California Form 5870a - Tax On Accumulation Distribution Of Trusts - 2013 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
Do not use form FTB 5870A if you were a non-
more information, go to ftb.ca.gov and search for
are attributable to the net income reported on line 3 .
contingent beneficiary and you received an
conformity . Additional information can be found
See IRC Sections 666(b) and (c) .
accumulation distribution, but you did not receive
in FTB Pub . 1001, Supplemental Guidelines to
Schedule J (541) because the trust did not file
Special Rule for Multiple Trusts. If you received
California Adjustments, the instructions for California
Form 541 or pay the required California tax due .
accumulation distributions from two or more other
Schedule CA (540 or 540NR), and the Business
The entire trust accumulation income is taxable
trusts that were considered to have been made in any
Entity tax booklets .
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
California does not follow the federal rules for:
For this special rule, only count as trusts those trusts
requirements of the California Revenue and Taxation
for which the sum of this accumulation distribution
Code (R&TC) in the tax booklets . Taxpayers should
• Generation-skipping transfer tax imposed by IRC
and any earlier accumulation distributions from
not consider the tax booklets as authoritative law .
Section 2601 .
the trusts, which are considered under IRC
• The tax relating to estates imposed by IRC
If you received an accumulation distribution from
Section 666(a) to have been distributed in the same
Section 2001 or Section 2101 .
a foreign trust, use federal Form 4970, Tax on
earlier tax year, is $1,000 or more .
Accumulation Distribution of Trusts, as a worksheet .
Except as explained above, use the instructions for
Line 8 – You can determine the number of years
The partial tax from an accumulation distribution
federal Form 4970 to compute the partial tax .
which the UNI is deemed to have been distributed
of a foreign trust computed on federal Form 4970
Nonresidents or part-year residents in preceding
by counting the throwback years for which there are
is reported on federal Form 3520, Annual Return to
five years: For any taxable year you were a
entries on Schedule J (541), Part IV, line 26 through
Report Transactions With Foreign Trusts and Receipt
nonresident or part-year resident in the accumulation
line 29 . These throwback rules apply even if you
of Certain Foreign Gifts . California does not conform
years listed in Part I, Section B, skip line 14 through
would not have been entitled to receive a distribution
to the federal provision relating to information
line 22 . Complete Long Form 540NR, California
in the earlier taxable year if the distribution had
returns required for foreign trusts with United States
Nonresident or Part-Year Resident Income Tax Return,
actually been made then .
beneficiaries, IRC Section 6048(c) .
up to line 74, total tax . Make your adjustments on
There can be more than four throwback years .
Report the accumulation distributions from foreign
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
was a California resident for the entire year .
distribution for each throwback year is more than
Although California conforms to the federal provision
line 10, then enter the same number on line 11 as
repealing the throwback rules, California may still apply
Get FTB Pub . 1100, Taxation of Nonresidents
you entered on line 8 .
R&TC Section 17745(b) . This provision states that if the
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 2008
of the trust because the resident beneficiary’s interest
Status, for more information .
through 2012, 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,
originally reported, amended, or as changed by the
For any taxable year in which an otherwise contingent
Part I, line 12, in California adjusted gross income
Franchise Tax Board (FTB) . Include in the taxable
beneficiary receives a distribution, the beneficiary is
on Form 540, California Resident Income Tax Return
income, amounts considered distributed as a result
non-contingent to the extent of the distribution and
line 17 . If you were a nonresident at the trust’s year
of prior accumulation distributions whether from
the trust may have a filing requirement under R&TC
end, include the California source income amount
the same or another trust, and whether made in an
Section 18505 for that taxable year . Get the instructions
from form FTB 5870A, Part I, line 12 in California
earlier year or the current year .
for Form 541, California Fiduciary Income Tax Return,
adjusted gross income on Long Form 540NR,
for more information .
line 32 . You may need to contact the trust for
For taxable years 2008 through 2012, enter the
additional information regarding sourced income .
amount of your taxable income, but not less than
Purpose
In either instance, include all other income of the
zero .
beneficiary from periods of California residency and
Use form FTB 5870A to figure the additional tax
Line 17 – Compute the tax (not including any
all other California source income from periods of
under IRC Section 667 or R&TC Sections 17745(b)
alternative minimum tax) on the income on line 16
nonresidency .
and (d) on an accumulation distribution made by
using the tax rates in effect for the earlier year shown
a foreign trust and certain domestic trusts in the
Enter the amount from Long Form 540NR, line 74
in each of the three columns . Use the California tax
current year .
on form FTB 5870A, Part I, Section B, line 23 . Follow
tables included in the personal income tax booklets
the instructions for completing the rest of form
for prior years .
If IRC Section 667 and R&TC Section 17745(b) both
FTB 5870A .
appear to apply to the same distribution, calculate
Line 18 – Enter your tax (not including any
the tax on the distribution using R&TC Section 17745
alternative minimum tax) as originally reported,
Specific Line Instructions
and Part II only . See R&TC Section 17779 .
amended, or as changed by the FTB before reduction
for any credits for the particular earlier year shown in
Part I
If you were a noncontingent beneficiary and you
each of the three columns .
received Schedule J (541), Trust Allocation of
Line 1 – Enter the amount distributed in the current
an Accumulation Distribution, and the trust filed
year that represents the undistributed net income of
Form 541, and paid the tax, compute your additional
a trust considered to have been distributed in earlier
tax under the provisions of IRC Section 667 .
years .
FTB 5870A Instructions 2013 Page 1
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