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Report separately on Schedule K-1 (541), line 12, any adjustments or

R&TC Section 25120(a), and the gross receipts from the production of

tax preferences attributable to depreciation, depletion, or amortization

nonbusiness income, as defined in R&TC Section 25120(d).

that were allocated to beneficiaries.

Proportionate interest means:

F Optional Write-off for Certain Adjustments

1. In the case of a pass-through entity which reports a profit for the

taxable year, your profit interest in the entity is reported as of the end

and Tax Preferences

of your taxable year.

2. In the case of a pass-through entity which reports a loss for the

Under IRC Section 59(e), the estate or trust may elect to deduct certain

taxable year, your loss interest in the entity is reported as of the end

adjustments and tax preferences ratably over a period of time. If this

of your taxable year.

election is made, the optional write-off period is used for regular tax and

3. In the case of a pass-through entity which is sold or liquidates during

there is no AMT adjustment on Schedule P (541). The items for which

the taxable year, your capital account interest in the entity is reported

this election can be made are:

as of the time of the sale or liquidation.

• Circulation expenditures under IRC Section 173(a).

Proportionate interest includes an interest in a pass-through entity

• Research and experimental expenditures under IRC Section 174(a).

including a partnership, S corporation, RIC, REIT, or REMIC.

• Intangible drilling and developmental expenditures under IRC

Section 263(c).

Eligibility

• Development expenditures for mines and natural deposits under IRC

The exclusion is only available for the alternative minimum taxable

Section 616(a).

income of the estate or trust. The exclusion may not be passed through

• Mining and exploration expenditures under IRC Section 617(a).

to beneficiaries. Therefore, if the estate or trust qualifies for this

• Grapevines replanted as a result of phylloxera infestation or Pierce’s

exclusion, it must complete two Schedules P (541): one for the estate’s

Disease.

or trust’s computation of AMTI and AMT, and one for the computation of

AMTI, adjustments and preference items on Schedule K-1 (541).

The estate or trust may elect to deduct circulation expenditures over

three years and intangible drilling and developmental expenditures over

The fiduciary should complete the first Schedule P (541) for the estate

60 months. The estate or trust may elect to deduct the remaining items

or trust as follows:

over 10 years. For intangible drilling and developmental expenditures,

1. Make no entry for AMT adjustments and tax preferences attributable

the write-off period begins with the month the expenditure was paid or

to any trade or business of the estate or trust (line 4 items).

incurred.

2. Enter all taxable income attributable to any trade or business of the

The election must be made in the year of the expenditure and may be

estate or trust on line 7b.

revoked only with the consent of the FTB. If the estate or trust made the

The fiduciary should complete the second Schedule P (541) for the

election for any of the above items, do not adjust for those items on this

beneficiary as follows:

schedule. See IRC Section 59(e) for more information.

1. Enter the AMT adjustments and tax preferences attributable to any

Additional information

trade or business of the estate or trust on the appropriate lines

For more information, get federal Schedule I (Form 1041), Alternative

(line 4 items).

Minimum Tax – Estates and Trusts.

2. Make no entry on line 7b.

G Alternative Minimum Taxable Income (AMTI)

Refer to this second Schedule P (541) when entering AMTI and

adjustments and taxable preference items on Schedule K-1 (541),

Exclusion

line 12. The estate or trust should also have completed a second

A qualified taxpayer shall exclude income, positive and negative

Schedule P (541) for the prior taxable year, and refer to it to compute the

adjustments, and preference items attributable to any trade or business

amount for Schedule K-1 (541), line 11(d), if applicable.

when figuring AMTI. These adjustments and preference items must

H Internet Access

also be excluded when calculating any deductions that may result in

AMT carryovers. You are a qualified taxpayer if you meet both of the

You can download, view, and print California tax forms and publications

following:

at ftb.ca.gov.

• Own or have an ownership interest in a trade or business.

Access other California state agency websites at ca.gov.

• Have aggregate gross receipts, (less returns and allowances)

during the taxable year of less than $1,000,000 from all trades

Specific Line Instructions

or businesses for which you are the owner or have an ownership

interest. Gross receipts may include, but are not limited to, items

Part I – Fiduciary’s Share of Alternative Minimum Taxable

reported on federal Schedules C, Profit or Loss from Business;

Income (AMTI)

D, Capital Gains and Loss; E, Supplemental Income and Loss (other

than income from a trust); or F, Profit or Loss from Farming; and

Line 2 – Net Operating Loss (NOL) Deduction

from federal Form 4797, Sales of Business Property, (figured in

For more information, see form FTB 3805V, Net Operating Loss (NOL)

accordance with California law) or California Schedule D-1, Sales of

Computation and NOL and Disaster Loss Limitations – Individuals,

Business Property, (if required to complete it) that are associated

Estates, and Trusts.

with a trade or business. In the case of an ownership interest, you

Line 4 – For line 4a through line 4s, enter each adjustment as a positive

include only the proportional share of gross receipts of any trade or

amount unless instructed otherwise.

business from a partnership, S corporation, regulated investment

Line 4a – Interest

company (RIC), a real estate investment trust (REIT), or real estate

In determining the AMTI, qualified residence interest, other than

mortgage investment conduit (REMIC) in accordance with your

qualified housing interest defined in IRC Section 56(e), is not allowed

ownership interest in the enterprise.

as a deduction. Only home mortgage interest that meets the definition

Aggregate gross receipts, less returns and allowances means the sum

of “qualified housing interest” is deductible for AMT purposes. The AMT

of the gross receipts of the trades or businesses which you own and the

adjustment is that portion of home mortgage interest deductible for

proportionate interest of the gross receipts of the trades or businesses

regular tax purposes that is not qualified housing interest.

which you own and of pass-through entities in which you hold an

Qualified housing interest. Qualified housing interest is interest paid

interest.

or accrued by the trust or estate on debt incurred to acquire, construct,

Gross receipts, less returns and allowances means the sum of the

or substantially rehabilitate a residence held by the estate or trust that

gross receipts from the production of business income, as defined in

Page 2 Schedule P (541) Instructions 2013

Instructions For Schedule P (Form 541) - Alternative Minimum Tax And Credit Limitations - Fiduciaries - 2013 Page 2

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