Instructions For Form 541 - California Fiduciary Income Tax Return - 2013 Page 5

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In general, fiduciaries should pay California use
Deductions upon termination. A deduction shall
Trusts that hold assets related to an IRC
tax on purchases made from out-of-state (for
be allowed to the beneficiaries succeeding to the
Section 1361(d) election and other not related
example, by telephone, over the Internet, by
property of the estate or trust if, upon termination,
assets should fill out the “Income” and
mail, or in person). However, not all purchases
the estate or trust has one of the following:
“Deduction” sections of Form 541 only for their
require fiduciaries to pay use tax. For example,
income and deductions attributable to assets not
• A capital loss carryover
fiduciaries would include purchases of clothing,
related to an IRC Section 1361(d) election.
• For its final taxable year, deductions (other than
but not purchases of food products or prescription
the charitable deductions) in excess of gross
Use Schedule B of Form 541 to determine their
medicine. For more information on nontaxable and
income
distribution deduction.
exempt purchases, fiduciaries may visit the State
• A net operating loss
Principal Business Activity (PBA) Code. If the
Board of Equalizations website at boe.ca.gov.
Tax-exempt income. California does not tax:
estate or trust was engaged in a trade or business
Fiduciaries should pay California use tax on
during the taxable year, enter the principal
• Interest on governmental obligations. Interest
taxable items if:
business activity code used on the federal
derived from bonds issued by California or its
• The seller does not collect California sales or
Schedule C, Profit or Loss From Business, or
political subdivisions, the federal government,
use tax.
Schedule C-EZ, Net Profit From Business.
the District of Columbia (issued before
• The fiduciary uses, gives away, stores, or
December 24, 1973), or territories of the
Additional Information. Use the Additional
consumes the item in this state.
United States.
Information field for “In-Care-Of” name and other
Example: The fiduciary purchases a dining table
• Proceeds of insurance policies. In general, a
supplemental address information only.
from a company in North Carolina. The company
lump sum payable at the death of the insured
Foreign Address. If the estate or trust has a
ships the table from North Carolina to the
under a life insurance policy is excludable from
foreign address enter the city, foreign country
fiduciary’s address in California for the fiduciary’s
gross income of the recipient.
name, foreign province/state/county name, and
use and does not charge California sales or use
• Miscellaneous items wholly exempt from
foreign postal code in the appropriate boxes. Do
tax. The fiduciary owes use tax on the purchase.
tax. (1) Gifts (not received as a consideration
not abbreviate the foreign country name. Follow
for services rendered), money or property
Complete the Use Tax Worksheet or use the Use
the country’s practice for entering the province/
acquired by bequest, devise, or inheritance
Tax Lookup Table on page 11 to calculate the
state/county name and foreign postal code.
(but the income derived therefrom is taxable);
amount due.
Amended Tax Return. If the fiduciary is filing
and, (2) Income, other than rent, derived by a
Extensions to file. If the fiduciary requests an
an amended Form 541, check the box labeled
lessor of real property upon the termination of
extension to file its income tax return, wait until
“Amended tax return.” Complete the entire return,
a lease, representing the value of such property
the fiduciary files its tax return to report the
correct the lines needing new information, and
attributable to buildings erected or other
purchases subject to use tax and to make the use
recompute the tax liability. On an attached sheet,
improvements made by the lessee.
tax payment.
explain the reason for the amendments and
Withholding on nonresident beneficiaries.
identify the lines and amounts being changed
Penalty. Failure to timely report and pay the use
Fiduciaries must withhold tax on payments
on the amended tax return. Include the fiduciary
tax due may result in the assessment of penalties.
of income from California sources that are
name and FEIN on each attachment.
Changes in use tax reported. Do not file an
not subject to payroll withholding and made
If the amended tax return results in a change to
Amended Fiduciary Income Tax Return to revise
to nonresident beneficiaries. See R&TC
income, or a change in distribution of any income
the use tax previously reported. If fiduciary has
Sections 18662 through 18677. Get Form 592,
or other information provided to a beneficiary, an
changes to the amount of use tax previously
Resident and Nonresident Withholding Statement
amended Schedule K-1 (541) must also be filed
reported on the original tax return, contact the
and Form 592-B, Resident and Nonresident
with the amended Form 541 and given to each
State Board of Equalization.
Withholding Tax Statement, or Form 592-F,
beneficiary. Write “AMENDED” across the top of the
Foreign Partner or Member Annual Return, to
For assistance with your use tax questions, go to
amended Schedule K-1 (541).
report the withholding.
the State Board of Equalization’s website at
Income
boe.ca.gov or call their Customer Service Center
See Cal. Code Regs., tit. 18, sections 17951-1(c),
at 800.400.7115 or California Relay Service (CRS)
17951-2, and 17953 regarding taxability of
Complete Schedule G, California Source
711 (for hearing and speech disabilities). For
distributions to nonresident beneficiaries.
Income and Deduction Apportionment, on
California income tax information, contact the
Form 541, Side 3, if the trust has any resident
Specific Line Instructions
Franchise Tax Board at ftb.ca.gov.
and nonresident trustees and/or resident and
Identification Area
nonresident non-contingent beneficiaries. Follow
R Miscellaneous Items
the line instructions for Schedule G on page 13.
Follow the instructions for federal Form 1041
California law follows federal law in the areas of:
The amounts transferred from Schedule G should
when completing the identification area on
• Accounting methods
only include income and deductions reportable to
Form 541, Side 1. Attach a schedule listing the
• Separate shares in a single trust
California.
names and addresses of additional fiduciaries
• Separate shares in a single estate
Line 1 – Interest income
(who served the trust during any portion of the
• Blind trusts
Enter the total of all taxable interest including
taxable year) who are not identified on the front
• Multiple trusts
any original issue discount bonds and income
of Form 541. Identify each fiduciary as a resident
• Simple and complex trusts
received as a holder of a regular interest in a
or nonresident of California. California law is
• Common trust funds
REMIC.
generally the same as federal law in the following
• Excess distributions
areas:
If the fiduciary filed federal Form 1120-RIC
Liability for tax. The fiduciary is liable for
or Form 1120-REIT, file Form 100 instead of
• Simplified filing requirements
payment of the tax. Failure to pay the tax may
Form 541.
• Methods of reporting
result in the fiduciary being held personally liable.
• Pooled income funds
Line 2 – Dividends
See R&TC Sections 19071 and 19516.
• Amended tax returns
Enter the total of all taxable dividends.
Estate income to be reported. If a decedent, at
• Final tax returns
Line 3 – Business income or (loss)
the date of death, was a resident of California, the
• Nonexempt charitable and split-interest trusts
If the estate or trust was engaged in a trade or
entire income of the estate must be reported. If a
Qualified Subchapter S Trust. Trusts that only
business during the taxable year, complete form
decedent, at the date of death, was a nonresident,
hold assets related to an IRC Section 1361(d)
FTB 3885F, Depreciation and Amortization, and
only the income derived from sources within
election should fill out the “Income” and
attach it to Form 541. Also complete and attach
California should be reported.
“Deduction” sections of Form 541 like all other
a copy of federal Schedule C or C-EZ using
trusts, except the trust should take an income
California amounts. Follow federal instructions
distribution deduction on line 18 equal to its
for “Depreciation, Depletion, and Amortization,’’
adjusted total income from line 17.
regarding dividing the deductions between the
fiduciary and the beneficiary(ies).
Page 6 Form 541 Booklet 2013

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