Arizona Form 141az - Arizona Fiduciary Income Tax Return

Arizona Form 141AZ

O. Previously Deferred Discharge of Indebtedness

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

(DOI) Income Adjustment

amount of deferred DOI income to its Arizona income on the

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

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

DOI income is realized by the debtor and usually must be

Since Arizona is taxing the federally deferred DOI income for

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

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

income is generally equal to the amount of loan forgiveness.

trust may subtract the amount of OID that accrued during the

DOI income also occurs when a debtor repurchases its own debt

taxable year with respect to that DOI income.

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

Resident estate or trust

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

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

of DOI income is generally equal to the difference between the

and not allowed to be deducted in computing federal taxable

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

income for 2011 under I.R.C. § 108(i).

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

Nonresident estate or trust

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

connection with the reacquisition of a business debt instrument,

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

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

Arizona source income that was deferred and not allowed to

election will generally include this income in federal taxable

be deducted in computing federal taxable income for 2011

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

under I.R.C. § 108(i).

would have made the federal election under I.R.C. § 108(i) as

Q. Other Adjustments

added by the American Recovery and Reinvestment Act of 2009.

Other special adjustments may be necessary. Call one of the

Arizona did not adopt the special federal DOI income deferral

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

provisions for the 2009 or 2010 taxable year.

following apply.

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

•

You sold or disposed of property that was held for the

defer the inclusion of DOI income under I.R.C. § 108(i), the

production of income and your basis was computed

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

under the Arizona Income Tax Act of 1954.

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

•

You deferred exploration expenses determined under

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

I.R.C § 617 in a taxable year ending before January 1,

addition to Arizona income on the Arizona return filed for the

1990, and you have not previously taken a subtraction

year in which the estate or trust reacquired the debt instrument

for those expenses.

(2009 or 2010), Arizona will not tax that DOI income twice. In

Line B9 - Total Adjustments Decreasing Federal

the year in which the estate or trust includes that deferred DOI

Taxable Income

income in federal taxable income, the estate or trust may take a

Add lines B5 through B8. Enter the total.

subtraction for the amount included for that year. Usually this

Line B10 - Net Fiduciary Adjustment

subtraction will apply to taxable years 2014 through 2018.

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

However, if the estate or trust had to accelerate the deferral for

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

federal purposes, this subtraction may apply to a taxable year

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

prior to 2014.

Resident estate or trust

Schedule C - Fiduciary Adjustment Allocation

On line B8, enter the amount of previously deferred DOI

Use Schedule C to determine the allocation of the shares of

income included in federal taxable income for the current

taxable year to the extent that the amount was previously

the Arizona fiduciary adjustment.

This adjustment is

added to the Arizona income.

divided among the beneficiaries and the fiduciary in

proportion to their share of the federal distributable net

Nonresident estate or trust

income. If there is no federal distributable net income, each

On line B8, enter the amount of previously deferred Arizona

beneficiary’s share of the adjustment is in proportion to each

source DOI that the estate or trust included in its Arizona

share of the estate or trust income distributed. Any balance of

gross income for the current taxable year to the extent that

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

the adjustment not allocated to the beneficiaries is allocable to

Arizona income.

the fiduciary.

P. Original Issue Discount (OID) on Reacquisition

Lines C1 through C10 -

of Debt Instrument

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

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

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

election to defer discharge of indebtedness (DOI) income under

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

the estate or trust to be distributed to each beneficiary in

I.R.C. § 108(i) (for 2009 or 2010), the taxpayer was not allowed

accordance with the documents or laws controlling

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

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

accrued with respect to that DOI income, during the income

more than 10 beneficiaries, complete an additional schedule.

deferral period. Arizona did not adopt the federal provisions

The schedule should show the same information required on

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

lines C1 through C10.

where the estate or trust federally deferred the DOI income under

Line C11 -

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

Add the amounts on lines C1 through C10 in column (b).

aggregate amount of the OID deductions disallowed ratably over

Add the percents on lines C1 through C10 in column (c). If

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

the fiduciary completed an additional schedule because there

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

Arizona Form 141az - Arizona Fiduciary Income Tax Return - 2011 Page 8

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