Instructions For Arizona Form 141az - 2013 (Page 8 of 15) in pdf

Arizona Form 141AZ

N. Previously Deferred Discharge of Indebtedness

return filed for the year in which it reacquired the debt instrument.

(DOI) Income Adjustment

Since Arizona is taxing the federally deferred DOI income for

2009 or 2010 on the 2009 or 2010 Arizona return, the estate or

Generally, when a loan is settled for less than the amount owed,

trust may subtract the amount of OID that accrued during the

DOI income is realized by the debtor and usually must be

taxable year with respect to that DOI income.

included in the debtor’s gross income. The amount of DOI

Resident Estate or Trust

income is generally equal to the amount of loan forgiveness.

DOI income also occurs when a debtor repurchases its own debt

On line B8, enter the amount of any OID that was deferred

at a discount (a price lower than the adjusted basis issue price of

and not allowed to be deducted in computing federal taxable

the debt instrument). In debt repurchase transactions, the amount

income for 2013 under IRC § 108(i).

of DOI income is generally equal to the difference between the

Nonresident Estate or Trust

adjusted issue price and the price paid for the debt instrument.

On line B8, enter the amount of any OID related to that

For federal purposes, an estate or trust may have made a special

Arizona source income that was deferred and not allowed to

election for taxable years 2009 or 2010 to include DOI income in

be deducted in computing federal taxable income for 2013

connection with the reacquisition of a business debt instrument,

under IRC § 108(i).

ratably over a 5-year period. An estate or trust that made this

P. Estate Income of an Arizona Nonprofit Medical

election will generally include this income in federal taxable

Marijuana Dispensary (NMMD) included in Federal

income beginning with the 2014 taxable year. An estate or trust

Adjusted Gross Income

would have made the federal election under IRC § 108(i) as

added by the American Recovery and Reinvestment Act of 2009.

If the NMMD was registered to an individual as a sole

Arizona did not adopt the special federal DOI income deferral

proprietorship and the NMMD becomes part of the

provisions for the 2009 or 2010 taxable year.

individual’s estate after the individual died, the estate may

subtract the amount of the income from the dispensary that

For Arizona purposes, if a taxpayer made the federal election to

is included in the computation of the estate’s federal

defer the inclusion of DOI income under IRC § 108(i), the estate

adjusted gross income. Include the amount of the income on

or trust was required to add the amount of deferred DOI income

line B8.

to Arizona income for the year for which the estate or trust made

Q. Other Adjustments

the election. If the estate or trust made the required addition to

Other special adjustments may be necessary. Call one of the

Arizona income on the Arizona return filed for the year in which

numbers listed on page 1 of these instructions if any of the

the estate or trust reacquired the debt instrument (2009 or 2010),

following apply.

Arizona will not tax that DOI income twice. In the year in which



You sold or disposed of property that was held for the

the estate or trust includes that deferred DOI income in federal

production of income and your basis was computed

taxable income, the estate or trust may take a subtraction for the

under the Arizona Income Tax Act of 1954.

amount included for that year. Usually this subtraction will apply



to taxable years 2014 through 2018. However, if the estate or

You deferred exploration expenses determined under

trust had to accelerate the deferral for federal purposes, this

IRC § 617 in a taxable year ending before January 1,

subtraction may apply to a taxable year prior to 2014.

1990, and you have not previously taken a subtraction

for those expenses.

Resident Estate or Trust

Line B9 - Total Adjustments Decreasing Federal

On line B8, enter the amount of previously deferred DOI

Taxable Income

income included in federal taxable income for the current

taxable year to the extent that the amount was previously

Add lines B5 through B8. Enter the total.

added to the Arizona income.

Line B10 - Net Fiduciary Adjustment

Nonresident Estate or Trust

Subtract the amount on line B9 from the amount on line B4.

On line B8, enter the amount of previously deferred Arizona

If the result is a negative number, enter the result in brackets.

source DOI that the estate or trust included in its Arizona

Also, enter the result on Form 141AZ, page 1, line 8.

gross income for the current taxable year to the extent that

the amount was previously added to the estate’s or trust’s

Schedule C - Fiduciary Adjustment Allocation

Arizona income.

Use Schedule C to determine the allocation of the shares of

O. Original Issue Discount (OID) on Reacquisition

the Arizona fiduciary adjustment. This adjustment is divided

of Debt Instrument

among the beneficiaries and the fiduciary in proportion to

For federal purposes, when an estate or trust made the special

their share of the federal distributable net income. If there is

election to defer discharge of indebtedness (DOI) income under

no federal distributable net income, each beneficiary’s share

IRC § 108(i) (for 2009 or 2010), the taxpayer was not allowed to

of the adjustment is in proportion to each share of the estate or

take a deduction with respect to the portion of any OID that

trust income distributed. Any balance of the adjustment not

accrued with respect to that DOI income, during the income

allocated to the beneficiaries is allocable to the fiduciary.

deferral period. Arizona did not adopt the federal provisions

Lines C1 through C10 -

requiring an estate or trust to defer the OID deduction in cases

where the estate or trust federally deferred the DOI income under

In column (a), enter the name of each beneficiary.

IRC § 108(i). In this case, the estate or trust must deduct the

column (b), enter each beneficiary’s share of the federal

aggregate amount of the OID deductions disallowed ratably over

distributable net income. In column (c), enter the percentage of

a 5 year period, beginning with the period in which the income is

the estate or trust to be distributed to each beneficiary in

includible in an estate’s or trust’s federal taxable income.

accordance with the documents or laws controlling

distribution of the estate or trust. If the estate or trust has

For Arizona purposes, an estate or trust was required to add the

more than 10 beneficiaries, complete an additional schedule.

amount of deferred DOI income to its Arizona income on the

Instructions For Arizona Form 141az - 2013 Page 8

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