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INSTRUCTIONS TO BENEFICIARY

SCHEDULE K-1 (FORM 741)

Who Must File—If you were a Kentucky resident for the entire

Generally, all income of Kentucky residents, regardless of

year, your filing requirement depends upon your family size,

where it was earned, is subject to Kentucky income tax.

modified gross income, Kentucky adjusted gross income and

Nonresidents and Part-year Residents—Nonresidents

income from self-employment.

with income from Kentuck y sources and par t-year

residents receiving income while a Kentucky resident or

Family Size—Consists of yourself, your spouse if married and

from Kentucky sources while a nonresident must file a

living in the same household and qualifying children.

Kentucky Form 740-NP based on the above criteria. Persons

moving into Kentucky must report all income received

Qualifying Child—Means a qualifying child as defined in

from Kentucky sources prior to becoming residents and

Internal Revenue Code Section 152(c).

income received from all sources after becoming Kentucky

residents. Residents moving out of Kentucky during the year

Modified Gross Income—Consists of your federal adjusted

must report income from all sources while a resident and

gross income, your spouse’s federal adjusted gross income

from Kentucky sources while a nonresident.

if living in the same household, plus any tax-exempt interest

from municipal bonds (non-Kentucky) or any lump-sum

Note: Nonresidents and part-year residents are entitled to

distribution amount taxed on Form 4972-K.

the family size tax credit.

Kentucky Adjusted Gross Income—Consists of your federal

When to Report—Include your share of the estate or trust’s

adjusted gross income plus any additions and subtractions

income, deductions, credit, etc., as shown by your Schedule

from Schedule M, Modifications to Federal Adjusted Gross

K-1 (Form 741) on your Kentucky income tax return for the

Income.

year in which the tax year of the estate or trust ends. For

example, if you, the beneficiary, are on a calendar year, and

Resident beneficiaries use Charts A and B below to determine

the estate or trust’s tax year ends January 31, 2011, you must

if you need to file a Kentucky return. Nonresidents use Chart

take the items listed on Schedule K-1 (Form 741) into account

A only.

on your tax return for calendar year 2011.

Passive Activity Limitations—Form 740 filers see Form 8582-

Chart A

K and instructions for passive activity loss adjustments.

Nonresident beneficiaries (740-NP filers) must complete Form

Your Modified Gross

8582-K and federal Schedule E with Kentucky amounts.

If Your Family Size is:

Income is greater than:

One .............................. and ............................ $10,890

Kentucky Resident Beneficiaries (Form 740 Filers)—If Line

Two .............................. and ............................ $14,710

11, column (c) is a positive amount, enter the difference

Three ........................... and ............................ $18,530

as an addition to federal adjusted gross income on Form

Four or More .............. and ............................ $22,350

740, Schedule M, Line 3. If Line 11, column (c) is a negative

amount, enter the difference as a subtraction on Form 740,

Schedule M, Line 15.

Nonresident Beneficiaries (Form 740-NP Filers)—This

Chart B

Schedule K-1 should reflect all income that has been claimed

as part of the income distribution deduction. However,

Your Kentucky

Adjusted Gross Income

nonresident beneficiaries are only subject to tax on the

If Your Filing Status is:

is greater than:

following types of income:

Single Person—

• from Kentucky sources;

Under age 65 ........................ and ................. $ 3,280

• from activities carried on in Kentucky;

Single Person—

• from the performance of services in Kentucky;

Age 65 or over or blind ........ and ................. $ 5,280

• from real or tangible property located in Kentucky; and

Single Person—

• from a partnership or S corporation doing business in

Age 65 or over and blind ..... and ................. $ 6,550

Kentucky.

Husband and Wife—

Line 12a—Enter this amount on Line 7 of the Kentucky

Both under age 65 ................ and ................. $ 4,280

Limited Liability Entity Tax Credit Worksheet located in the

Husband and Wife—

Form 740 and Form 740-NP instructions under Business

One age 65 or over .............. and ................. $ 5,950

Incentive Credits.

Husband and Wife—

Both age 65 or over ............. and ................. $ 7,050

Line 12b—Enter this amount on Form 740 or Form 740-NP ,

Line 30c.

Taxpayers With Self-Employment Income—Must file a

Line 12c—Enter this amount on Form 740 or Form 740-NP ,

Kentucky individual income tax return regardless of the

Line 30d.

amount of Kentucky adjusted gross income used in the Chart

B if you have gross receipts from self-employment in excess

Line 12d—Enter this amount on Form 740, Line 30a or Form

of modified gross income for your family size in Chart A.

740-NP , Line 30e.

Schedule K-1 (Form 741) - Kentucky Beneficiary'S Share Of Income, Deductions, Credits, Etc. - 2011 Page 2

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