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2023

Instructions for Form 1041

otherwise noted.

What's New ............................... 1

Reminders ................................ 1

Photographs of Missing Children ................ 2

The Taxpayer Advocate Service (TAS) ............ 2

How To Get Forms and Publications .............. 3

General Instructions ......................... 3

Purpose of Form ............................ 3

Income Taxation of Trusts and Decedents'

Period Covered ............................ 8

Where To File .............................. 9

Who Must Sign ............................. 9

Accounting Methods ......................... 9

Accounting Periods ......................... 10

Rounding Off to Whole Dollars ................. 10

Estimated Tax ............................ 10

Interest and Penalties ....................... 10

Other Forms That May Be Required ............. 11

Additional Information ....................... 13

A. Type of Entity ........................... 18

B. Number of Schedules K-1 Attached ........... 19

C. Employer Identification Number .............. 19

D. Date Entity Created ....................... 19

E. Nonexempt Charitable and Split-Interest Trusts ... 19

F. Initial Return, Amended Return, etc. ........... 20

G. Section 645 Election ...................... 20

Income ................................. 21

Deductions .............................. 22

Limitations on Deductions .................... 23

Other Information .......................... 37

Schedule J (Form 1041)—Accumulation

Distribution for Certain Complex Trusts ........ 39

Schedule K-1 (Form 1041)—Beneficiary's Share of

Income, Deductions, Credits, etc. ............ 41

Index ................................... 53

For the latest information about developments related to

Form 1041 and Schedules A, B, G, J, K-1 and its instructions,

such as legislation enacted after they were published, go to

Capital gains and qualified dividends. For tax year 2023,

the 20% maximum capital gains rate applies to estates and

trusts with income above $14,650. The 0% and 15% rates

apply to certain threshold amounts. The 0% rate applies to

amounts up to $3,000. The 15% rate applies to amounts over

$3,000 and up to $14,650.

Bankruptcy estate filing threshold. For tax year 2023, the

requirement to file a return for a bankruptcy estate applies

only if gross income is at least $13,850.

Qualified disability trust. For tax year 2023, a qualified

March 31, 2021, and before October 1, 2021, may be eligible

to claim the credits in 2023.

amendments or codicils, before preparing an estate's or

trust's return.

for Estates and Trusts, to accompany your payment of a

Form 8978 Worksheet. A Form 8978

Worksheet—Schedule G, Part I, Line 8 has been added to

the instructions to calculate the amount due when there is a

negative amount from Form 8978, line 14, that was not used

to reduce Schedule G, line 3, to zero, and you have chapter 1

taxes and/or tax and interest from Form 8621.

Advanced manufacturing production credit. Section

13502 of the Inflation Reduction Act of 2022 (IRA 2022)

created the advanced manufacturing production credit for

certain components produced and sold after 2022. See Form

2021 or later may be carried back 2 years and carried

forward indefinitely.

see Pub. 536, Net Operating Losses (NOLs) for Individuals,

Estates, and Trusts, for more information.

Section 965. Section 965(a) inclusion amounts are not

applicable for tax year 2021 and later years. However,

section 965 may still apply to certain estates and trusts

(including the S portion of electing small business trusts

(ESBTs)) where a section 965(h) or section 965(i) election

Excess deductions on termination. Under Final

Regulations - TD9918, each excess deduction on termination

of an estate or trust retains its separate character as an

amount allowed in arriving at

non-miscellaneous itemized deduction, or a miscellaneous

itemized deduction.

Termination—Section 67(e) Expenses and Box 11, Code B

Excess Deductions on Termination—Non-Miscellaneous

Internet. You can access the IRS website 24 hours a

day, 7 days a week, at IRS.gov to:

Download forms, including talking tax forms, instructions,

and publications;

Order IRS products;

Use the online Internal Revenue Code, regulations, and

other official guidance;

Sign up to receive local and national tax news by email.

Tax forms and publications. The estate or trust can

download or print all of the forms and publications it may

need on

IRS.gov/FormsPubs. Otherwise, the estate or trust

can go to IRS.gov/OrderForms to place an order and have

forms mailed to it. The IRS will process your order for forms

and publications as soon as possible.

The income that is either accumulated or held for future

distribution or distributed currently to the beneficiaries;

Any income tax liability of the estate or trust;

Employment taxes on wages paid to household

employees; and

Net Investment Income Tax (NIIT). See Schedule G, Part I,

created during an individual's life (inter vivos) or at the time of

their death under a will (testamentary).

If the trust instrument

contains certain provisions, then the person creating the trust

(the grantor) is treated as the owner of the trust's assets.

Such a trust is a grantor type trust. See Grantor Type Trusts,

later, under Special Reporting Instructions.

A trust or decedent's estate figures its gross income in

much the same manner as an individual. Most deductions

and credits allowed to individuals are also allowed to estates

distributions taxed to the beneficiaries.

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

distributive share of income. Schedule K-1 (Form 1041) is

used to notify the beneficiaries of the amounts to be included

on their income tax returns.

Before preparing Form 1041, the fiduciary must figure the

accounting income of the estate or trust under the will or trust

instrument and applicable local law to determine the amount,

Abusive trust arrangements are typically promoted by the

promise of tax benefits with no meaningful change in the

taxpayer's control over or benefit from the taxpayer's income

or assets. The promised benefits may include reduction or

elimination of income subject to tax; deductions for personal

expenses paid by the trust; depreciation deductions of an

owner's personal residence and furnishings; a stepped-up

basis for property transferred to the trust; the reduction or

elimination of self-employment taxes; and the reduction or

elimination of gift and estate taxes. These promised benefits

the taxpayer (for example, the taxpayer's business, business

equipment, home, automobile, etc.). Some trusts may hold

interests in other trusts, purport to involve charities, or are

foreign trusts. Funds may flow from one trust to another trust

by way of rental agreements, fees for services, purchase

agreements, and distributions.

Some of the abusive trust arrangements that have been

identified include unincorporated business trusts (or

organizations), equipment or service trusts, family residence

trusts, charitable trusts, and final trusts. In each of these

permitted by the terms of the trust.

When trusts are used for legitimate business, family, or

estate planning purposes, either the trust, the beneficiary, or

transform a taxpayer's personal, living, or educational

expenses into deductible items, and can't seek to avoid tax

liability by ignoring either the true ownership of income and

assets or the true substance of transactions. Therefore, the

tax results promised by the promoters of abusive trust

arrangements, go to IRS.gov and type “Abusive Trusts” in the

search box.

Adjusted gross income (AGI). Compute the AGI of an

estate or a non-grantor trust by subtracting the following from

total income on line 9 of page 1.

of lines 12, 14, and 15a to the extent they are costs incurred

in the administration of the estate or trust) that wouldn't have

AGI of the S portion of an ESBT in the same manner as an

individual taxpayer, except that administration costs allocable

to the S portion (to the extent they are costs incurred in the

administration of the trust that wouldn't have been incurred if

the property were not held by the estate or trust) shall be

deducted in arriving at AGI.

Beneficiary. A beneficiary includes an heir, a legatee, or a

devisee.

Decedent's estate. The decedent's estate is an entity that

the time of their death.

under Special Reporting Instructions, later, for special filing

Be sure to read Optional Filing Methods for Certain

file your return with Form 8997 attached. See the Form 8997

instructions.

foreign estate is one the income of which is from sources

outside the United States that isn't effectively connected with

the conduct of a U.S. trade or business and isn't includible in

gross income. If you are the fiduciary of a foreign estate, file

Form 1040-NR, U.S. Nonresident Alien Income Tax Return,

instead of Form 1041.

during the year, you must file your return with Form 8997

attached. See the Form 8997 instructions.

have substantially the same grantor(s) and substantially the

same primary beneficiary(ies) and a principal purpose of

such trusts is avoidance of tax. This provision applies only to

that portion of the trust that is attributable to contributions to

corpus made after March 1, 1984.

on the court and control tests.

trust treated as wholly owned by the grantor) that:

Was in existence on August 20, 1996,

Was treated as a domestic trust on August 19, 1996, and

Elected to continue to be treated as a domestic trust.

U.S. owner must generally file Form 3520-A, Annual

Information Return of Foreign Trust With a U.S. Owner.

under section 684 as having transferred all of its assets to a

foreign trust, except to the extent a grantor or another person

is treated as the owner of the trust when the trust becomes a

foreign trust.

If all or any portion of a trust is a grantor type trust, then that

trust or portion of a trust must follow the special reporting

requirements discussed later under Special Reporting

Instructions. See Grantor Type Trust under Specific

Instructions, later, for more details on what makes a trust a

Section 645 provides that if both the executor (if any) of an

estate (the related estate) and the trustee of a qualified

revocable trust (QRT) elect the treatment in section 645, the

trust must be treated and taxed as part of the related estate

during the election period. This election may be made by a

QRT even if no executor is appointed for the related estate.

In general, Form 8855, Election To Treat a Qualified

Revocable Trust as Part of an Estate, must be filed by the due

date for Form 1041 for the first tax year of the related estate.

Qualified revocable trusts (QRTs). In general, a QRT is

any trust (or part of a trust) that, on the day the decedent

died, was treated as owned by the decedent because the

decedent held the power to revoke the trust as described in

section 676. An electing trust is a QRT for which a section

645 election has been made.

Election period. The election period is the period of time

during which an electing trust is treated as part of its related

estate.

The election period begins on the date of the decedent's

To determine the applicable date, first determine whether a

Form 706, United States Estate (and Generation-Skipping

Transfer) Tax Return, is required to be filed as a result of the

decedent's death. If no Form 706 is required to be filed, the

applicable date is 2 years after the date of the decedent's

death. If Form 706 is required, the applicable date is the later

of 2 years after the date of the decedent's death or 6 months

after the final determination of liability for estate tax. For

additional information, see Regulations section 1.645-1(f).

election period doesn't need to obtain a new TIN.

multiple owners, see Regulations sections 1.645-1 and

301.6109-1(a).

Form 1041 while the election is in effect.

The executor of the related estate is responsible for filing

end of the election period.

The Form 1041 includes all items of income, deduction,

and credit for the estate and all electing trusts.

For item G, the executor must provide the TIN of the

electing trust with the highest total asset value.

The executor must attach a statement to Form 1041

providing the following information for each electing trust

distribution provisions. Also, each of those shares can

contain two or more separate shares. For more information,

see Separate share rule, later, and Regulations section

1.645-1(e)(2)(iii).

The executor is responsible for ensuring that the estate's

share of the combined tax obligation is paid.

between shares and charitable contribution deductions, see

Regulations section 1.645-1(e).

under the name and TIN of the filing trustee's trust. A

statement providing the same information about the electing

trusts (except the filing trust) that is listed under If there is an

executor above must be attached to these Forms 1041. All

electing trusts must choose the same tax year.

If the filing trust continues after the termination of the

valid section 645 election is subsequently made, then the

trustee must file an amended Form 1041 for the electing

trust, excluding all items of income, deduction, and credit of

the electing trust. These amounts are then included on the

first Form 1041 filed by the executor for the related estate (or

the filing trustee for the electing trust filing as an estate).

estate isn't appointed until after the trustee has made a valid

section 645 election, the executor must agree to the trustee's

election and they must file a revised Form 8855 within 90

death. The amended returns are still filed under the name

and TIN of the electing trust, and they must include the items

of income, deduction, and credit for the related estate for the

periods covered by the returns. Also, attach a statement to

the amended Forms 1041 identifying the name and TIN of

the related estate, and the name and address of the executor.

Check the “Final return” box on the amended return for the

tax year that ends with the appointment of the executor.

Except for this amended return, all returns filed for the

combined entity after the appointment of the executor must

If the election terminates as the result of a later appointed

executor, the executor of the related estate must file Forms

1041 under the name and TIN of the related estate for all tax

trustee of that trust must file a final Form 1041 by completing

the entity information (using the trust's EIN), checking the

Final return box, and signing and dating the form. Don't report

items of income, deduction, and credit. These items are

reported on the related estate's return.

The trustee of an Alaska Native Settlement Trust may elect

the special tax treatment for the trust and its beneficiaries

provided for in section 646. The election must be made by

the due date (including extensions) for filing the trust's tax

The bankruptcy trustee or debtor-in-possession must file

Form 1041 for the estate of an individual involved in

bankruptcy proceedings under chapter 7 or 11 of title 11 of

the U.S. Code if the estate has gross income for the tax year

of $13,850 or more. See

details.

A section 664 CRT doesn’t file Form 1041. Instead, a CRT

bank. Instead, the fund may use Form 1065, U.S. Return of

Partnership Income, for its return. For more details, see

section 584 and Regulations section 1.6032-1.

ESBTs file Form 1041. However, see Electing Small Business

Trusts (ESBTs), later, for a discussion of the special reporting

requirements for these trusts.

Pooled income funds file Form 1041. See Pooled Income

Funds, later, for the special reporting requirements for these

Grantor Type Trusts, later, for Form 1041 reporting

requirements.

The trustee of a designated or qualified settlement fund

(QSF) must generally file Form 1120-SF, U.S. Income Tax

Return for Settlement Funds, instead of Form 1041.

Special election. If a QSF has only one transferor, the

transferor may elect to treat the QSF as a grantor type trust.

attach an election statement to a timely filed Form 1041,

including extensions, that the administrator files for the QSF

for the tax year in which the settlement fund is established. If

Form 1041 isn't filed because Optional Method 1 or 2

attachment described under Grantor Type Trusts, later. At the

top of the election statement, enter “Section 1.468B-1(k)

Election” and include the transferor's:

Name,

Address,

TIN, and

see Regulations section 1.671-5(b)(22). A tax information

statement that includes the information given to the IRS on

Forms 1099, as well as additional information identified in

Regulations section 1.671-5(e), must be given to trust

interest holders. See the General Instructions for Certain

Information Returns for more information.

Qualified fiduciaries or transmitters may be able to file Form

1041 and related schedules electronically. To become an

e-file provider, complete the following steps.

make account updates.

Desk at 866-255-0654 (512-416-7750 for international calls),

Monday through Friday, 6:30 a.m.–6:00 p.m. (Central time).

Frequently asked questions and Online Tutorials are available

to answer questions or to guide users through the application

process.

electronically by using a personal identification number (PIN).

See Form 8879-F for details.

Form 8879-F can only be associated with a single

Form 1041. Form 8879-F can't be used with multiple

Forms 1041.

You can use certain PDSs designated by the IRS to meet the

“timely mailing as timely filing/paying” rule for tax returns and

payments. Go to IRS.gov/PDS for the current list of

designated services.

The PDS can tell you how to get written proof of the

mailing date.

For the IRS mailing address to use if you’re using a PDS,

go to IRS.gov/PDSstreetAddresses.

PDSs can't deliver items to P.O. boxes. You must use

paid preparer's authorization or revoke the authorization

before it ends, see Pub. 947, Practice Before the IRS and

Power of Attorney.

Figure taxable income using the method of accounting

regularly used in keeping the estate's or trust's books and

records. Generally, permissible methods include the cash

method, the accrual method, or any other method authorized

by the Internal Revenue Code. In all cases, the method used

must clearly reflect income.

Don't claim an exemption amount in figuring the alternative

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

maximum tax on qualified dividends and capital gains.

services performed by the debtor after the beginning of the

case (both wages and self-employment income) and before

the case is closed, dismissed, or converted to a case under a

different chapter; and (b) property described in section 541 of

debtor-in-possession, the income from the property isn't

included in the bankruptcy estate's gross income. Also

included in income is gain from the sale of the bankruptcy

estate's property. To figure gain, the trustee or

debtor-in-possession must determine the correct basis of the

property.

bankruptcy estate is allowable as a deduction or credit, or is

treated as wages for employment tax purposes, treat the

amount as if it were paid or incurred by the individual debtor

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 -

TD9918.

attributable to conducting a trade or business or for the

production of estate rents or royalties are deductible in

arriving at AGI on Form 1040, Schedules C, E, and F.

Administrative expense loss. When figuring an NOL,

nonbusiness deductions (including administrative expenses)

to any tax year is determined after the NOL deductions

allowed for that year. An administrative expense loss is

allowed only to the bankruptcy estate and can't be carried to

any tax year of the individual debtor.

Generally, an NOL arising in a tax year beginning in

2021 or later may not be carried back and instead

must be carried forward indefinitely. However,

farming losses arising in tax years beginning in 2021 or later

may be carried back 2 years and carried forward indefinitely.

individual debtor prior to the year in which the bankruptcy

proceedings began.

Excess credits, such as the foreign tax credit, may also be

carried back to pre-bankruptcy years of the individual debtor.

Standard deduction. A bankruptcy estate that doesn't

itemize deductions is allowed a standard deduction of

$13,850 for tax year 2023.

Discharge of indebtedness. In a title 11 case, gross

income doesn't include amounts that would normally be

included in gross income resulting from the discharge of

indebtedness. However, any amounts excluded from gross

income must be applied to reduce certain tax attributes in a

certain order. Attach Form 982 to show the reduction of tax

attributes.

Figure the tax for the bankruptcy estate using the tax rate

schedule below. Enter the tax on Form 1040 or 1040-SR,

line 16.

To request a prompt determination of the tax liability of the

bankruptcy estate, the trustee or debtor-in-possession must

location of the office where the return was filed; (c) the

debtor's name; (d) the debtor's SSN, TIN, or EIN; (e) the type

of bankruptcy estate; (f) the bankruptcy case number; and (g)

the court where the bankruptcy is pending. Send the request

to the Centralized Insolvency Operation, P.O. Box 7346,

Philadelphia, PA 19101-7346 (marked “Request for Prompt

Determination”).

The IRS will notify the trustee or debtor-in-possession

within 60 days from receipt of the request if the return filed by

the trustee or debtor-in-possession has been selected for

See Rev. Proc. 2006-24, 2006-22 I.R.B. 943, available at

IRS.gov/irb/2006-22_IRB/ar12.html, modified by

Announcement 2011-77, available at IRS.gov/irb/

2011-51_IRB/ar13.

Use Form 1041 only as a transmittal for Form 1040 or

1040-SR. In the top margin of Form 1040 or 1040-SR, enter

“Attachment to Form 1041. DO NOT DETACH.” Attach Form

1040 or 1040-SR to Form 1041. Complete only the

identification area at the top of Form 1041. Enter the name of

Form 1040 or 1040-SR. Complete lines 25 through 30 of

Form 1041, and sign and date it.

income may be affected by section 1115 or 1186 of title 11 of

the U.S. Code. See Income, Deductions, and Credits, earlier.

The debtor may receive a Form W-2, 1099-INT, 1099-DIV,

1099-MISC, or 1099-NEC or other information return

reporting wages or other income to the debtor for the entire

year, even though some or all of this income is includible in

the bankruptcy estate's gross income under section 1115 of

schedule that shows (a) all the income reported on the Form

W-2, Form 1099, or other information return; (b) the portion of

this income includible in the bankruptcy estate's gross

income; and (c) all the withheld income tax, if any, and the

portion of withheld tax reasonably allocated to the bankruptcy

estate. Also, the debtor-in-possesion (or the chapter 11

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

W-2 reports wages to the debtor and some or all of the

wages are includible in the bankruptcy estate's gross income

Copy the exact name of the estate or trust from the Form

SS-4, Application for Employer Identification Number, that

you used to apply for the EIN. If the name of the trust was

changed during the tax year for which you are filing, enter the

trust's new name and check the “Change in trust's name” box

in item F.

identification number, and address of the grantor(s) or other

owner(s) in parentheses after the name of the trust.

Include the suite, room, or other unit number after the street

established solely for the benefit of an individual under 65

years of age who is disabled, and

some part of the tax year within the meaning of 42 U.S.C.

1382c(a)(3).

consists of S corporation stock and that isn't treated as

owned by the grantor or another person. See

life interest is figured using the yearly rate of return earned by

the trust. See section 642(c) and the related regulations for

more information.

Every trust or decedent's estate claiming an income

distribution deduction on page 1, line 18, must enter the

Every estate or trust that is required to file Form 1041 must

have an EIN. An EIN may be applied for in the following ways.

once the application information is validated.

If the estate or trust hasn't received its EIN by the time the

return is due, enter “Applied for” and the date you applied in

Check this box if the trust is a nonexempt charitable trust

within the meaning of section 4947(a)(1).

A nonexempt charitable trust is a trust:

more charitable purposes described in section 170(c)(2)(B);

purposes).

tion. If a nonexempt charitable trust is treated as though it

were a private foundation under section 509, then the

fiduciary must file Form 990-PF, Return of Private

Foundation, in addition to Form 1041.

If a nonexempt charitable trust is treated as though it were

a private foundation, and it has no taxable income under

subtitle A, it may check the box on Form 990-PF, Part VI-A,

line 15, and enter the tax-exempt interest received or accrued

4720 or on Form 990-PF (the section 4940 tax) can't be taken

as a deduction on Form 1041.

Check this box if the nonexempt charitable trust (section

4947(a)(1)) isn't treated as a private foundation under section

Other returns that must be filed. If a nonexempt charitable

trust isn't treated as though it were a private foundation, the

fiduciary must file Form 990, Return of Organization Exempt

From Income Tax; or Form 990-EZ, Short Form Return of

Organization Exempt From Income Tax, in addition to Form

1041, if the trust meets the filing requirements for either of

those forms.

were a private foundation, and it has no taxable income

under subtitle A, it may answer “Yes” on Form 990, Part V,

line 12a, and enter the tax-exempt interest received or

accrued during the year on Form 990, Part V, line 12b,

instead of filing Form 1041 to meet its section 6012 filing

section 4947(a)(2).

Isn't exempt from tax under section 501(a);

Has some unexpired interests that are devoted to

purposes other than religious, charitable, or similar purposes

described in section 170(c)(2)(B); and

Has amounts transferred in trust after May 26, 1969, for

split-interest trust must file Form 5227. However, see the

Instructions for Form 5227 for the exception that applies to

split-interest trusts other than section 664 CRTs.

If you are filing an amended Form 1041:

Check the “Amended return” box in item F,

Complete the entire return,

in item F.

than on the original return, you should generally pay the

difference with the amended return. However, you should

adjust this amount if there is any increase or decrease in the

total payments shown on line 26.

amendments and identifies the lines and amounts being

changed on the amended return.

In the top margin of your corrected Schedule H, enter

“CORRECTED” and the date you discovered the error. Also,

on an attachment, explain the reason for your correction. If

Amended Schedule K-1 (Form 1041). If the amended

Check this box if this is a final return because the estate or

trust has terminated. Also, check the “Final K-1” box at the

top of Schedule K-1.

If, on the final return, there are excess deductions, an

unused capital loss carryover, or an NOL carryover, see the

instructions for box 11 of Schedule K-1, later.

If the name of the trust has changed from the name shown on

the prior year's return (or Form SS-4 if this is the first return

a change in the fiduciary whose address is used as the

mailing address for the estate or trust after the return is filed,

use Form 8822-B to notify the IRS.

If the fiduciary changed their name from the name they

entered on the prior year's return (or Form SS-4 if this is the

first return being filed), be sure to check this box.

If the same fiduciary who filed the prior year's return (or Form

SS-4 if this is the first return being filed) files the current

If a section 645 election was made by filing Form 8855, check

the box in item G. See Special Rule for Certain Revocable

Trusts under Who Must File, earlier, and Form 8855 for more

information about this election.

The estate's or trust's QBI includes items of income, gain,

deduction, and loss that are effectively connected with the

conduct of a trade or business within the United States and

began 60 days before the ex-dividend date. The ex-dividend

date is the first date following the declaration of a dividend on

which the purchaser of a stock isn't entitled to receive the

next dividend payment. When counting the number of days

the stock was held, include the day the estate or trust

disposed of the stock but not the day it acquired the stock.

However, you can't count certain days during which the

estate's or trust's risk of loss was diminished. See Pub. 550

for more details.

preferred stock held for less than 91 days during the 181-day

period that began 90 days before the ex-dividend date. When

counting the number of days the stock was held, include the

day the estate or trust disposed of the stock but not the day it

to make related payments with respect to positions in

substantially similar or related property.

Payments in lieu of dividends, but only if you know or have

reason to know that the payments are not qualified dividends.

If you have an entry on line 2b(2), be sure you use

Schedule D (Form 1041), the Schedule D Tax

Worksheet, or the Qualified Dividends Tax

If the estate operated a business, report the income and

expenses on Schedule C (Form 1040), Profit or Loss From

Business. Enter the net profit or (loss) from Schedule C on

line 3.

Enter the gain from Schedule D (Form 1041), Part III, line 19,

column (3), or the loss from Part IV, line 20.

return with Schedule D, Form 8949, and Form 8997 attached.

You will need to file Form 8997 annually until you dispose of

Loss, to report the estate's or trust's share of income or

(losses) from rents, royalties, partnerships, S corporations,

other estates and trusts, and REMICs. Also use Schedule E

(Form 1040) to report farm rental income and expenses

based on crops or livestock produced by a tenant. Enter the

net profit or (loss) from Schedule E on line 5. See the

Instructions for Schedule E (Form 1040) for reporting

requirements.

partnership, S corporation, or other flow-through entity, use

on line 6.

If an estate or trust has farm rental income and

expenses based on crops or livestock produced by a

tenant, report the income and expenses on

Schedule E (Form 1040). Don't use Form 4835, Farm Rental

Income and Expenses, or Schedule F (Form 1040) to report

such income and expenses and don't include the net profit or

(loss) from such income and expenses on line 6.

Enter from line 17 of Form 4797, Sales of Business Property,

the ordinary gain or loss from the sale or exchange of

property other than capital assets and also from involuntary

conversions (other than casualty or theft).

through 7. List the type and amount on an attached schedule

if the estate or trust has more than one item.

Distributions From Pensions, Annuities, Retirement or

Profit-Sharing Plans, IRAs, Insurance Contracts, etc., that is

treated as ordinary income. For more information, see Form

4972, Tax on Lump-Sum Distributions, and its instructions.

Alaska Native Settlement Trust from an Alaska Native

Corporation. Report gain from taxable contributions of

noncash property on Schedule D (Form 1041).

nonrefundable and refundable portions). These amounts

must be included in gross income for the tax year that

includes the last day of the calendar quarter with respect to

which the credit is allowed. A credit is available only if the

leave was taken sometime after March 31, 2020, and before

October 1, 2021, and only after the qualified leave wages

were paid, which might under certain circumstances not

occur until a quarter after September 30, 2021, including

quarters during 2022. Accordingly, all lines related to

qualified sick and family leave wages remain on the

A trust or decedent's estate is allowed a deduction for

depreciation, depletion, and amortization only to the extent

the deductions aren't apportioned to the beneficiaries. An

estate or trust isn't allowed to make an election under section

179 to expense depreciable business assets.

The estate's or trust's share of depreciation, depletion,

and amortization is generally reported on the appropriate

lines of Schedule C, E, or F (Form 1040), the net income or

among the income beneficiaries and the trust in the same

manner as the trust's accounting income. See Regulations

section 1.167(h)-1(b).

to each.

deduction is apportioned between the income beneficiaries

and the trust based on the trust income from such property

allocable to each, unless the governing instrument (or local

law) requires or permits the trustee to maintain a reserve for

income. See Regulations section 1.611-1(c)(4).

Amortization. The deduction for amortization is apportioned

between an estate or trust and its beneficiaries under the

same principles used to apportion the deductions for

depreciation and depletion.

expenditures under section 194 is allowed only to an estate.

Generally, no deduction that would otherwise be allowable is

allowed for any expense (whether for business or for the

production of income) that is allocable to tax-exempt income.

Examples of tax-exempt income include:

Certain death benefits (section 101),

Interest on state or local bonds (section 103),

Compensation for injuries or sickness (section 104), and

are allocated only to tax-exempt income. A reasonable

proportion of expenses indirectly allocable to both

tax-exempt income and other income must be allocated to

each class of income.

Administration expenses and casualty and theft losses

deductible on Form 706 may be deducted, to the extent

otherwise deductible for income tax purposes, on Form 1041

if the fiduciary files a statement waiving the right to deduct