Instructions - Form 741 - Kentucky Fiduciary Income Tax Return

Form 42A741(I) (10-16)

Page 4

Line 4, Total Additions—Add Lines 1 through 3. Enter on

Line 11, Resident Beneficiary Adjustment—Complete Line 11

Schedule M, Line 4 and on page 1, Line 2.

to determine the net difference between the federal Schedule

K-1 and the Kentucky Schedule K-1. Combine from column (c),

Part II—Subtractions from Federal Adjusted Total Income

Lines 1 through 6, and portions of Lines 9 and 10. Do not

include amounts from Lines 7, 8, 9(a), or other deductions

Line 5—Enter interest from U.S. government bonds and

that qualify as itemized deductions. These amounts are

securities (attach schedule).

entered on the beneficiaries’ Form 740, Schedule A, Itemized

Deductions Schedule.

Line 6—Enter subtractions from Kentucky Schedule(s) K-1

received from partnerships, fiduciaries and S corporations.

Nonresident Beneficiaries (Form 740-NP Filers)—Complete

Schedule K-1 for nonresident beneficiaries. This Schedule K-1

Line 7—Enter other subtractions from income. Other

should reflect all income that has been claimed as part of

the income distribution deduction. However, nonresident

subtractions may include:

beneficiaries are only subject to tax on the following types

• Kentucky net operating loss deduction;

of income:

• passive activity loss adjustment (see Form 8582-K and

• from Kentucky sources;

instructions);

• from activities carried on in Kentucky;

• differences in the gains (losses) from the sale of intangible

assets amortized under the provisions of the Revenue

• from the performance of services in Kentucky;

Reconciliation Act of 1993;

• from real or tangible property located in Kentucky; and

• Nonresident trust or nonresident estate—Subtract the

• from a partnership or S corporation doing business in

amount of income reported on Form 741, Line 1 that is not

Kentucky.

taxable to Kentucky. Note: Deductions must also be adjusted

to claim only that portion of deductions allocable to the

Line 12a—If an income distribution includes net distributable

Kentucky income;

share income from a limited liability entity subject to tax under

• Kentucky depreciation computed in accordance with the

KRS 141.0401(2), complete Line 12a.

Internal Revenue Code in effect on December 31, 2001, if

you have elected to take the 30 percent or the 50 percent

Line 12b—Enter each beneficiary's share of Kentucky income

special depreciation allowance for property placed in service

tax withheld from Form PTE-WH.

after September 10, 2001;

ADDITIONAL INFORMATION

• income of military personnel. Additional information may

be found in the instructions for Form 740.

If you need further assistance, contact a local Kentucky

Line 8, Total Subtractions—Add Lines 5 through 7. Enter on

Taxpayer Service Center or the Department of Revenue,

Schedule M, Line 8 and on page 1, Line 6.

Frankfort, KY 40620, (502) 564-4581.

SCHEDULE K-1 INSTRUCTIONS

A Kentucky Schedule K-1 is required if you claim an income

distribution deduction on Schedule B and have differences

in income reported on Schedule M. Attach copies of federal

Schedule(s) K-1 if there are no differences.

Schedule K-1 is used to report the portion of income distributed

to beneficiaries that is subject to tax. All items of income

subject to tax and all deductions are listed on Schedule K-1.

• Enter in column (b) amounts from federal Form 1041,

Schedule K-1;

• enter in column (c) any difference between Kentucky and

federal amounts (Schedule M); and

• enter in column (d) the Kentucky income and deduction

amounts.

Instructions - Form 741 - Kentucky Fiduciary Income Tax Return - 2016 Page 4

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