Arizona Form 140 - Resident Personal Income Tax Return

Form 140

Completing Line(s) A4

1. You withdrew money from your MSA during 2010.

2. You did not use the amount withdrawn to pay qualified

Enter the following on line(s) A4.

medical expenses.

The name of the qualifying parent or ancestor of your parent.

3. You did not have to include the withdrawal as income

2. The SSN of the qualifying parent or ancestor of your

on your federal income tax return.

parent.

3. The qualifying parent’s or ancestor’s relationship to

Enter the amount withdrawn.

2 - Deceased Account Holder Where the Named

you, or your spouse if filing a joint return.

Beneficiary is Not the Decedent's Surviving Spouse

4. The number of months the qualifying parent or ancestor

of your parent lived in your home during 2010.

You must make an entry here if all of the following apply.

You may lose the exemption if you do not furnish this information.

1. The account holder died during the year.

Line A5 - Total Qualifying Parents or

2. You are the named beneficiary of the decedent's MSA.

Ancestors of Your Parents

3. You are not the decedent's surviving spouse.

Enter the total number of persons listed on line(s) A4. Enter

You did not have to include the value of the MSA as

the same number on the front of the return in box 11.

income on your federal income tax return.

In this case, the MSA ceased to be an MSA. Enter the fair

Additions to Income

market value of the MSA as of the date of death, less the amount

of MSA funds used within one year of the date of death, to pay

Line B6 - Non-Arizona Municipal Interest

the decedent's qualified medical expenses. You can reduce the

Enter the amount of interest income from non-Arizona

fair market value by only those expenses paid from the MSA. If

municipal bonds that you did not include as income on your

you pay additional medical expenses for the decedent from the

federal return.

MSA after you file, you may file an amended return to further

You may exclude any expenses incurred to purchase or carry the

reduce the fair market value of the MSA.

obligation. Reduce the interest income by the amount of those

3 - Decedent's Final Return and No Named MSA

expenses that you could not deduct on your federal return.

Beneficiary

If you received tax exempt interest from municipal bonds,

Make an entry here if all of the following apply.

attach a schedule listing the payors and the amount received

1. The account holder died during the year.

from each payor. You may also want to attach supporting

documents for amounts received from Arizona municipal

2. There is no named MSA beneficiary.

bonds that are exempt from Arizona income tax. These may

3. This is the decedent's final return.

be items such as bank statements, brokerage statements, etc.

4. The value of the MSA did not have to be included on

Line B7 - Ordinary Income Portion of

the decedent's final federal income tax return.

Lump-Sum Distributions Excluded on Your

In this case, the MSA ceases to be an MSA. Enter the fair

Federal Return

market value of the MSA as of the date of death. This rule

Use line B7 if you use federal averaging for lump-sum

applies in all cases in which there is no named beneficiary,

distributions from your pension or profit-sharing plan.

even if the surviving spouse ultimately obtains the right to

the MSA assets.

Arizona law does not provide for averaging. Enter the

amount of the distribution that you treated as ordinary

NOTE: The following are not withdrawals. Do not enter

income on your federal return. If you choose to treat the

any of the following:

capital gain portion of the distribution as ordinary income,



Amounts from the MSA used to pay qualified medical

you must also include that amount.

expenses.

For details, see Arizona Department of Revenue Income Tax



A qualified return of excess contributions.

Ruling ITR 93-5.



A qualified rollover.



Line B8 - Total Federal Depreciation

The fair market value of an MSA received by a surviving

spouse who was the deceased account holder's named

Enter the total amount of depreciation deducted on the

beneficiary.

federal return. If you make an entry here, you should also take

a subtraction on line C22. To figure how much you should

For more information about the above items, see the

subtract, see the instructions for line C22.

department's MSA brochure, Pub 542.

Line B9 - Medical Savings Account (MSA)

Line B10 - I.R.C. § 179 Expense in Excess

Distributions

of Allowable Amount

For information on Arizona's MSA provisions, see the

Enter the amount of IRC § 179 expense deducted on the

department's MSA brochure, Pub 542.

federal return that exceeds $25,000. If you make an entry

here, you should also take a subtraction on line C29 for a

You must add amounts received from an MSA here if any of

portion of the amount entered here. To figure how much you

the following apply.

should subtract, see the instructions for line C29.

1 - You Withdrew Funds from Your MSA for Other

Line B11 - Other Additions to Income

Than Qualified Expenses

Use line B11 if any of the special circumstances below apply.

You must make an entry here if all of the following apply.

Arizona Form 140 - Resident Personal Income Tax Return - 2010 Page 7

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