Instructions For Form 5227 (Page 3 of 8) in pdf

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Notes, loans, and mortgages.

2. Allowable deductions not allocated

E. Initial Return, Final Return,

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U.S. Treasury bills, notes, and bonds.

under 1 above are allocated on the basis

Amended Return; or Change of

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U.S. savings bonds.

of gross income after directly attributable

Name or Address

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Original issue discount.

deductions, to the extent of such income.

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Initial return. Check this box if this is the

Income received as a regular interest

3. Deductions not allocated under

initial return for the split-interest trust and

holder of a Real Estate Mortgage

either 1 or 2 above may be allocated in

enter the date that the entity was created.

Investment Conduit (REMIC).

any manner.

For taxable bonds acquired after

Final return. Check this box if this is a

No deduction is ever allowed for:

December 31, 1987, amortizable bond

final return because the trust has

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The personal exemption under section

premium is treated as an offset to the

terminated. Also, check the “Final K-1”

642(b).

interest income instead of as a separate

box at the top of the Schedule K-1 (Form

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Charitable contributions under section

interest deduction. See Pub. 550,

1041).

642(c).

Investment Income and Expenses.

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Amended return. If you are filing an

Net operating losses under section

amended 2001 Form 5227, check the

Line 2—Dividends

642(d).

“Amended return” box. Complete the

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Income distribution deductions under

Report all taxable dividends received by

entire return and correct the appropriate

section 661.

the trust.

lines with the new information. On an

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Capital loss carryforwards under

attachment, explain the reason for the

Line 3—Business Income or

section 1212.

changes and identify the lines and

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(Loss)

Federal income taxes.

amounts being changed.

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Federal excise taxes under Chapter 42.

If the trust operated a business, report the

If the amended return results in a

income and expenses on Schedule C,

Any expense that is not deductible in

change to income, or a change in

Profit or Loss From Business (or

determining taxable income and not

distribution of any income or other

Schedule C-EZ, Net Profit From

allocated to nontaxable income must be

information provided to a recipient, an

Business) of Form 1040. See the

allocated to corpus. For a discussion on

amended Schedule K-1 (Form 1041)

instructions for F. Unrelated Business

the allocation of deductions to tax-exempt

must be filed with the amended Form

Taxable Income above. Enter the net

income, see the Instructions for Form

5227 and a copy given to each recipient.

profit or (loss) from Schedule C or C-EZ

1041.

Check the “Amended K-1” box at the top

on line 3.

of the Schedule K-1 (Form 1041).

All Federal income taxes for which the

Line 4—Rents, Royalties,

split-interest trust is liable because it has

Change of name or address. If there

unrelated business taxable income, and

has been a change in the trustee’s name

Partnerships, Other Estates and

all taxes imposed by Chapter 42 of the

or address, check the appropriate box.

Trusts, etc.

Internal Revenue Code (relating to private

F. Unrelated Business Taxable

Use Schedule E (Form 1040),

foundations), are allocated to corpus.

Supplemental Income and Loss, to report

Income (section 664 trusts

the trust’s income or (losses) from rents,

Line 17—Long-Term Capital

only)

royalties, partnerships, S corporations,

Gain or (Loss)

If the charitable remainder trust has any

other estates and trusts, and REMICs.

unrelated business taxable income (within

The total of long-term capital gains or

Enter the net profit or (loss) from

the meaning of section 512 and related

(losses) from all three tax rate groups

Schedule E on line 4. See the Instructions

regulations) for 2001, all of the trust’s

(described below) is entered on line 17a.

for Schedule E (Form 1040) for reporting

income is subject to the same taxes

The following is a summary of the three

requirements. If the trust received a

(including estimated tax payments) that

tax rate groups:

Schedule K-1 from a partnership, S

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are imposed on complex trusts under

28% group. This group includes

corporation, or other flow-through entity,

Subchapter J of the Internal Revenue

collectibles gains and losses and the

use the corresponding lines on Form

Code. The trust cannot be taxed as a

taxable gain (but not more than the

5227 to report the interest, dividends,

grantor trust.

section 1202 exclusion) on the sale or

capital gains, etc., from the flow-through

exchange of qualified small business

If you answer “Yes,” in addition to

entity.

stock. Enter these gains or (losses) on

Form 5227, file Form 1041 (if a domestic

Line 5—Farm Income or (Loss)

line 17b.

trust). Use Form 1041 to report all the

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25% group. This consists of

trust’s income (not just the unrelated

If the trust operated a farm, use

unrecaptured section 1250 gain

business income) and its deductions

Schedule F (Form 1040), Profit or Loss

(generally, the part of real estate capital

(including the deduction for distributions

From Farming, to report farm income and

gain attributable to depreciation) on sales,

to beneficiaries) and to compute any tax

expenses. Enter the net profit or (loss)

exchanges, etc., of assets held more than

due. Use the regular trust rules contained

from Schedule F on line 5.

1 year. Enter this gain on line 17d.

in the Instructions for Form 1041. You

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Line 6—Ordinary Gain or

must also complete Schedule I of Form

20% group. This is all other gains or

(Loss)

losses from sales, exchanges, and

1041 to determine whether the trust is

conversions (including installment

subject to any alternative minimum tax.

Enter from Form 4797, Sales of Business

payments received) of assets held more

See the instructions for Part III on

Property, the gain or loss from the sale or

than 12 months. Within this group there

exchange of property other than capital

page 4 to determine the amount of the

are two classes, qualified 5-year gain

current distribution to report to each

assets and also from involuntary

items and Other 20% gain items.

beneficiary on Form 1041, Schedule K-1.

conversions (other than casualty or theft).

Qualified 5-year gain items are those on

For more information, see the Instructions

which there is long-term capital gain

Part I—Ordinary Income

for Form 4797.

(other than 28% rate gain or realized

Deductions

unrecaptured section 1250 gain) from the

Line 1—Interest Income

sale or other disposition of property held

Deductions are to be allocated as follows:

Report all taxable interest income that

for more than 5 years and are entered on

was received by the trust. Examples of

1. Allowable deductions directly

line 17c. Other 20% gain items are all the

taxable interest include interest from:

attributable to one or more classes of

remaining items in the 20% group.

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Accounts (including certificates of

income items (i.e., interest, dividends, or

deposit and money market accounts) with

rents) or corpus are allocated to such

For more information, see the

banks, credit unions, and thrifts.

income classes or corpus.

Instructions for Schedule D (Form 1041).

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Instructions For Form 5227 Page 3

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