Instructions For Form 5227 (Page 5 of 15) in pdf

Note. If the trust has farm rental income and expenses

Part I. Income and Deductions

based on crops or livestock produced by a tenant, report

the income and expenses on Schedule E (Form 1040)

Section A—Ordinary Income

and include it on line 4. Do not use Form 4835, Farm

Report the trust’s ordinary income on lines 1 through 7.

Rental Income and Expenses, or Schedule F (Form

1040) to report such income and expenses and do not

Line 1. Interest income. Report all taxable interest

include the net profit or (loss) from such income and

income that was received by the trust. Examples of

expenses on line 6.

taxable interest include interest from:

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Accounts (including certificates of deposit and money

Line 6. Ordinary gain or (loss). Enter from Form 4797,

market accounts) with banks, credit unions, and thrifts;

Sales of Business Property, the gain or loss from the sale

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Notes, loans, and mortgages;

or exchange of property other than capital assets and

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

also from involuntary conversions (other than casualty or

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U.S. savings bonds;

theft). For more information, see the Instructions for Form

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Original issue discount; and

4797.

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Income received as a regular interest holder of a Real

Line 7. Other income. List any other item and its

Estate Mortgage Investment Conduit (REMIC).

amount that is includable in gross income but not

For taxable bonds acquired after December 31, 1987,

included in lines 1 through 6 (or Section B) on the dashed

amortizable bond premium is treated as an offset to the

line to the left of the entry space. If more space is

interest income instead of as a separate interest

needed, attach a schedule. Enter the total of these items

deduction. See Pub. 550, Investment Income and

in the entry space to the right.

Expenses.

Section B—Capital Gains (Losses)

Line 2a. Ordinary dividends. Enter on line 2a the total

of all ordinary dividends, including the qualified dividends

Use Schedule D (Form 1041), Capital Gains and Losses,

reported on line 2b.

as directed below. You may use Schedule D-1 (Form

Line 2b. Qualified dividends. Report on this line all

1041), Continuation Sheet for Schedule D (Form 1041),

qualified dividends received by the trust. In general, a

to report additional gains and losses. Lines 11 and 12

qualified dividend is a dividend received during the tax

only apply to a charitable remainder trust (section 664

year from (a) a domestic corporation or (b) a qualified

trust).

foreign corporation. A qualified dividend does not include

Line 9. Total short-term capital gain or (loss).

any dividend from a corporation if the corporation is (or

Complete lines 1a through 3 and line 5 of the 2007

was) exempt from income tax under section 501 or 521

Schedule D (Form 1041). Do not make an entry on line 4

for the corporation’s current or preceding tax year during

of Schedule D (Form 1041). Enter the amount from line 5

which the distribution was made.

of the Schedule D (Form 1041) on line 9.

Generally, these dividends are reported to the trust in

Line 10. Total long-term capital gain or (loss).

box 1b of Form(s) 1099-DIV, Dividends and Distributions.

Complete lines 6a through 10 and line 12 of the 2007

Qualified dividends are treated as a separate class of

Schedule D (Form 1041). Do not make an entry on line

ordinary income for purposes of ordering distributions.

11 of Schedule D (Form 1041). Enter the amount from

See Ordering Rules for Ordinary Income on page 12 for

line 12 of Schedule D (Form 1041) on line 10.

more information on distributions. See Pub. 550 for

For section 664 trust only. Line 10 is the total of all

additional information on qualified dividends, including

classes (described below) of long-term capital gain. The

holding period requirements.

following is a summary of the classes:

Line 3. Business income or (loss). If the trust

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28% long-term capital gain class. This class consists

operated a business, report the income and expenses on

of collectibles gains and losses and the taxable gain (but

Schedule C, Profit or Loss From Business (or Schedule

not more than the section 1202 exclusion) on the sale or

C-EZ, Net Profit From Business) of Form 1040. See the

exchange of qualified small business stock. Enter these

instructions for G. Unrelated Business Taxable Income

gains or losses on line 12.

(Section 664 Trusts Only) on page 4. Enter the net profit

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Section 1250 long-term capital gain class. This

or loss from Schedule C or C-EZ on line 3.

class consists of unrecaptured section 1250 gain

Line 4. Rents, royalties, partnerships, other estates

(generally the part of real estate capital gain attributable

and trusts, etc. Use Schedule E (Form 1040),

to depreciation) on sales, exchanges, etc. of assets held

Supplemental Income and Loss, to report the trust’s

more than one year. Undistributed, unrecaptured section

income or losses from rents, royalties, partnerships, S

1250 gain on sales, exchanges, etc. after May 6, 1997, is

corporations, other estates and trusts, and REMICs.

included in this class. Enter this gain on line 11.

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Enter the net profit or loss from Schedule E on line 4.

All other long-term capital gain class. This class

See the Instructions for Schedule E (Form 1040) for

consists of all other gains or losses from sales,

reporting requirements. If the trust received a Schedule

exchanges, and conversions (including installment

K-1 from a partnership, S corporation, or other

payments received) of assets held more than 12 months.

flow-through entity, use the corresponding lines on Form

Section C—Nontaxable Income

5227 to report the interest, dividends, capital gains, etc.,

from the flow-through entity.

In this section, include other income that is not included

Line 5. Farm income or (loss). If the trust operated a

in Section A or B. This section includes income excluded

farm, use Schedule F (Form 1040), Profit or Loss From

under Subtitle A, Chapter 1, Subchapter B, Part III of the

Farming, to report farm income and expenses. Enter the

Internal Revenue Code, such as interest on state and

net profit or loss from Schedule F on line 5.

municipal bonds.

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Instructions For Form 5227 Page 5

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