaries.
adjustment or tax preference item attributable to depreciation
separately in box 12, using code G. Only the beneficiary of an estate or trust that succeeds to
its property is allowed to deduct that entity's excess
Note. An estate or trust can't make an election under section deductions on termination. A beneficiary who doesn't have
179 to expense certain depreciable business assets. enough income in that year to absorb the entire deduction
can't carry the balance over to any succeeding year.
Depletion (code B). Enter the beneficiary's share of the
depletion deduction under section 611 directly apportioned
to each activity reported in boxes 5 through 8. See Box 11, Code B—Excess Deductions on
Depreciation, Depletion, and Amortization, earlier, for a Termination—Non-Miscellaneous Itemized
discussion of how the depletion deduction is apportioned Deductions
between the beneficiaries and the estate or trust. Report any
tax preference item attributable to depletion separately in If this is the final return of the estate or trust, and there are
box 12, using code H. excess deductions on termination (see the instructions for
Amortization (code C). Itemize the beneficiary's share of line 23), enter the beneficiary's share of excess deductions
the amortization deductions directly apportioned to each for non-miscellaneous itemized deductions in box 11, using
activity reported in boxes 5 through 8. Apportion the code B. Figure the deductions on a separate sheet and
amortization deductions between the estate or trust and the attach it to the return.
beneficiaries in the same way that the depreciation and
depletion deductions are divided. Report any AMT An individual beneficiary must be able to itemize
adjustment attributable to amortization separately in box 12, deductions in order to claim excess deductions that are
using code I. non-miscellaneous itemized deductions in determining
taxable income.
Box 10—Estate Tax Deduction (Including Certain Note. Section 67(g) suspends miscellaneous itemized
Generation-Skipping Transfer Taxes) deductions subject to the 2% floor for tax years 2018 through
2025. Therefore, miscellaneous itemized deductions are not
If the distribution deduction consists of any IRD, and the deductible as excess deductions on termination of an estate
estate or trust was allowed a deduction under section 691(c) or trust. Consult your state taxing authority for information

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about deducting miscellaneous itemized deductions on your Box 13—Credits and Credit Recapture
state tax return.
Enter each beneficiary's share of the credits and credit
Box 11, Codes C and D—Unused Capital Loss recapture using the applicable codes. Listed below are the
Carryover credits that can be allocated to the beneficiary(ies). Attach a
statement if additional information must be provided to the
Upon termination of the trust or decedent's estate, the beneficiary as explained below.
beneficiary succeeding to the property is allowed as a
deduction any unused capital loss carryover under section • Credit for estimated taxes (code A). Payment of estimated
1212. If the estate or trust incurs capital losses in the final tax to be credited to the beneficiary (section 643(g)).
year, use the Capital Loss Carryover Worksheet in the See the instructions for Schedule G, Part II, line 11,
Instructions for Schedule D (Form 1041) to figure the amount ! before you make an entry to allocate any estimated
of capital loss carryover to be allocated to the beneficiary. CAUTION tax payments to a beneficiary. If the fiduciary doesn't
make a valid election, then the IRS will disallow the estimated
Box 11, Codes E and F—NOL Carryover tax payment that is reported on Schedule K-1 and claimed on
the beneficiary's return.
Upon termination of a trust or decedent's estate, a Credit for backup withholding (code B).
beneficiary succeeding to its property is allowed to deduct •
any unused NOL (and any alternative tax net operating loss) Income tax withheld on wages can't be distributed to
carryover for regular and AMT purposes if the carryover ! the beneficiary.
would be allowable to the estate or trust in a later tax year but CAUTION
for the termination. Enter in box 11, using codes E and F, the • The low-income housing credit (code C). Attach a
unused carryover amounts. statement that shows the beneficiary's share of the amount, if
any, entered on line 6 of Form 8586, Low-Income Housing
Box 12—AMT Items Credit, with instructions to report that amount on Form 8586,
line 4, or Form 3800, Part III, line 4d, if the beneficiary's only
Adjustment for minimum tax purposes (code A). Enter source for the credit is a pass-through entity.
the beneficiary's share of the adjustment for minimum tax • Advanced manufacturing production credit (code D).
purposes. Attach a statement showing the amount of the credit the
To figure the adjustment, subtract the beneficiary's share beneficiary must report on line 7 of Form 7207, with
of the income distribution deduction figured on Schedule B, instructions to report the amount directly on Form 3800, Part
line 15, from the beneficiary's share of the income distribution III, line 1b, if the beneficiary's only source for the credit is a
deduction on a minimum tax basis figured on Schedule I pass-through entity.
(Form 1041), line 42. The difference is the beneficiary's share • Work opportunity credit (code F).
of the adjustment for minimum tax purposes. • Credit for small employer health insurance premiums
(code G).
Note. Schedule B, line 15, equals the sum of boxes 1, 2a, 3, • Biofuel producer credit (code H).
4a, 5, 6, 7, and 8 of all Schedules K-1. • Credit for increasing research activities (code I).
• Renewable electricity production credit (code J). Attach a
AMT adjustment attributable to qualified dividends, net statement that shows separately the amount of the credit the
short-term capital gains, or net long-term capital gains beneficiary must report on line 14 of Form 8835, including the
(codes B through D). If any part of the amount reported in allocation of the credit for production during the 4-year period
box 12, code A, is attributable to qualified dividends (code B), beginning on the date the facility was placed in service and
net short-term capital gain (code C), or net long-term capital for production after that period.
gain (code D), enter that part using the applicable code. • Empowerment zone employment credit (code K).
AMT adjustment attributable to unrecaptured section • Orphan drug credit (code M).
1250 gain or 28% rate gain (codes E and F). Enter the • Credit for employer-provided childcare facilities and
beneficiary's distributive share of any AMT adjustments to the services (code N).
unrecaptured section 1250 gain (code E) or 28% rate gain • Biodiesel, renewable diesel, or sustainable aviation fuels
(code F), whichever is applicable, in box 12. credit (code O). If the credit includes the small agri-biodiesel
credit, attach a statement that shows the beneficiary's share
Accelerated depreciation, depletion, and amortization of the small agri-biodiesel credit, the number of gallons
(codes G through I). Enter any adjustments or tax claimed for the small agri-biodiesel credit, and the estate's or
preference items attributable to accelerated depreciation trust's productive capacity for agri-biodiesel.
(code G), depletion (code H), or amortization (code I) that • Credit to holders of tax credit bonds (code P).
were directly apportioned to the beneficiary. For property • Credit for employer differential wage payments (code Q).
placed in service before 1987, report separately the • Recapture of credits (code R). On an attached statement
accelerated depreciation of real and leased personal to Schedule K-1, provide any information the beneficiary will
property. need to report recapture of credits.
Exclusion items (code J). Enter the beneficiary's share of • Other credits (code ZZ). This code is used to report the
the adjustment for minimum tax purposes from box 12, code beneficiary's share of all other credits.
A, of Schedule K-1 that is attributable to exclusion items
(Schedule I (Form 1041), lines 2, 3, 4, 5, and 7). Box 14—Other Information

Enter the dollar amounts and applicable codes for the items
listed under Other information.

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Foreign taxes (code B). Enter the beneficiary's allocable level. See Determining the trust’s or estate’s QBI or qualified
share of taxes paid or accrued to a foreign country. Attach a PTP items, later. The beneficiary must then determine
statement reporting the beneficiary's share of foreign tax whether each item is includible in QBI.
(paid or accrued) and income by category including interest, In addition, the trust or estate must also report on whether
dividends, rents and royalties, and other income. See Form any of its trades or businesses are SSTBs and identify on the
1116 and Pub. 514 for more information. statement any trades or businesses that are aggregated.
Qualified rehabilitation expenditures (code C). Provide Trusts and estates should use Statement A—QBI
the beneficiary with a statement of their share of qualified Pass-Through Entity Reporting, in these instructions, or a
rehabilitation expenditures and other information needed to substantially similar statement, to report each beneficiary’s
complete Part VII of Form 3468, Investment Credit. If there allocable information from each trade or business, including
are expenditures and other information from more than one QBI items, W-2 wages, UBIA of qualified property, qualified
activity, the attached statement will separately identify the PTP items, and section 199A dividends by attaching the
expenditures and other information for each property. See the completed statement(s) to each beneficiary’s Schedule K-1.
instructions for Form 3468, Part VII, for details. The trust or estate should also use Statement A—QBI
Pass-Through Entity Reporting to report each beneficiary’s
Note. Expenditures related to rental real estate activities are share of QBI items, W-2 wages, UBIA of qualified property,
subject to different passive activity limitation rules than other qualified PTP items, and section 199A dividends reported to
qualified rehabilitation expenditures. See the Instructions for the trust or estate by another entity.
Form 8582-CR for details.
Note. The estate or trust must report each beneficiary's
Basis of energy property (code D). Provide the share of qualified items of income, gain, deduction, and loss
beneficiary with a statement with the distributive share of from a PTP. The PTP component is not limited by the W-2
amounts needed to complete Form 3468, Part VI. If there is wages and UBIA of qualified property limitations. Therefore,
information for more than one property, the attached neither the PTP nor its owners (including estates and trusts)
statement will separately identify the information for each are required to report W-2 wages or UBIA of qualified
property. See the instructions for Form 3468, Part VI, for property amounts related to a trade or business operated by
details. a PTP.
Foreign trading gross receipts (code G). Enter the Trusts and estates should use Statement B—QBI
beneficiary's share, if any, of foreign trading gross receipts. Pass-Through Entity Aggregation Election(s), in these
See Form 8873 for more information. instructions, or a substantially similar statement, to report
NIIT (code H). Use code H to identify the amount of the aggregated trades or businesses and provide supporting
beneficiary's adjustment for section 1411 NII or deductions. information to beneficiaries on each Schedule K-1.
See the Instructions for Form 8960. An attachment may be Trusts and estates should use Statement C—QBI
provided with the Schedule K-1 informing the beneficiary of Pass-Through Entity Reporting—Patrons of Specified
the detailed items to be reported on Form 1040 or 1040-SR. Agricultural and Horticultural Cooperatives, in these
See Net Investment Income Tax (NIIT), earlier, for more instructions, or a substantially similar statement, to report
information on these amounts. allocable QBI and W-2 wages allocable to qualified payments
from a specified agricultural or horticultural cooperative for
Section 199A information (code I). In the case of a trust
each trade or business. This statement should also be used
or estate, the QBI deduction, also known as the section 199A
to report each beneficiary’s allocable section 199A(g)
deduction, is determined at the beneficiary level for the
deduction reported to the trust or estate by the specified
portions of QBI, qualified REIT dividends, and qualified PTP
cooperative.
items apportioned to the beneficiaries. To allow beneficiaries
to correctly figure their QBI deduction, the trust or estate Determining the trust’s or estate’s qualified trades or
must enter an asterisk (*) on each beneficiary’s Schedule K-1 businesses. The trust’s or estate’s qualified trades or
next to code I and enter “STMT” in the right column to businesses include its section 162 trades or businesses,
indicate that the information is provided on an attached except for SSTBs, or the trade or business of providing
statement. Do not add amounts into a single number and services as an employee. A section 162 trade or business
report it on Schedule K-1. The information must be generally includes any activity carried on to make a profit and
separately identified for each trade or business the trust or with considerable, regular, and continuous activity. For more
estate directly conducts, including specified service trades or information on what qualifies as a trade or business for
businesses (SSTBs). The trust or estate must attach the purposes of section 199A, see the instructions for Form 8995
statement to each Schedule K-1, separately identifying the or Form 8995-A.
beneficiary’s allocable share of: Rental real estate. Rental real estate may constitute a
trade or business for purposes of the QBI deduction if the
1. Qualified items of income, gain, deduction, and loss; rental real estate:
2. W-2 wages; • Rises to the level of a trade or business under section 162;
3. UBIA of qualified property; • Satisfies the requirements for the rental real estate safe
4. Qualified PTP items; and harbor in Rev. Proc. 2019-38, 2019-42 I.R.B. 942; or
• Meets the self-rental exception (that is, the rental or
5. Section 199A dividends, also known as qualified REIT licensing of property to a commonly controlled trade or
dividends. business conducted by an individual or relevant pass-through
The trust or estate must make an initial determination of entity (RPE)) in Regulations section 1.199A-1(b)(14).
which items are qualified items of income, gain, deduction,
and loss at its level and report to each beneficiary their share The determination of whether rental real estate constitutes a
of all items that may be qualified items at the beneficiary trade or business for purposes of the QBI deduction is made

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by the trust or estate. The trust or estate must first make this or a substantially similar statement, and attach it to each
determination and then only include the allocable share of Schedule K-1. The statement must provide the information
rental real estate items of income, gain, loss, and deduction necessary to identify each separate trade or business
on the statement provided to beneficiaries. Rental real estate included in each aggregation, a description of the aggregated
that does not meet one of the three conditions noted above trades or businesses, and an explanation of the factors met
does not constitute a trade or business for purposes of the that allow the aggregation in accordance with Regulations
QBI deduction and must not be included in the QBI section 1.199A-4. The aggregation statement must be
information provided to beneficiaries. completed each year to show the trust’s or estate's trade or
SSTBs excluded from qualified trades or businesses. business aggregations. Failure to disclose the aggregations
SSTBs are generally excluded from the definition of a may cause them to be disaggregated.
qualified trade or business. An SSTB is any trade or business The trust’s or estate's aggregations must be reported
providing services in the field of health, law, accounting, consistently for all subsequent years, unless there is a
actuarial science, performing arts, consulting, athletics, change in facts and circumstances that changes or
financial services, brokerage services, investing and disqualifies the aggregation. The trust or estate must provide
investment management, trading or dealing in securities, a written explanation for any changes to prior year
trust or estate interests, or commodities or any other trade or aggregations that describes the change in facts and
business where the principal asset is the reputation or skill of circumstances.
one or more of its employees or owners. The term “any trade
If the trust or estate directly or indirectly owns an interest in
or business where the principal asset is the reputation or skill
an RPE that aggregates multiple trades or businesses, it
of one or more of its employees or owners” means any trade
must attach a copy of the RPE’s aggregation to each
or business that consists of any of the following: (a) a trade or
Schedule K-1. The trust or estate cannot break apart the
business in which a person receives fees, compensation, or
aggregation of another RPE, but it may add trades or
other income for endorsing products or services; (b) a trade businesses to the aggregation, assuming the requirements
or business in which a person licenses or receives fees,
above are satisfied.
compensation, or other income for the use of an individual’s
image, likeness, name, signature, voice, trademark, or any Determining the trust’s or estate’s QBI or qualified
other symbols associated with the individual’s identity; or (c) PTP items. The trust’s or estate’s items of QBI that must be
receiving fees, compensation, or other income for appearing reported to beneficiaries include the allocated amounts of
at an event or on radio, television, or another media format. qualified items of income, gain, deduction, and loss from the
trust’s or estate’s trades or businesses that are effectively
Exception. If the beneficiary’s taxable income is equal to
connected with the conduct of a trade or business within the
or less than the threshold for the reporting 2023 tax year,
United States. This may include, but is not limited to, items
$182,100 ($364,200 if married filing jointly), the QBI from the
such as ordinary business income or (losses), section 1231
SSTB may be used by the beneficiary to compute their QBI
gains or (losses), section 179 deductions, and interest from
deduction. If the beneficiary’s taxable income is within the debt-financed distributions.
phase-in range, the threshold amount plus $50,000
($100,000 if married filing jointly), an applicable percentage QBI may also include rental income (losses) or royalty
of the QBI, W-2 wages, and UBIA of qualified property from income, if the activity rises to the level of a trade or business;
an SSTB may be used by the beneficiary to compute their and gambling gains or (losses), but only if the trust or estate
QBI deduction. Therefore, the statement attached to the is engaged in the trade or business of gambling. Whether an
Schedule K-1 issued to each beneficiary must identify any activity rises to the level of a trade or business must be
items relating to SSTBs. determined at the entity level and, once made, is binding on
Aggregation. A trust or estate engaged in more than one beneficiaries.
trade or business may choose to aggregate multiple trades or Qualified PTP items that must be reported to the
businesses into a single trade or business for purposes of beneficiaries include the allocated amounts of the trust’s or
section 199A if it meets the following requirements. estate’s share of qualified items of income, gain, deduction,
1. The same person, or group of persons, either directly and loss from a PTP and may also include gain or loss
or through attribution, owns 50% or more of each trade or recognized on the disposition of the trust’s or estate’s
business for a majority of the tax year, including the last day partnership interest that is not treated as a capital gain or
of the tax year, and all trades or businesses use the same tax loss.
year-end. However, QBI and qualified PTP items don’t include any of
2. None of the trades or businesses are SSTBs. the following.
• Items that are treated as capital gain or loss under any
3. The trades or businesses to be aggregated meet at provision of the Code.
least two of the following three factors. • Dividends or dividend equivalents, including qualified REIT
a. They provide products, property, or services that are dividends.
the same or that are customarily offered together. • Interest income (unless received in connection with the
b. They share facilities or share significant centralized trade or business).
business elements, such as personnel, accounting, legal, • Wage income.
manufacturing, purchasing, human resources, or information • Income that is not effectively connected with the conduct
technology resources. of a trade or business within the United States (for more
information, go to IRS.gov and type in the key word
c. They are operated in coordination with, or reliance
upon, one or more of the businesses in the aggregated “effectively connected income”).
group. • Commodities transactions, or foreign currency gains or
losses described in section 954(c)(1)(C) or (D).
If the trust or estate chooses to aggregate multiple trades • Income, loss, or deductions from notional principal
or businesses, it must report the aggregation on Statement B, contracts under section 954(c)(1)(F).

Instructions for Form 1041 (2023) 47

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• Annuities (unless received in connection with the trade or QBI Flowchart. Trusts or estates may use the QBI
business). Flowchart to help them determine if an allocated item of
• Guaranteed payments described in section 707(c) income, gain, deduction, or loss is includible in QBI
received by the entity for services rendered to a partnership. reportable to beneficiaries.
• Payments described in section 707(a) received by the
entity for services rendered to a partnership.

QBI Flowchart

Questions Yes No
Is the item effectively connected with the conduct of a trade or business within the United Continue Stop, this item isn’t QBI.
States?
Is the item attributable to a trade or business (this may include section 1231 gain (loss), Continue Stop, this item isn’t QBI.
section 179 deductions, interest from debt-financed distributions, etc.)? Examples of an item
not considered attributable to the trade or business at the entity level include gambling income
(loss) where the entity isn’t engaged in the trade or business of gambling, income (loss) from
vacation properties when the entity isn’t in that trade or business, activities not engaged in for
profit, etc.
Is the item treated as a capital gain or loss under any provision of the Internal Revenue Code Stop, this item isn’t QBI. Continue
or is it a dividend or dividend equivalent?
Is the item interest income other than interest income properly allocable to a trade or Stop, this item isn’t QBI. Continue
business? (Note that interest income attributable to an investment of working capital,
reserves, or similar accounts isn’t properly allocable to a trade or business.)
Is the item an annuity, other than an annuity received in connection with the trade or business? Stop, this item isn’t QBI. Continue
Is the item gain or loss from a commodities transaction or foreign currency gain or loss Stop, this item isn’t QBI. Continue
described in section 954(c)(1)(C) or (D)?
Is the item gain or loss from a notional principal contract under section 954(c)(1)(F)? Stop, this item isn’t QBI. Continue
Is the item of income or loss from a qualified PTP? This item is a qualified PTP This item is QBI. Report this
item. Report this item as item as QBI subject to
qualified PTP income or beneficiary-specific
loss, subject to determinations.
beneficiary-specific
determinations, and check
the “PTP” box.

Specific Instructions for Statement A—QBI wages and UBIA of qualified property reported to the trust or
Pass-Through Entity Reporting. estate from any qualified trades or businesses of an RPE the
QBI or qualified PTP items. The trust or estate must first trust or estate owns directly or indirectly. However, trusts or
determine if it is engaged in one or more trades or estates that own a direct or indirect interest in a PTP may not
businesses. It must then determine if any of its trades or include any amounts for W-2 wages or UBIA of qualified
businesses are SSTBs. The trust or estate must also property from the PTP, as the W-2 wages and UBIA of
determine whether it has qualified PTP items from an interest qualified property from a PTP are not allowed in computing
in a PTP. The trust or estate must indicate the status on the the W-2 wage and UBIA limitations.
appropriate checkboxes for each trade or business (or The W-2 wages are amounts paid to employees described
aggregated trade or business) or PTP interest reported. in sections 6051(a)(3) and (8). If the trust or estate conducts
more than one trade or business, it must allocate the W-2
Note. SSTBs and PTPs cannot be aggregated with any wages among its trades or businesses. See Rev. Proc.
other trade or business. So, if the aggregation box is 2019-11, 2019-09 I.R.B. 742, for more information.
checked, the “SSTB” and “PTP” boxes for that specific The unadjusted basis of qualified property is figured by
aggregated trade or business should not be checked. adding the unadjusted basis of all qualified assets
Next, the trust or estate must report to each beneficiary immediately after acquisition. Qualified property includes all
their allocable share of all apportioned items that are QBI or tangible property subject to depreciation under section 167
qualified PTP items for each trade or business the trust or for which the depreciable period hasn't ended that is held
estate owns directly or indirectly. Use the QBI Flowchart to and used for the production of QBI by the trade or business
determine if an allocated item is reportable as a QBI item or during the tax year and held on the last day of the tax year.
qualified PTP item subject to beneficiary-specific The depreciable period ends on the later of 10 years after the
determinations. Each item included under “Other” must be property is placed in service or the last day of the full year for
stated separately, identifying the nature and amount of each the applicable recovery period under section 168.
item. Section 199A dividends. The trust or estate must report
W-2 wages and UBIA of qualified property. The trust or the apportioned allocable share of any REIT dividends to
estate must determine the W-2 wages and UBIA of qualified each beneficiary on Statement A, or a substantially similar
property properly allocable to QBI for each qualified trade or statement, attached to Schedule K-1. Section 199A
business and report the allocable share to each beneficiary dividends do not have to be reported by trade or business
on Statement A, or a substantially similar statement, attached and can be reported as a single amount to beneficiaries.
to Schedule K-1. This includes the allocable share of W-2 Section 199A dividends include dividends the trust or estate

48 Instructions for Form 1041 (2023)

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receives from a REIT held for more than 45 days, for which      under sections 6051(a)(3) and (8) for the calendar year 
the payment is not obligated to someone else, is not a capital  ended with or within the trust’s or estate’s tax year. If the trust 
gain dividend under section 857(b)(3), and is not a qualified   or estate conducts more than one trade or business, it must 
dividend under section 1(h)(11), plus any apportioned           allocate W-2 wages among its trades or businesses. See 
qualified REIT dividends received from a RIC.                   Rev. Proc. 2019-11 for more information.
Fiscal year trusts and estates.   For purposes of 
determining the QBI or qualified PTP items, UBIA of qualified   Note.     The trust or estate must report each beneficiary’s 
property, and the aggregate amount of qualified section 199A    share of qualified items of income, gain, deduction, and loss 
dividends, fiscal year trusts or estates include all items from from a PTP, but the W-2 wages and UBIA of qualified 
the fiscal tax year.                                            property from the PTP should not be reported, as the 
                                                                beneficiary cannot use that information in computing their 
For purposes of determining W-2 wages, fiscal year trusts 
                                                                QBI deduction.
or estates include apportioned amounts paid to employees 

Statement A—QBI Pass-Through Entity Reporting

Pass-through entity’s name:                                               Pass-through entity’s EIN:
Beneficiary’s name:                                                       Beneficiary’s identifying number:
                                                                           PTP         PTP                  PTP
Beneficiary's Share of:                                                    Aggregated  Aggregated           Aggregated
                                                                           SSTB        SSTB                 SSTB 
QBI or Qualified PTP Items Subject to Beneficiary-Specific Determinations     TB1                   TB2                  TB3
          Ordinary business income 
         Rental income 
         Other

W-2 Wages
UBIA of Qualified Property

Section 199A Dividends

Specific Instructions for Statement B—QBI                       disaggregated. The trust’s or estate’s aggregations must be 
Pass-Through Entity Aggregation Election(s).  If the trust      reported consistently for all subsequent years, unless there is 
or estate elects to aggregate more than one trade or            a change in facts and circumstances that changes or 
business that meet all the requirements to aggregate, the       disqualifies the aggregation. The trust or estate must provide 
trust or estate must report the aggregation to beneficiaries on a written explanation for any changes to prior year 
Statement B, or a substantially similar statement, and attach   aggregations that describes the change in facts and 
it to each Schedule K-1. The trust or estate must indicate      circumstances.
trades or businesses that were aggregated by checking the                 If the trust or estate holds a direct or indirect interest in an 
appropriate box for each aggregated trade or business. The      RPE that aggregates multiple trades or businesses, the trust 
trust or estate must also provide a description of the          or estate must also include a copy of the RPE’s aggregations 
aggregated trade or business and an explanation of the          with each beneficiary’s Schedule K-1. The trust or estate 
factors met that allow the aggregation.                         cannot break apart the aggregation of another RPE, but it 
The aggregation statement must be completed each year           may add trades or businesses to the aggregation, assuming 
to show the trust’s or estate’s trade or business aggregations. the aggregation requirements are satisfied.
Failure to disclose the aggregations may cause them to be 

Instructions for Form 1041 (2023)                                                                                            49

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Statement B—QBI Pass-Through Entity Aggregation Election(s)

Pass-through entity’s name:                                                             Pass-through entity’s EIN:                                           
Aggregation of Pass-Through Business Operations 
Aggregation 1
     Provide a description of the aggregated trades or businesses and an explanation of the factors met that allow the aggregation in accordance with 
     Regulations section 1.199A-4. In addition, if the pass-through entity holds a direct or indirect interest in a relevant pass-through entity (RPE) that 
     aggregates multiple trades or businesses, attach a copy of the RPE's aggregations.
      
     Has this trade or business aggregation changed from the prior year? This includes changes in the aggregation due to a trade or business being 
     formed, acquired, disposed, or ceasing operations. If yes, explain.
      
Note. If you have more than one aggregated group, attach additional Statements B. Name the additional aggregations 2, 3, 4, and so forth.

Specific Instructions for Statement C—QBI                                 QBI items and W-2 wages allocable to qualified payments 
Pass-Through Entity Reporting—Patrons of Specified                      include apportioned QBI items included on Statement A that 
Agricultural and Horticultural Cooperatives.                            are allocable to the qualified payments reported to the trust or 
QBI items and wages allocable to qualified payments.                    estate on Form 1099-PATR from the cooperative.
If the trust or estate is a patron of a specified agricultural or         Section 199A(g) deduction.             The trust or estate must 
horticultural cooperative, the trust or estate must provide the         report to its beneficiaries their allocable shares of any 
allocable share of QBI items and W-2 wages allocable to                 apportioned section 199A(g) deduction passed through the 
qualified payments from each trade or business to each of its           cooperative, as reported on Form 1099-PATR. Section 
beneficiaries on Statement C, or a substantially similar                199A(g) deductions do not have to be reported by trade or 
statement, and attach it to Schedule K-1 so each beneficiary            business and can be reported as a single amount to 
can compute their patron reduction under section 199A(b)(7).            beneficiaries.

Statement C—QBI Pass-Through Entity Reporting—Patrons of Specified Agricultural and Horticultural 
Cooperatives

Pass-through entity’s name:                                                            Pass-through entity’s EIN:
Beneficiary’s name:                                                                    Beneficiary's identifying number:
                                                                                        PTP         PTP                                   PTP
Beneficiary’s Share of:                                                                 Aggregated  Aggregated                            Aggregated
                                                                                        SSTB        SSTB                                  SSTB 
QBI Items Allocable to Qualified Payments Subject to Beneficiary-Specific               TB1                      TB2                         TB3
Determinations
              Ordinary business income 
              Rental income 
              Other

W-2 Wages Allocable to Qualified Payments

Section 199A(g) Deduction

Code J. Qualifying advanced coal project property and                   beneficiary with a statement with the distributive share of 
qualifying gasification project property. Provide the                   amounts that the beneficiary will need to complete Form 

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3468, Part II, Sections A and B. If there is information for In addition, if the beneficiary is a “covered person” in
more than one property, the attached statement will connection with a foreign tax credit splitter arrangement
separately identify the information for each property. See the under section 909, attach a statement that identifies the
instructions for Form 3468, Part II, Sections A and B, for arrangement including the foreign taxes paid or accrued.
details.
Inclusion of global intangible low-taxed income (GILTI).
Code K. Qualifying advanced energy project property. Section 951A requires U.S. shareholders of controlled foreign
Provide the beneficiary with a statement with the distributive corporations to report their ratable share of GILTI in taxable
share of amounts that the beneficiary will need to complete income. If applicable, provide the information necessary to
Form 3468, Part III. If there is information for more than one figure the GILTI inclusion to each beneficiary. See the
property, the attached statement will separately identify the Instructions for Form 8992 for details.
information for each property. See the instructions for Form Foreign-derived intangible income (FDII). Public Law
3468, Part III, for details. 115-97 enacted section 250, which allows a domestic
Code L. Advanced manufacturing investment property. corporation a deduction for the eligible percentage of FDII
Provide the beneficiary with a statement with the distributive and GILTI. Section 250 is effective for tax years beginning
share of amounts that the beneficiary will need to complete after 2017. If applicable, provide the necessary information to
Form 3468, Part IV. If there is information for more than one each domestic corporate beneficiary for its calculation of FDII
property, the attached statement will separately identify the benefit. See section 250 for more information. See the
information for each property. See the instructions for Form Instructions for Form 8993 for details.
3468, Part IV, for details. Limitation on business interest expense. If an estate or
Other information (code ZZ). List on a separate sheet the trust is required to file Form 8990, the adjusted taxable
tax information the beneficiary will need to complete their income of an estate or trust beneficiary is reduced by any
return that isn't entered elsewhere on Schedule K-1. income (including any DNI) received from the estate or trust
by the beneficiary to the extent such income supported a
For example, if the estate or trust participates in a deduction for business interest expense under section 163(j)
transaction that must be disclosed on Form 8886 (see (1)(B) in computing the estate's or trust's taxable income. If
earlier), both the estate or trust and its beneficiaries may be applicable, provide the beneficiary the necessary information
required to file Form 8886. The estate or trust must determine to calculate this amount in an attachment to Schedule K-1.
if any of its beneficiaries are required to disclose the See Form 8990 and the Instructions for Form 8990 for
transaction and provide those beneficiaries with information additional information.
they will need to file Form 8886. This determination is based
on the category(ies) under which a transaction qualified for
disclosure. See the Instructions for Form 8886 for details.

Instructions for Form 1041 (2023) 51

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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. Generally, tax returns and return 
information are confidential, as required by Code section 6103.
The time needed to complete and file this form and related schedules will vary depending on individual circumstances. The 
estimated average times are:

                                   Form 1041      Schedule D           Schedule I      Schedule J      Schedule K-1   Form 1041-V
Recordkeeping. . . .               25 hr., 49min.      14 hr., 35 min. 17 hr., 42 min. 11 hr., 00 min. 6 hr., 27 min.    43 min.
Learning about the law 
or the form. . . .                 16 hr., 21min.      3 hr., 38 min.  4 hr., 22 min.  1 hr., 27 min.  35 min.           - - - -
Preparing the form. . . .          31 hr., 27min.      4 hr., 58 min.  4 hr., 51 min.  2 hr., 37 min.  43 min.           - - - -
Copying, assembling, and sending 
the form to the IRS. . . .         4 hr., 01min.          16 min.          - - - -     16 min.         - - - -           - - - -

Comments and suggestions. We welcome your comments concerning the accuracy of these time estimates or 
suggestions for making this form and related schedules simpler. You can send us comments through IRS.gov/FormComments. 
Or, you can write to the Internal Revenue Service, Tax Forms and Publications, 1111 Constitution Ave. NW, IR-6526, 
Washington, DC 20224. Although we can't respond individually to each comment received, we do appreciate your feedback 
and will consider your comments and suggestions as we revise our tax forms, instructions, and publications. Don't send Form 
1041 to this address. Instead, see Where To File, earlier.

52                                                                                     Instructions for Form 1041 (2023)

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Index
 
                                                  Bankruptcy  7 19, 
A                                                 Exemption for      27                           Q
Accounting income     3                           Foreign  5                                      Qualified business income deduction  27
Adjusted gross income (AGI)   2 4 10 15,  , , ,   Who must file      5                            Qualified disability trust 27
  17 28 36 44, , ,                              Estate tax deduction    27                        Qualified revocable trust  5
Alaska Native Settlement Trusts  7              Estimated tax  10 28,                             Qualified settlement funds   8
Amended return     20                             Allocation of payments to beneficiaries      10 Qualified small business stock  30
Amounts paid or permanently set                   Penalty  28                                     Qualified subchapter S trust (QSST)  5 14, , 
  aside   29                                    Exemption   27                                     19
Assembly   13                                   Extraterritorial income exclusion     21
Attachments   13                                                                                  R
                                                F
                                                                                                  Returns:
B                                               Fiduciary  4 5 9,  ,                               Amended     20
Bankruptcy estate  7 16 19, ,                   Fiduciary accounting income (FAI)                  Common trust fund     7
Bankruptcy information   16                       (See Accounting income)                          Electronic and magnetic media  8
Beneficiary  4                                  Final return 20                                    Final  20
  Allocation of estimated tax payment 10        First-tier distributions  30                       Nonexempt charitable trust   19 20, 
  Complex trust    42                           Foreign tax credit     32                          Qualified settlement funds  8
  Estate  42                                    Form 1041-T   10                                   Split-interest trust 20
  Simple trust 42                               Form 8855   5                                      When to file  8
  Tax year for inclusion 42                     Form 8886   12 13 51, ,                            Who must file  5
  Withholding on foreign person 30                                                                Revocable Living Trusts:
Blind trust 21                                  G                                                  Section 645 Election   20
                                                General business credit     32
C                                               Grantor trusts   3 5 13 19,  , ,                  S
Cemetery perpetual care fund   27                 Backup withholding      15                      Second-tier distributions   31
Charitable deduction  28                          Nonqualified deferred compensation              Separate share rule   29
Charitable remainder trusts   20                     plans  19
Common trust fund     7                           Optional filing methods    14                   Special filing instructions:
                                                  Pre-need funeral trusts   19                     Bankruptcy estates    18
                                                  Special filing instructions    13                Electing small business trusts 15
D                                               GST tax deduction      27                          Grantor trusts 13
Decedent's Estate  4                                                                               Pooled income funds    15
Definitions:                                    I                                                 Split-interest trust 20
  Accumulation distribution 39                                                                    Substitute forms   42
  Adjusted gross income (AGI)  4                Income distribution deduction       3 27 29, , 
  Beneficiary 4                                 Inter vivos 3 4,                                  T
  Complex trust    18                           Interest income      21
  Decedent's estate   18                        IRD:                                              Tax rate schedule  31
  Decedent's Estate   4                           Deduction  27                                   Taxable income  27
                                                                                                  Throwback years    39
  DNI  4                                                                                          Trusts 4
  Fiduciary  4                                  M                                                  Alaska Native Settlement   7
  Grantor trusts   19                           Minimum taxable income           27                Blind  21
  IRD  4                                                                                           Common trust fund     7
  Outside income   40                           N                                                  Complex   42
  Pooled income fund  19                        Net investment income tax        36                Domestic  5
  Revocable Living Trust 4                      Net operating loss     28                          Exemption for  27
  Simple trust 18                               Nonexempt charitable deduction        19           Foreign  37
  Trust 4                                       Nonexempt charitable trust       19 28,            Grantor  3
  Trusts  4                                     Nonqualified deferred compensation                 Inter vivos  3 4, 
Distributable net income (See DNI)                plans  19                                        Nonexempt charitable    19 28, 
DNI 4 29,                                                                                          Pre-need funeral    19
                                                P                                                  Qualified disability 27
E                                                                                                  Qualified revocable   5
                                                Paid preparer 9                                    Simple  42
Electing small business trusts  15              Paid preparer authorization      9                 Split-interest 20
  ESBT (S portion only)  19                     Penalties:                                         Testamentary   3 4, 
  S portion  15                                   Estimated tax      28                            Who must file  5 41, 
Elections:                                        Failure to provide a required TIN   41
  Section 643(e)(3)   31                          Failure to provide information timely    11     W
  Section 643(g)   10                             Late filing of return 11
  Section 645  5                                  Late payment of tax     11                      Where to file 9
  Special rule for qualified revocable trusts 5   Other  11                                       Who must file:
  Treating contributions as paid in prior tax     Trust fund recovery   11                         Decedent's estate    5
    year   28                                     Underpaid estimated tax        11                Trust  5
Electronic deposits   10                        Pooled income funds       15 19 28 29, , ,        Withholding on foreign person   30
ESBTs (See Electing small business trusts)      Pre-need funeral trusts     19
Estate 5 42, 

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