Instructions For Form 541 - California Fiduciary Income Tax Return

Line 15b – Allowable miscellaneous itemized

Line 20a – Taxable Income

• Partial throwback tax on accumulation

deductions subject to the 2% floor

Subtract line 18, income distribution deduction,

distribution from trust.

Miscellaneous itemized deductions are deductible

from the adjusted total income reported on

If an estate or a trust is the beneficiary of

only to the extent that the aggregate amount of

line 17, and enter the result.

a trust and in the current year received

such deductions exceeds 2% of AGI.

Line 20b – ESBT Taxable Income

a distribution from the trust of income

The term “miscellaneous itemized deductions”

The portion of an Electing Small Business Trust

accumulated in prior taxable years (an

does not include deductions relating to:

(ESBT) that consists of stock in one or more

accumulation distribution), the estate or trust

S corporations must be treated as a separate trust

may be liable for a partial throwback tax on the

• Interest under IRC Section 163

and the tax must be figured separately on the

accumulation distribution. Under the throwback

• Taxes under IRC Section 164

S-portion of the ESBT. On a separate schedule,

rules, the beneficiary of an accumulation

• Amortization of bond premium under IRC

figure the taxable income on the S corporation

distribution is taxed as if the distribution was

Section 171

items making the following modifications:

made in the prior years when the income was

For more exceptions, see IRC Section 67(b).

accumulated. Figure the throwback tax on form

• Only report the items described in IRC

Trusts’ expenses relating to outside investment

FTB 5870A, Tax on Accumulation Distribution

Section 641(c)(2)(C).

advice and investment management fees are

of Trusts. Include the tax on line 21b and attach

• Take no other deductions (including the

miscellaneous itemized deductions subject to the

form FTB 5870A to Form 541.

distribution deduction) or credits.

2% floor.

• Do not apportion to the beneficiaries any of the

• Interest on tax deferred under the installment

For estates and trusts, AGI is computed by

S corporation items of income, loss, deduction

method for certain nondealer property

subtracting the following from total income

or credit.

installment obligations.

(line 9):

Enter taxable income from the S-portion of the

If an obligation arising from the disposition of

• Fiduciary fees of the estate or trust (line 12).

ESBT on line 20b, and attach the schedule to the

property to which IRC Section 453A applies is

• Income distribution deduction (line 18).

income tax return. Include the taxable income

outstanding at the close of the year, the estate

• Other deductions claimed on line 10 through

from the S-portion of the ESBT when calculating

or trust must include the interest due under

line 15a that were incurred in the conduct of a

the Mental Health Services Tax on line 27.

IRC Section 453A in the amount to be entered

trade or business or the production of income.

on line 21b. Attach a schedule showing the

The taxable income on the remainder

computation. Write “IRC Section 453A’’ on

See the federal Form 1041 instructions for more

(non-S portion) of the ESBT is computed in

line 21b. Include the tax in the total on line 21b.

information regarding the income distribution

a manner consistent with a complex trust on

deduction and AGI computation.

Form 541. Enter the taxable income for the

• Tax on the S-portion of an Electing Small

non-S portion of the ESBT on line 20a.

Business Trust (ESBT).

Generally, the estate or trust will have to complete

Schedule P (541) if an income distribution

Multiply line 20b by the highest rate applicable

Tax Computation

deduction is reported under IRC Section 651 or

to individuals. Include the tax in the total on

Enter Mental Health Services Tax on line 27.

IRC Section 661.

line 21b.

Line 21a – Regular tax

Unallowable deductions. Deductions are not

• REMIC Annual Tax

Determine the tax on the taxable income (line 20a)

allowed on Form 541 for:

Enter the $800 REMIC annual tax on line 21b

using the Tax Rate Schedule on this page. Enter

• Expenses that are allocable to one or more

and line 28, tax liability. REMIC annual tax is

the tax on line 21a. Do not include the amount

classes of income (other than interest income)

not eligible for exemption credits.

reported on line 20b.

exempt from tax.

Line 21c – QSF Tax

Line 21b – Other taxes

• Any amount relating to expenses for

QSF is a Qualified Settlement Fund (including

production of income that is allocable to

• Tax may be applied to lump-sum distributions

designated settlement funds). Determine the

interest income exempt from tax. For the

from a qualified retirement plan. The fiduciary

tax using corporate tax rates under R&TC

treatment of interest expense attributable to

must complete Schedule G-1 to figure the

Section 24693. For more information, see General

tax-exempt income, see the instructions for

amount of tax to enter on line 21b.

Information C, Who Must File.

line 10. For the determination of the amount

of expense attributable to tax-exempt income,

see the instructions for federal Form 1041,

Schedule B, Income Distribution Deduction.

• Decedent’s medical and dental expenses paid

by the estate.

• Funeral expenses.

2013 Tax Rate Schedule

If the amount on

Form 541, line 20a is:

Enter on line 21a:_______________________

over —

but not over —

of the amount over —

0 $

7,582

0.00 + 1.00%

7,582

17,976

75.82 + 2.00%

7,582

17,976

28,371

283.70 + 4.00%

17,976

28,371

39,384

699.50 + 6.00%

28,371

39,384

49,774

1,360.28 + 8.00%

39,384

49,774

254,250

2,191.48 + 9.30%

49,774

254,250

305,100

21,207.75 + 10.30%

254,250

305,100

508,500

26,445.30 + 11.30%

305,100

508,500

AND OVER

49,429.50 + 12.30%

508,500

Page 8 Form 541 Booklet 2013

Instructions For Form 541 - California Fiduciary Income Tax Return - 2013 Page 7

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