California Form 5870a - Tax On Accumulation Distribution Of Trusts - 2012 Page 3
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4Instructions 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, 2009, and to the California Revenue & Taxation Code (R&TC) .
General Information
Complete Part I of form FTB 5870A to determine the
Line 2 – Enter any amount on line 1 that represents
amount of the tax due .
undistributed net income (UNI) of a trust considered
In general, for taxable years beginning on or after
to have been accumulated before you were born or
If you were an otherwise contingent beneficiary
January 1, 2010, California law conforms to the
reached age 21 . However, if the multiple trust rule
and did not receive Schedule J (541), compute
Internal Revenue Code (IRC) as of January 1, 2009 .
applies, see the instructions for line 4 .
your additional tax under the provisions of R&TC
However, there are continuing differences between
Sections 17745(b) and (d) . Complete Part II,
Line 4 – Except as noted below under “Special Rule
California and federal law . When California conforms
Section A or Section B, of form FTB 5870A to
for Multiple Trusts,” enter on line 4 the California
to federal tax law changes, we do not always adopt
determine the amount of additional tax due .
taxes (not including any alternative minimum tax)
all of the changes made at the federal level . For
charged for any earlier year on the trust income that
more information, go to ftb.ca.gov and search for
Do not use form FTB 5870A if you were a non-
are attributable to the net income reported on line 3 .
conformity . Additional information can be found
contingent beneficiary and you received an
See IRC Sections 666(b) and (c) .
in FTB Pub . 1001, Supplemental Guidelines to
accumulation distribution, but you did not receive
California Adjustments, the instructions for California
Schedule J (541) because the trust did not file
Special Rule for Multiple Trusts. If you received
Schedule CA (540 or 540NR), and the Business
Form 541 or pay the required California tax due .
accumulation distributions from two or more other
Entity tax booklets .
The entire trust accumulation income is taxable
trusts that were considered to have been made in any
in the year that you receive the distribution,
of the earlier taxable years from which the current
The instructions provided with California tax forms
and should be reported on Schedule CA (540),
accumulation distribution is considered to have been
are a summary of California tax law and are only
California Adjustments – Residents, or Schedule CA
made, do not include on line 4 the taxes attributable
intended to aid taxpayers in preparing their state
(540NR), California Adjustments – Nonresidents or
to the current accumulation distribution considered
income tax returns . We include information most
Part-Year Residents, line 21f, column C . See R&TC
to have been distributed in the same earlier taxable
useful to the greatest number of taxpayers in the
Section 17745(a) .
years . See IRC Section 667(c) .
limited space available . It is not possible to include all
requirements of the California Revenue and Taxation
California does not follow the federal rules for:
For this special rule, only count as trusts those trusts
Code (R&TC) in the tax booklets . Taxpayers should
for which the sum of this accumulation distribution
• Generation-skipping transfer tax imposed by IRC
not consider the tax booklets as authoritative law .
and any earlier accumulation distributions from
Section 2601 .
the trusts, which are considered under IRC
If you received an accumulation distribution from
• The tax relating to estates imposed by IRC
Section 666(a) to have been distributed in the same
a foreign trust, use federal Form 4970, Tax on
Section 2001 or Section 2101 .
earlier tax year, is $1,000 or more .
Accumulation Distribution of Trusts, as a worksheet .
Except as explained above, use the instructions for
The partial tax from an accumulation distribution
Line 8 – You can determine the number of years
federal Form 4970 to compute the partial tax .
of a foreign trust computed on federal Form 4970
which the UNI is deemed to have been distributed
Nonresidents or part-year residents in preceding
is reported on federal Form 3520, Annual Return to
by counting the throwback years for which there are
five years: For any taxable year you were a
Report Transactions With Foreign Trusts and Receipt
entries on Schedule J (541), Part IV, line 26 through
nonresident or part-year resident in the accumulation
of Certain Foreign Gifts . California does not conform
line 29 . These throwback rules apply even if you
years listed in Part I, Section B, skip line 14 through
to the federal provision relating to information
would not have been entitled to receive a distribution
line 22 . Complete Long Form 540NR, California
returns required for foreign trusts with United States
in the earlier taxable year if the distribution had
Nonresident or Part-Year Resident Income Tax Return,
beneficiaries, IRC Section 6048(c) .
actually been made then .
up to line 74, total tax . Make your adjustments on
Report the accumulation distributions from foreign
There can be more than four throwback years .
the accumulation years listed, eliminating the highest
trusts and from certain domestic trusts on form
and lowest taxable income years . Include in the total
Line 11 – From the number of years entered on
FTB 5870A, Tax on Accumulation Distribution
adjusted gross income for Long Form 540NR the
line 8, subtract any year in which the distribution
of Trusts, and attach it to your return . See IRC
amount from form FTB 5870A, Part I, line 12, plus all
from Schedule J (541), Part IV, column (a) is less
Section 665(c) .
other income of the beneficiary as if the beneficiary
than the amount on line 10 of form FTB 5870A . If the
Although California conforms to the federal provision
was a California resident for the entire year .
distribution for each throwback year is more than
repealing the throwback rules, California may still apply
line 10, then enter the same number on line 11 as
Get FTB Pub . 1100, Taxation of Nonresidents
R&TC Section 17745(b) . This provision states that if the
you entered on line 8 .
and Individuals Who Change Residency, and FTB
trust did not pay tax on current or accumulated income
Pub . 1031, Guidelines for Determining Resident
Line 13 – Enter your taxable income for years 2007
of the trust because the resident beneficiary’s interest
Status, for more information .
through 2011, even if the trust had accumulated
in the trust was contingent, this income will be taxable
income less than five years after the beneficiary
If you were a California resident at the trust’s year
when it is distributed or distributable to the beneficiary .
became 21 years old . Use the taxable income as
end, include the amount from form FTB 5870A,
For any taxable year in which an otherwise contingent
originally reported, amended, or as changed by the
Part I, line 12, in California adjusted gross income
beneficiary receives a distribution, the beneficiary is
Franchise Tax Board (FTB) . Include in the taxable
on Form 540, line 17 . If you were a nonresident
non-contingent to the extent of the distribution and
income, amounts considered distributed as a result
at the trust’s year end, include the California
the trust may have a filing requirement under R&TC
of prior accumulation distributions whether from
source income amount from form FTB 5870A,
Section 18505 for that taxable year . Get the instructions
the same or another trust, and whether made in an
Part I, line 12 in California adjusted gross income
for Form 541, California Fiduciary Income Tax Return,
earlier year or the current year .
on Long Form 540NR, line 32 . You may need to
for more information .
contact the trust for additional information regarding
For taxable years 2007 through 2011, enter the
sourced income . In either instance, include all other
amount of your taxable income, but not less than
Purpose
income of the beneficiary from periods of California
zero .
residency and all other California source income
Use form FTB 5870A to figure the additional tax
Line 17 – Compute the tax (not including any
from periods of nonresidency .
under IRC Section 667 or R&TC Sections 17745(b)
alternative minimum tax) on the income on line 16
and (d) on an accumulation distribution made by
Enter the amount from Long Form 540NR, line 74
using the tax rates in effect for the earlier year shown
a foreign trust and certain domestic trusts in the
on form FTB 5870A, Part I, Section B, line 23 . Follow
in each of the three columns . Use the California tax
current year .
the instructions for completing the rest of form
tables included in the personal income tax booklets
FTB 5870A .
for prior years .
If IRC Section 667 and R&TC Section 17745(b) both
appear to apply to the same distribution, calculate
Line 18 – Enter your tax (not including any
Specific Line Instructions
the tax on the distribution using R&TC Section 17745
alternative minimum tax) as originally reported,
and Part II only . See R&TC Section 17779 .
amended, or as changed by the FTB before reduction
Part I
for any credits for the particular earlier year shown in
If you were a noncontingent beneficiary and you
Line 1 – Enter the amount distributed in the current
each of the three columns .
received Schedule J (541), Trust Allocation of
year that represents the undistributed net income of
an Accumulation Distribution, and the trust filed
a trust considered to have been distributed in earlier
Form 541, and paid the tax, compute your additional
years .
tax under the provisions of IRC Section 667 .
FTB 5870A Instructions 2012 Page 1
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