Looking for a California Tax Forms And Templates? Download it for free!

Instructions for Form FTB 5870A

Tax on Accumulation Distribution of Trusts

References in these instructions are to the Internal Revenue Code (IRC) as of January 1, 2005, and to the California Revenue & Taxation Code (R&TC) .

General Information

If you were a contingent beneficiary and you did not

Line 4 – Except as noted below under “Special Rule

receive Schedule J (541) because the trust was not

for Multiple Trusts,” enter on line 4 the California

In general, California law conforms to the Internal

required to file Form 541, compute your additional

taxes (not including any alternative minimum tax)

Revenue Code (IRC) as of January 2005 . However,

tax under the provisions of R&TC Sections 17745(b)

charged for any earlier year on the trust income that

there are continuing differences between California

and (d) . Complete Part II, Section A or Section B,

are attributable to the net income reported on line 3 .

and federal law . When California conforms to

of form FTB 5870A to determine the amount of

See IRC Sections 666(b) and (c) .

federal tax law changes, we do not always adopt all

additional tax due .

Special Rule for Multiple Trusts. If you received

of the changes made at the federal level . For more

Do not use form FTB 5870A if you were a non-

accumulation distributions from two or more other

information, go to our website at ftb.ca.gov and

contingent beneficiary and you received an

trusts that were considered to have been made in any

search for conformity . Additional information can be

accumulation distribution, but you did not receive

of the earlier taxable years from which the current

found in FTB Pub . 1001, Supplemental Guidelines to

Schedule J (541) because the trust did not file

accumulation distribution is considered to have been

California Adjustments, the instructions for California

Form 541 or pay the required California tax due .

made, do not include on line 4 the taxes attributable

Schedule CA (540 or 540NR), and the Business

The entire trust accumulation income is taxable

to the current accumulation distribution considered

Entity tax booklets .

in the year that you receive the distribution,

to have been distributed in the same earlier taxable

The instructions provided with California tax forms

and should be reported on Schedule CA (540),

year(s) .

are a summary of California tax law and are only

California Adjustments – Residents, or Schedule CA

This special rule applies only to those trusts with

intended to aid taxpayers in preparing their state

(540NR), California Adjustments – Nonresidents or

accumulation distributions (including earlier

income tax returns . We include information most

Part-Year Residents, line 21f, column C . See R&TC

accumulation distributions that are considered under

useful to the greatest number of taxpayers in the

Section 17745(a) .

IRC Section 666(a) to have been distributed in the

limited space available . It is not possible to include

California does not follow the federal rules for:

same earlier year) that total $1,000 or more .

all requirements of the California Revenue and

Taxation Code (R&TC) in the tax booklets . Taxpayers

• Generation-skipping transfer tax imposed by IRC

Line 8 – You can determine the number of years

should not consider the tax booklets as authoritative

Section 2601 .

which the UNI is deemed to have been distributed

law .

• The tax relating to estates imposed by IRC

by counting the throwback years for which there are

Section 2001 or Section 2101 .

entries on Schedule J (541), Part IV, line 26 through

If you received an accumulation distribution from

line 29 . These throwback rules apply even if you

a foreign trust, use federal Form 4970, Tax on

Except as explained above, use the instructions for

would not have been entitled to receive a distribution

Accumulation Distribution of Trusts, as a worksheet .

federal Form 4970 to compute the partial tax .

in the earlier taxable year if the distribution had

The partial tax from an accumulation distribution

Nonresidents or part-year residents in preceding

actually been made then .

of a foreign trust computed on federal Form 4970

five years: For any year you were a nonresident or

is reported on federal Form 3520, Annual Return to

There can be more than four throwback years .

part-year resident in the accumulation years listed

Report Transactions With Foreign Trusts and Receipt

in Part I, Section B, skip line 14 through line 22 .

Line – From the number of years entered on

of Certain Foreign Gifts . California does not conform

Complete Long Form 540NR, California Nonresident

line 8, subtract any year in which the distribution

to the federal provision relating to information

or Part-Year Resident Income Tax Return, up to

from Schedule J (541), Part IV, column (a) is less

returns required for foreign trusts with United States

line 42, total tax . Make your adjustments on the

than the amount on line 10 of form FTB 5870A . If the

beneficiaries, IRC Section 6048(c) .

accumulation years listed, eliminating the highest

distribution for each throwback year is more than

Report the accumulation distributions from

and lowest taxable income years . Include in the total

line 10, then enter the same number on line 11 as

foreign trusts and from certain domestic trusts

adjusted gross income for Long Form 540NR the

you entered on line 8 .

on FTB 5870A, Tax on Accumulation Distribution

amount from form FTB 5870A, Part I, line 12, plus all

Line 3 – Enter your taxable income for years 2003

of Trusts, and attach it to your return . See IRC

other income of the beneficiary as if the beneficiary

through 2007, even if the trust had accumulated

Section 665(c) .

was a California resident for the entire year .

income less than five years after the beneficiary

Although California conforms to the federal provision

Get FTB Pub . 1100, Taxation of Nonresidents

became 21 years old . Use the taxable income as

repealing the throwback rules, California may still apply

and Individuals Who Change Residency, and FTB

originally reported, amended, or as changed by

R&TC Section 17745(b) . This provision states that if the

Pub . 1031, Guidelines for Determining Residency

the FTB . Include in the taxable income, amounts

trust did not pay tax on current or accumulated income

Status, for more information .

considered distributed as a result of prior

of the trust because the resident beneficiary’s interest

accumulation distributions whether from the same or

If you were a California resident at the trust’s year

in the trust was contingent, this income will be taxable

another trust, and whether made in an earlier year or

end, include the amount from form FTB 5870A,

when it is distributed or distributable to the beneficiary .

the current year .

Part I, line 12, in California adjusted gross income

Get the instructions for Form 541, California Fiduciary

on the Form 540, line 17 . If you were a nonresident

For taxable years 2003 through 2007, enter the

Income Tax Return, for more information .

at the trust’s year end, include the California

amount of your taxable income, but not less than

Round Cents to Dollars – Round cents to the nearest

source income amount from form FTB 5870A,

zero .

whole dollar . For example, round $50 .50 up to $51 or

Part I, line 12 in California adjusted gross income

Line 7 – Compute the tax (not including any

round $25 .49 down to $25 . If you do not round, the

on Long Form 540NR, line 21 . You may need to

alternative minimum tax) on the income on line 16

Franchise Tax Board (FTB) will disregard the cents .

contact the trust for additional information regarding

using the tax rates in effect for the earlier year shown

This helps process this form quickly and accurately .

sourced income . In either instance, include all other

in each of the three columns . Use the California tax

income of the beneficiary from periods of California

tables included in the personal income tax booklets

Purpose

residency and all other California source income

for prior years .

from periods of nonresidency .

Use form FTB 5870A to figure the additional tax

Line 8 – Enter your tax (not including any

Enter the amount from Long Form 540NR, line 42

under IRC Section 667 or R&TC Sections 17745(b)

alternative minimum tax) as originally reported,

on form FTB 5870A, Part I, Section B, line 23 . Follow

and (d) on an accumulation distribution made by

amended, or as changed by the FTB before reduction

the instructions for completing the rest of form

a foreign trust and certain domestic trusts in the

for any credits for the particular earlier year shown in

FTB 5870A .

current year .

each of the three columns .

If IRC Section 667 and R&TC Section 17745(b) both

Line 20 – Include on line 20 only the net change in

Specific Line Instructions

appear to apply to the same distribution, calculate

nonrefundable credits, such as exemption credit, etc .

the tax on the distribution using R&TC Section 17745

Part I

For example, to the extent the tax on line 18 is less

and Part II only . (See R&TC Section 17779 .)

than the allowable exemption credit, only the excess

Line – Enter the amount distributed in the current

exemption credit is to be included on line 20 .

If you were a noncontingent beneficiary and you

year that represents the undistributed net income of

received Schedule J (541), Trust Allocation of

Line 2 – If the net change results in an increase in

a trust considered to have been distributed in earlier

an Accumulation Distribution, and the trust filed

allowable credits, subtract line 20 from line 19 . If the

years .

Form 541, and paid the tax, compute your additional

net change results in a decrease in allowable credits,

Line 2 – Enter any amount on line 1 that represents

tax under the provisions of IRC Section 667 .

add line 20 and line 19 .

undistributed net income (UNI) of a trust considered

Complete Part I of form FTB 5870A to determine the

Line 22 – Complete and attach a separate Schedule P

to have been accumulated before you were born or

amount of the tax due .

(100, 100W, 540, 540NR, or 541, Alternative

reached age 21 . However, if the multiple trust rule

Minimum Tax and Credit Limitations), to recompute

applies, see the instructions for line 4 .

FTB 5870A Instructions 2008 Page

California Form 5870a Draft - Tax On Accumulation Distribution Of Trust, Instructions - 2008 Page 4

Related Articles

Related forms

Related Categories