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• If the operations within California are so

In column (d), enter the result of combining

An estate or trust cannot pass through the

separate and distinct from the operations

column (b) and column (c).

alternative minimum taxable income (AMTI)

outside of California that taxable income

exclusion to the beneficiary. The fiduciary for

In column (e), enter California source income

can be separately accounted for, only the

the estate or trust must recalculate Schedule P

and credits.

income from within California must be

(541), by leaving Part I, line 7b blank. This will

Line and Line – Enter in column (b), the

included in California source income.

eliminate the effect of the AMTI exclusion but

amounts from federal Schedule K-1 (1041),

• If the trade or business carried on within

allow other items of adjustment or tax preference

and in column (c) any adjustments resulting

California is an integral part of a unitary

to be passed through to the beneficiary. The

from differences between California and federal

business carried on outside of California,

recalculated amount on Schedule P (541), Part I,

law for each specific line item.

the entire net income must be reported and

line 10, must be entered on Schedule K-1 (541),

Line 3 – Enter the combined amount from

apportioned or allocated in accordance with

line 12a, column (d).

federal Schedule K-1 (1041), line 3 and line 4a.

the provisions of the Uniform Division of

Line b through Line e – Enter the

Gains or losses from the complete or partial

Income for Tax Purposes Act as contained

amounts from Schedule P (541), line 4. Get the

disposition of a rental real estate or trade or

in R&TC Sections 25120 through 25139.

instructions for federal Schedule K-1 (1041)

business activity that is a passive activity must

Partnership, limited liability company

for more information.

be shown on an attachment to Schedule K-1

(LLC), and S corporation income (loss), is

Line 3 and Line 4 – Enter the beneficiary’s

(541).

apportioned or allocated in the same manner

trust payments, withholding, taxes paid to

Line 5 – Enter on line 5 the beneficiary’s share

as any other business. If the estate or trust is a

other states, and/or other credits. Attach

of annuities, royalties, or any other income

partner, member, or S corporation shareholder

a separate sheet for each item reported

(before directly allocable deductions) that

in a business entity, income sourced to

on line 13a-d and line 14a showing the

is not subject to any passive activity loss

California is generally included in column (e)

computation. Items that must be reported on

limitation rules at the beneficiary level.

of Schedules K-1 (565, 568, or 100S). For

this line include the allocable share, if any, of

more information, see Cal. Code Regs., tit. 18,

Line 6 through Line 8 – Enter the beneficiary’s

items listed on line 13a through line 14a.

section 17951-4 and related tax codes.

share of trade or business, rental real estate, and

Line 3a – Enter the beneficiary’s share of

other rental income, minus allocable deductions

See Cal. Code Regs., tit. 18 sections 17951-1(c),

estimated payment credited.

(other than directly apportionable deductions). To

17951-2, and 17953 regarding taxability of

Form 541-T, Allocation of Estimated Tax

assist the beneficiary in figuring any applicable

distributions to nonresident beneficiaries.

Payments to Beneficiaries, must be submitted

passive activity loss limitations, also attach a

If California source income is being

in order for the beneficiary to receive credit for

separate schedule showing the beneficiary’s share

distributed to a nonresident beneficiary, see

the payments.

of income derived from each trade or business,

instructions regarding withholding in General

rental real estate, and other rental activity.

Line 3b – If the fiduciary withheld taxes at

Information Q, Miscellaneous Items, of the

source for a domestic or foreign nonresident

Line 9a through line 9c – Enter the

Form 541 instructions.

beneficiary, if there is a pass-through

beneficiary’s share of the depreciation and

If the beneficiary of an estate or trust was a

withholding credit from another entity, or

depletion deductions directly apportioned

resident of California for the estate’s or trust’s

backup withholding, the fiduciary must

to each activity reported on line 5 through

entire taxable year, the beneficiary’s share of

provide each affected beneficiary (including

line 8. Itemize the beneficiary’s share of the

the estate’s or trust’s income or loss for the

California residents), a completed Form 592-B.

amortization deductions directly apportioned to

taxable year is taxable to California.

The fiduciary and beneficiaries must attach

each activity on line 5 through line 8. For more

Form 592-B to the front of their California

Internet

information, get the federal instructions for

tax return to claim the withholding amounts.

Schedule K-1 (1041).

You can download, view, and print California

Schedule K-1 (541) may not be used to claim

Line a through Line d – If this is the final

tax forms and publications at ftb.ca.gov.

the withholding credit.

return, enter on line 11 the beneficiary’s share

Line 3c – Enter taxes paid to other states

Specific Line Instructions

of any of the following:

reported on Schedule S, Other State Tax Credit.

• Excess deductions on termination (follow

When completing the California Schedule K-1

Attach a copy of the return filed with the other

the instructions for federal Form 1041)

(541) refer to the Federal/State Line References

state, evidence of payment, and a copy of

• Capital loss carryover

chart on page 3 that shows the specific line

Schedule S to verify the amount of tax paid.

• Unused net operating loss (NOL) carryover

instructions between the federal Schedule K-1

Line 3d – Enter on an attached schedule each

for both regular and alternative minimum

(1041) and the California Schedule K-1 (541).

tax, if the NOL carryover would be allowed

beneficiary’s allocable share of any credit or

The estate or trust is required to request and

to the estate or trust in a later year but for

credit information that is related to a trade or

provide a proper identification number for each

termination

business activity.

beneficiary. Enter the beneficiary’s number on

Note: No deduction is allowed for estate taxes.

Line 4a – Enter tax-exempt interest received

the respective Schedule K-1 (541) when the

by the estate or trust. Include exempt-interest

Net Operating Loss (NOL)

estate or trust files Form 541.

dividends received as a shareholder in a mutual

For more information, get form FTB 3805V, Net

Individuals and business beneficiaries are

fund or other regulated investment company.

Operating Loss (NOL) Computation and NOL

responsible for giving the estate or trust their

and Disaster Loss Limitations – Individuals,

Line 4d – Enter any other item that is not

social security number or Individual Taxpayer

Estates, and Trusts.

included. The estate or trust may need to report

Identification Number (ITIN), California

supplemental information that is not specifically

Line a – Enter the beneficiary’s share of

corporation number, Secretary of State (SOS)

requested on the Schedule K-1 (541) separately

the adjustment for minimum tax purposes.

file number, or federal employer identification

to each beneficiary.

To figure the adjustment, subtract the

number (FEIN) upon request.

beneficiary’s share of the income distribution

If the estate or trust claims tax benefits

The estate or trust may use federal Form W-9,

deduction figured on Form 541, Schedule B,

from an Enterprise Zone (EZ), Los Angeles

Request for Taxpayer Identification Number

line 15, from the beneficiary’s share of the

Revitalization Zone (LARZ), Local Agency

and Certificate, to request the beneficiary’s

income distribution deduction on an alternative

Military Base Recovery Area (LAMBRA),

identifying number.

minimum tax basis figured on Schedule P

Manufacturing Enhancement Area (MEA), or

Columns (b), (c), (d), and (e)

(541), Alternative Minimum Tax and Credit

Targeted Tax Area (TTA), it should give the

In column (b), enter the amounts from your

Limitations – Fiduciaries, Part II, line 15. The

beneficiaries their distributive share of the

federal Schedule K-1 (1041).

difference is the beneficiary’s share of the

business income and business capital gain or

adjustment for minimum tax purposes.

loss apportioned to the EZ, LARZ, LAMBRA,

In column (c), enter adjustments resulting

MEA, or TTA on this line.

from differences between California and federal

law for each specific line item.

Page Schedule K-1 (541) 2010

Schedule K-1 (541) Draft - Beneficiary'S Share Of Income, Deductions, Credits, Etc. - 2010 Page 4

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