Form 1041-Qft - General Instructions - 2006 (Page 2 of 3) in pdf

Form 1041-QFT (2006)

Page

Who Must Sign

Rounding Off to Whole Dollars

Final Form 1041

Trustee

You may round off cents to whole dollars on

If you have an existing EIN(s) that you

your return and schedules. If you do round to

previously used for filing Form 1041 and that

The trustee, or an authorized representative,

whole dollars, you must round all amounts.

you will not use again (i.e., for QFTs included

must sign Form 1041-QFT.

To round, drop amounts under 50 cents and

in a composite return), you should file

Paid Preparer

increase amounts from 50 to 99 cents to the

Form 1041 and check the final return box.

next dollar. For example, $1.39 becomes $1

Generally, anyone who is paid to prepare a tax

Specific Instructions

and $2.50 becomes $3. If you have to add

return must sign the return and fill in the other

two or more amounts to figure the amount to

blanks in the Paid Preparer’s Use Only area of the

enter on a line, include cents when adding

Part I—General Information

return. The person required to sign the return must

the amounts and round off only the total.

complete the required preparer information and:

Line 1—Name of Trust

Sign it in the space provided for the

Estimated Tax

Copy the exact name from the Form SS-4

preparer’s signature and

Generally, a QFT must pay estimated income

used to apply for the employer identification

Give you a copy of the return in addition to

tax for 2007 if it expects to owe, after

number you are using to file Form 1041-QFT.

the copy to be filed with the IRS.

subtracting withholding and credits, at least

Line 2—Employer Identification

$1,000 in tax. Estimated tax liability is figured

Paid Preparer Authorization

Number (EIN)

for the individual QFT, and not for a

If the trustee wants to allow the IRS to

composite return taken as a whole. For

If the QFT is not filing as part of a composite

discuss the QFT’s 2006 tax return with the

details and exceptions, see Form 1041-ES,

return, use the EIN of the QFT. If the QFT

paid preparer who signed it, check the “Yes”

Estimated Income Tax for Estates and Trusts.

does not have an EIN, it must apply for one.

box in the signature area of the return. This

Every trustee that elects to file a composite

authorization applies only to the individual

Interest and Penalties

return must apply for an EIN to be used only

whose signature appears in the “Paid

for filing Form 1041-QFT. A trustee must use

Interest

Preparer’s Use Only” section of the QFT’s

a separate EIN for every Form 1041-QFT it

return. It does not apply to the firm, if any,

Interest is charged on taxes not paid by the

files.

shown in that section.

due date, even if an extension of time to file

Use Form SS-4, Application for Employer

If the “Yes” box is checked, the trustee is

is granted. Interest is also charged on the

Identification Number, to apply for an EIN. If

authorizing the IRS to call the paid preparer

failure-to-pay penalty, failure-to-file penalty,

the QFT has not received its EIN by the time

to answer any questions that may arise

the accuracy-related penalty, and the fraud

the return is due, write “Applied for” in the

during the processing of the QFT’s return.

penalty. The interest charge is figured at a

space for the EIN.

The trustee is also authorizing the paid

rate determined under section 6621.

preparer to:

Line 3—Address

Late Filing of Return

Give the IRS any information that is missing

Include the suite, room, or other unit number

The law provides a penalty of 5% of the tax

from the QFT’s return,

after the street address. If the Post Office

due for each month, or part of a month, up to

does not deliver mail to the street address

Call the IRS for information about the

a maximum of 25% of the tax due, for each

processing of the QFT’s return or the status

and you have a P.O. box, show the box

month the return is not filed. If the return is

of its refund or payment(s), and

number instead of the street address.

more than 60 days late, the minimum penalty

Respond to certain IRS notices that the

If you want a third party (such as an

is the smaller of $100 or the tax due. The

trustee has shared with the preparer about

accountant or an attorney) to receive mail for

penalty will not be imposed if you can show

the QFT, enter on the street address line

math errors, offsets, and return preparation.

that the failure to file on time was due to

“C/O” followed by the third party’s name and

reasonable cause. If the failure was due to

The trustee is not authorizing the paid

street address or P.O. box.

reasonable cause, attach an explanation to

preparer to receive any refund check, bind

the return.

the QFT to anything (including any additional

If you change your address (including a

tax liability), or otherwise represent the QFT

new “in care of” name and address) after

Late Payment of Tax

filing Form 1041-QFT, use Form 8822,

before the IRS.

Generally, the penalty for not paying the tax

Change of Address, to notify the IRS.

The authorization will automatically end no

when due is

⁄

of 1% of the unpaid amount

Line 4—Number of QFTs

later than the due date (without regard to

for each month or part of a month that it

extensions) for filing the QFT’s 2007 tax

remains unpaid. The maximum penalty is

If this is a composite return, enter the total

return. If the trustee wants to expand the paid

25% of the unpaid amount. The penalty

number of QFTs (including separate interests

preparer’s authorization or revoke the

applies to any unpaid tax on the return. Any

treated as separate QFTs) included on the

authorization before it ends, see Pub. 947,

penalty is in addition to interest charges on

return.

Practice Before the IRS and Power of

late payments.

Attorney.

Part II—Tax Computation

If you include interest or either of

these penalties with your

Composite Return

Accounting Methods

payment, identify and enter these

If this is a composite return, enter

amounts in the bottom margin of

CAUTION

Figure taxable income using the method of

in Part II the totals for all the QFTs

Form 1041-QFT. Do not include the interest

accounting regularly used in keeping the QFT’s

included on the return.

or penalty amount in the balance of tax due

books and records. Generally, permissible

CAUTION

on line 17.

methods include the cash method, the accrual

Income

method, or any other method authorized by the

Underpaid Estimated Tax

Internal Revenue Code. In all cases, the method

Line 2a—Total Ordinary Dividends

If the trustee underpaid estimated tax, use

used must clearly reflect income.

Report all ordinary dividends received during

Form 2210, Underpayment of Estimated Tax

Generally, the QFT may change its accounting

the tax year.

by Individuals, Estates, and Trusts, to figure

method (for income as a whole or for any material

any penalty. Enter the amount of any penalty

Report capital gain distributions on

item) only by getting consent on Form 3115,

in the bottom margin of Form 1041-QFT. Do

Schedule D (Form 1041), line 9.

Application for Change in Accounting Method.

not include it in the balance of tax due on

For more information, see Pub. 538, Accounting

Line 2b—Qualified Dividends

line 17.

Periods and Methods.

Enter on line 2b the amount reported on line

Other Penalties

Accounting Period

2a that is a qualified dividend. A qualified

Other penalties can be imposed for

dividend is a dividend received during the tax

All QFTs must use a calendar year as their

negligence, substantial understatement of tax,

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

accounting period.

and fraud. See Pub. 17, Your Federal Income

qualified foreign corporation. A qualified

Tax, for details on these penalties.

Form 1041-Qft - General Instructions - 2006 Page 2

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