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CITY OF MUSKEGON
FIDUCIARY INCOME TAX RETURN INSTRUCTIONS
GENERAL INFORMATION: beneficiaries' percentage of distributable income.
Every estate and trust required to file a United States Fiduciary Return Line 10d. Enter the non-distributable income included in line 9.
(Federal Form 1041) who has Muskegon taxable income, as defined Line 10e. Subtract line 10d from line 9.
below, must file a City of Muskegon Fiduciary Income Tax Return, Form
M-1041. The Income Tax Ordinance requires that an estate or trust be Line 10f. Multiply the amount on line 10e by the percentage on line 10c
treated and taxed as a non-resident individual. A tax rate of one-half of to determine the resident beneficiaries' share of Muskegon distributable
one percent (.005) applies to estates and trusts. income.
"Income for estates" means "Income" as defined in Sec. 643 (b) of the Line 11. Subtract line 10f from line 9 to determine the Muskegon income
Federal Internal Revenue Code, property paid, credited or distributed but subject to tax.
not in excess of the resident individuals' share of the distributable net Line 12. Compute the tax due by multiplying the Muskegon income
income of the estate, decreased by the amount of depreciation or subject to tax by the tax rate, one-half of one percent (.005).
depletion allowed the resident individual as a deduction under Sec. 642 of
the Federal Internal Revenue Code. The exceptions hereinafter set forth SCHEDULE D - BUSINESS ALLOCATION FORMULA:
with respect to trusts are also applicable to income from estates. The Business Allocation Formula is to be used by estates or trusts with
"Income from trusts" means the amount of "Income" as defined in Sec. business activity both within and outside the City of Muskegon.
643 (b) of the Federal Internal Revenue Code, distributed or required to Line 1a. Enter in Column 1 the average net book value of all real and
be distributed under Sec. 652 (a) or 662 (a) (1) of the Federal Internal tangible personal property including inventories owned by the business,
Revenue Code, decreased by the amount of depreciation or depletion regardless of location; and in Column 2 enter the net book value of the
allowed the resident individual as a deduction by Sec. 642 of the Federal real and tangible personal property including inventories located in the
Internal Revenue Code. City of Muskegon. The average net book value of real and tangible
TAXABLE INCOME: personal property including inventories may be determined by adding the
net book values at the beginning of the year and the net book values at
The only types of income taxable to an estate or trust are the following: the end of the year and dividing the sum thus obtained by two. Any other
1. Net profit from the operation of a business or enterprise that is method which will accurately reflect the average net book value for the
attributable to business activity conducted in Muskegon whether year will also be permitted.
or not such business or enterprise is located in Muskegon. Line 1b. Enter in Column 1 the gross rentals of real property for the tax
2. Net profit from rental of real and tangible personal property period multiplied by 8 for all rented real property regardless of location. In
located in Muskegon. Column 2 enter the gross rentals of real property for the tax period
3. Net profit on the sale or exchange of real and tangible personal multiplied by 8 for all rented real property located in the City of Muskegon.
property located in Muskegon. Gross rentals refer to real property, rented or leased and should include
the actual sums of money or other consideration payable,directly or
4. Income from partnerships. indirectly, by the taxpayer for the use or possession of such real property.
Other income, such as dividends or interest, is not taxable to trusts and Line 2. Enter in column 1 the total compensation paid to all employees
estates. However, resident beneficiaries must report their distributive during the tax year and in column 2 enter the amount of compensation
shares of these items on their individual return, Form M-1040. paid to employees for work done or for services performed within the City
of Muskegon during the same period.
INSTRUCTIONS FOR PAGE 1 OF FORM M-1040: Line 3. Enter in Column 1 the total gross receipts from all sales or
Line 1. The total net profit (or loss) is to be computed from page 1 of the services rendered during the tax year, and in Column 2 enter the amount
Federal U.S. Fiduciary Income Tax Return, Form 1041, by using those of gross receipts from sales made or services rendered in the City of
lines applicable to any business operation. Muskegon during the same period.
Line 2. Enter the City of Muskegon Income Tax deducted as an expense Line 5. In determining the average percentage, a factor shall be
on Federal Form 1041. excluded from the computation only when such factor does not exist
Line 3. Add lines 1 and 2 to determine total allocatable income. anywhere insofar as the taxpayer's business operation is concerned and,
in such cases, the sum of the percentage on line 4 shall be divided by the
Line 4. Complete the Business Allocation Formula, Schedule A, Page 2, number of factors actually used.
Form M-1041, and enter the Business Allocation Percentage computed.
RESIDENT BENEFICIARIES' SHARE OF INCOME AND
Line 5. Multiply line 3 by line 4 to determine allocated income. EXCLUSIONS SCHEDULE B AND SCHEDULE C:
Line 6. Enter net income (loss) from rental of property located in the City The information for these schedules is to be taken from the comparable
of Muskegon columns of Schedule C, Form 1041, U.S. Fiduciary Income Tax Return.
Line 7. Enter the net income (loss) from the sale or exchange of property Fiduciaries shall report the amounts in Schedule B, column 4 and
located in Muskegon. Schedule C, Columns 1, 2 and 3 to each resident beneficiary who must
report the amounts as income or exclusions on their individual return,
Line 8. Enter any other Muskegon income. form M-1040.
Line 9. Add lines 5, 6, 7 and 8 to determine Muskegon income. TAX DUE OR REFUND
Line 10. The Muskegon resident beneficiaries' share of distributable net Tax due must be paid when filing the return. Make check or money order
income (loss) included in line 9 is subtracted. The amount of the payable to City of Muskegon and mail with the return to the Income Tax
subtraction is calculated on lines 10a through 10f. Muskegon resident Department, P.O. Box 29, Muskegon, Michigan 49443-0029. Tax due of
beneficiaries are required to report their portion of distributable net less than one dollar need not be paid.
income on their individual returns. They should receive this information
from the Fiduciary. DECLARATION OF ESTIMATED TAX
Line 10a. Enter the resident beneficiaries' share of distributable net Estates and trusts are not required to file a Declaration of Estimated
income. Income Tax.
Line 10b. Enter the distributable net income received by the estate or ASSISTANCE
trust. If you have any questions not answered in these instructions, or if you
Line 10c. Divide line 10a by line 10b to determine the resident need assistance in preparing your return, call (231) 724-6770 or visit the
Income Tax Department in City Hall at 933 Terrace, Muskegon, Michigan.
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