Looking for a California Tax Forms And Templates? Download it for free!

2014 Beneficiary’s Instructions for Schedule K-1 (541)

References in these instructions are to the Internal Revenue Code (IRC) as of January 1, 2009, and to the California Revenue and Taxation Code (R&TC).

What’s New

Facilities Authority (CEFA) may claim the

in computing the entity’s taxable income (i.e.,

distributions of corpus or tax-exempt income)

credit on their income or franchise tax returns

New Employment Credit – For taxable years

usually are not taxable to the beneficiary.

using credit code 235. The CEFA will provide

beginning on or after January 1, 2014, and

a copy of each credit certificate issued to the

Resident beneficiaries are taxed on income

before January 1, 2021, the New Employment

Franchise Tax Board (FTB). Any credits not

distributed or distributable from all sources.

Credit (NEC) is available to a qualified taxpayer

used in the taxable year may be carried forward

Nonresident beneficiaries are taxed only on

that hires a qualified full-time employee

up to six years. For more information, go to

income distributed or distributable that is

on or after January 1, 2014, and pays or

treasurer.ca.gov/cefa.

derived from sources within California (R&TC

incurs qualified wages attributable to work

Section 17953).

performed by the qualified full-time employee

General Information

For purposes of this section, the nonresident

in a designated census tract or economic

beneficiary is deemed the owner of intangible

development area, and receives a tentative

personal property from which the income of the

Purpose

credit reservation for that qualified full-time

estate or trust is derived. Therefore, such income

employee. In addition, an annual certification

is taxed at the beneficiary’s domicile.

The estate or trust uses Schedule K-1 (541),

of employment is required with respect to each

Beneficiary’s Share of Income, Deductions,

The estate or trust will attach a schedule of

qualified full-time employee hired in a previous

Credits, etc., to report your share of the estate’s

intangible income, such as income from stocks,

taxable year. In order to be allowed a credit,

or trust’s income, deductions, credits, etc. Your

bonds, bank accounts, and notes, whose source

the qualified taxpayer must have a net increase

name, address, and tax identification number, as

is dependent upon the residence or commercial

in the total number of full-time employees in

well as the estate’s or trust’s name, address, and

domicile of the taxpayer. The income on this

California. Any credits not used in the taxable

tax identification number, should be entered on

schedule is not income from California sources

the Schedule K-1 (541). Keep Schedule K-1 (541)

year may be carried forward up to five years.

for nonresidents but is income sourced at the

for your records. Do not file it with your tax

beneficiary’s state of residence or commercial

If a qualified employee is terminated within the

return. The estate or trust has filed a copy with

domicile.

first 36 months after beginning employment,

the Franchise Tax Board (FTB).

the employer may be required to recapture

previously taken credits. For more information,

You are subject to tax on your share of the

Specific Line Instructions

go to ftb.ca.gov and search for nec or get form

estate’s or trust’s income, and you must include

your share on your individual tax return.

FTB 3554, New Employment Credit.

If you are a nonresident beneficiary, the

California source amounts in column (e) will

Schedule K-1 (541), column (b) shows amounts

Repeal of Geographically Targeted Economic

help you identify the California source adjusted

from your federal Schedule K-1 (Form 1041),

Development Area Tax Incentives – The

gross income that must be reported on your

Beneficiary’s Share of Income, Deductions,

California legislature repealed and made

Schedule CA (540NR), California Adjustments —

Credits, etc. Column (c) shows the difference

changes to all of the Geographically Targeted

Nonresidents or Part-Year Residents, column E.

between federal and California amounts.

Economic Development Area (G-TEDA)

Column (d) shows your total amounts using

Part-year residents may be required to calculate

Tax Incentives. Enterprise Zones (EZ) and

California law by combining column (b) and

their IRC Section 652 or 662 income in a

Local Agency Military Base Recovery Areas

column (c). Column (e) shows your income and

manner that produces a different result than the

(LAMBRA) were repealed on January 1,

loss from California sources.

amounts shown in column (e) of this form. For

2014. The Targeted Tax Areas (TTA) and

more information, get FTB Pub. 1100, Taxation

Generally, the amount of loss and deduction you

Manufacturing Enhancement Areas (MEA)

of Nonresidents and Individuals Who Change

may claim on your tax return is limited to your

both expired on December 31, 2012. For more

Residency.

share of the estate or trust and the amount for

information, go to ftb.ca.gov and search for

which you are considered at-risk. If you have

Line 3 through Line 12

repeal tax incentives.

losses, deductions, or credits from a passive

You must report the amounts in column (c),

California Competes Credit – For taxable

activity, you must also apply the passive activity

adjustments, that are from nonpassive activities

years beginning on and after January 1, 2014,

rules. It is the beneficiary’s responsibility to

on the appropriate California form or schedule as

and before January 1, 2025, the California

consider and apply any applicable limitations.

explained in these instructions.

Competes Credit is available to businesses that

California law is generally the same as federal law

Report the amounts in column (d), total amounts

want to come to California or stay and grow

with regard to income, the character of income,

using California law, that are from passive

in California. Tax credit agreements will be

allocation of deductions, gifts, and bequests, and

activities on the appropriate California form or

negotiated by the Governor’s Office of Business

past years. Follow the instructions for federal

schedule. Get form FTB 3801, Passive Activity

and Economic Development (GO-Biz) and

Schedule K-1 (Form 1041) for these items.

Loss Limitations, to transfer those amounts and

approved by the California Competes Tax Credit

to figure the amount of your passive activity loss

Generally, you must report items shown on your

Committee. The California Competes Credit

limitation. Carry the passive activity amounts

Schedule K-1 (541) (and any attached schedules)

only applies to state income or franchise tax.

to the California form or schedule to figure

the same way that the estate or trust treated the

Taxpayers who are awarded a contract by the

your California adjustment amount. Enter this

items on its tax return. If the treatment on your

committee will claim the credit on their income

adjustment amount on the corresponding line

original or amended tax return is inconsistent with

on Schedule CA (540 or 540NR) only if there is a

or franchise tax returns using credit code 233.

the estate’s or trust’s treatment, or if the estate

federal/California difference.

The credit can reduce tax below the tentative

or trust was required to but has not filed a tax

minimum tax. Any credits not used in the

return, you must attach a statement identifying

If there is no California form or schedule on

taxable year may be carried forward up to six

the inconsistency. Beneficiaries may be liable

which to compute your passive activity loss

for negligence penalties and penalties relating to

years. For more information, go to the GO-Biz

adjustment amount (i.e., rental loss from passive

mathematical errors if they cannot demonstrate

website at business.ca.gov or ftb.ca.gov and

activities), you may figure the adjustment amount

that their treatment is consistent with the estate

on the California Adjustment Worksheets in the

search for ca competes.

or trust.

instructions for form FTB 3801. Enter the total of

College Access Credit – For taxable years

your adjustments from these worksheets from

Beneficiaries of estates and trusts include in

beginning on or after January 1, 2014, and

all passive activities on Schedule CA (540 or

their gross income their distributive share of

before January 1, 2017, a credit is available

540NR), line 17, column B or line 17, column C,

the fiduciary’s income distribution deduction for

to taxpayers who contribute to the College

whichever is appropriate.

the taxable year. Amounts that are distributed

Access Tax Credit Fund. Taxpayers who receive

by an estate or trust and that are not deductible

a certificate from the California Educational

Schedule K-1 (541) Beneficiary Instructions 2014 Page 1

California Schedule K-1 (541) - Beneficiary'S Share Of Income, Deductions, Credits, Etc. - 2014 Page 2

Related Articles

Related forms

Related Categories