Looking for a California Ftb Form 541 Schedule K-1 Templates? Download it for free!

Beneficiary’s Instructions for Schedule K-1 (541)

General Information

Resident beneficiaries are taxed on income

Line 1 – Interest

distributed or distributable from all sources.

Include on Schedule CA (540 or 540NR),

Purpose

Nonresident beneficiaries are taxed only on

line 8, column B or column C, whichever is

income distributed or distributable that is

appropriate, any amount shown on line 1,

The estate or trust uses Schedule K-1 (541),

derived from sources within California (R&TC

column (c).

Beneficiary’s Share of Income, Deductions,

Section 17953).

Credits, etc., to report your share of the

Line 2 – Dividends

estate’s or trust’s income, deductions, credits,

For purposes of this section, the nonresident

Include on Schedule CA (540 or 540NR),

etc. Your name, address, and tax identification

beneficiary is deemed the owner of intangible

line 9(a), column B or column C, whichever

number, as well as the estate’s or trust’s

personal property from which the income of

is appropriate, any amount shown on line 2,

name, address, and tax identification number,

the estate or trust is derived. Therefore, such

column (c).

should be entered on the Schedule K-1 (541).

income is taxed at the beneficiary’s domicile.

Line 3 – Net capital gain or (loss)

Keep Schedule K-1 (541) for your records. Do

The estate or trust will attach a schedule

Include on Schedule D (540), California Capital

not file it with your tax return. The estate or

of intangible income, such as income from

Gain or Loss Adjustment, line 2, any amount

trust has filed a copy with the Franchise Tax

stocks, bonds, bank accounts, and notes,

shown on line 3, column (d).

Board (FTB).

whose source is dependent upon the residence

If there is an attachment to Schedule K-1 (541)

You are subject to tax on your share of the

or commercial domicile of the taxpayer. The

that reports the disposition of a passive

estate’s or trust’s income, and you must

income on this schedule is not income from

activity, get form FTB 3801 for more

include your share on your individual tax

California sources for nonresidents but is

information.

return.

income sourced at the beneficiary’s state of

Line 5 – Other portfolio and nonbusiness

residence or commercial domicile.

Schedule K-1 (541), column (b) shows

income

amounts from your federal Schedule K-1

Specific Line Instructions

Include on Schedule CA (540 or 540NR), on

(1041), Beneficiary’s Share of Income,

line 17, in column B or column C, any amount

Deductions, Credits, etc. Column (c) shows

If you are a nonresident beneficiary, the

shown on line 5, column (c).

the difference between federal and California

California source amounts in column (e) will

Line 6 through Line 8 – Ordinary business,

amounts. Column (d) shows your total

help you identify the California source adjusted

net rental real estate, and other rental

amounts using California law by combining

gross income that must be reported on your

income

column (b) and column (c). Column (e) shows

Schedule CA (540NR), column E.

Read the instructions below before including

your income and loss from California sources.

Part-year residents may be required to calculate

any amounts shown on Schedule K-1 (541),

Generally, the amount of loss and deduction

their IRC Section 652 or 662 income in a

line 6, on Schedule CA (540 or 540NR),

you may claim on your return is limited to your

manner that produces a different result than the

line 17.

share of the estate or trust and the amount

amounts shown in column (e) of this form. For

Passive Activities: The deductions on line 6

for which you are considered at-risk. If you

more information, see FTB Pub. 1100, Taxation

may be subject to the passive loss limitation

have losses, deductions, or credits from

of Nonresidents and Individuals Who Change

rules. In general, losses from passive activities

a passive activity, you must also apply the

Residency.

are allowed only to the extent of income from

passive activity rules. It is the beneficiary’s

Line 3 through Line 12

passive activities.

responsibility to consider and apply any

You must report the amounts in column

applicable limitations.

If your passive activity deductions exceed your

(c), adjustments, that are from nonpassive

passive activity income, or you have passive

California law is generally the same as federal

activities on the appropriate California form or

activity losses from any other source, you

law with regard to income, the character

schedule as explained in these instructions.

must use form FTB 3801 to figure your losses

of income, allocation of deductions, gifts,

Report the amounts in column (d), total

allowed from all passive activities.

and bequests, and past years. Follow the

amounts using California law, that are from

instructions for federal Schedule K-1 (1041)

Line 9a through Line 9c – Depreciation,

passive activities on the appropriate California

for these items.

depletion, and amortization

form or schedule. Get form FTB 3801, Passive

Any directly apportionable deduction, such

Generally, you must report items shown on

Activity Loss Limitations, to transfer those

as depreciation, is treated by the beneficiary

your Schedule K-1 (541) (and any attached

amounts and to figure the amount of your

as having been incurred in the same activity

schedules) the same way that the estate or

passive activity loss limitation. Carry the

as incurred by the estate or trust. The estate

trust treated the items on its return. If the

passive activity amounts to the California

or trust should provide you with a schedule

treatment on your original or amended return

form or schedule to figure your California

showing your share of directly apportionable

is inconsistent with the estate’s or trust’s

adjustment amount. Enter this adjustment

deductions derived from each activity reported

treatment, or if the estate or trust was required

amount on the corresponding line on

on line 5 through line 8.

to but has not filed a return, you must attach

Schedule CA (540 or 540NR) only if there is a

a statement identifying the inconsistency.

Line 11a – Excess deductions on termination

federal/California difference.

Beneficiaries may be liable for negligence

Include any adjustment on Schedule CA

If there is no California form or schedule

penalties and penalties relating to mathematical

(540 or 540NR), line 41 as an addition or

on which to compute your passive activity

subtraction, whichever is appropriate.

errors if they cannot demonstrate that their

loss adjustment amount on (i.e., rental loss

treatment is consistent with the estate or trust.

Line 11b – Capital loss carryover

from passive activities), you may figure

Beneficiaries of estates and trusts include

Include any capital loss carryovers from the

the adjustment amount on the California

in their gross income their distributive

final year of the estate or trust on Schedule D

Adjustment Worksheets in the instructions

share of the fiduciary’s income distribution

(Form 540), line 6, column (d).

for form FTB 3801. Enter the total of your

deduction for the taxable year. Amounts that

adjustments from these worksheets from

Line 11c and Line 11d – Net Operating Loss

are distributed by an estate or trust and that

all passive activities on Schedule CA (540

(NOL) Carryover

are not deductible in computing the entity’s

or 540NR), line 17, column B or line 17,

Upon termination of a trust or decedent’s

taxable income (i.e., distributions of corpus or

column C, whichever is appropriate.

estate, a beneficiary succeeding to its property

tax-exempt income) usually are not taxable to

is allowed to deduct any unused NOL (and

the beneficiary.

any AMT NOL) carryover for regular and AMT

Form 541 Booklet 2008 Page 31

Instructions For Schedule K-1 (541) Draft - Beneficiary'S Share Of Income, Deductions, Credits, Etc. - 2008 Page 4

Related Articles

Related forms

Related Categories