Form N-405 - Tax On Accumulation Distribution Of Trusts - 2012 Page 2
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1
2FORM N-405
(REV. 2012)
PAGE 2
General Instructions
Specific Instructions
If your taxable income as adjusted is less
than zero, enter zero.
(Section references are to the Internal Revenue
Part I—Average Income and
Code.)
Part II—Computation of Tax
Determination of Computation
Attributable to the Accumulation
Years
Note:
Distribution
Line 1.—For a nonresident individual or
Act 113, Session Laws of Hawaii 1998, in
foreign corporation, include only the part of the
Line 17.—Figure the income tax on the income
conforming Hawaii’s income tax laws to the
accumulation distribution that is attributable to
on line 16 using the tax rates in effect for your
changes made by the Congress in 1997,
Hawaii sources or is effectively connected with a
particular earlier tax year shown in each of the
repealed the throwback rules applicable to
trade or business carried on in Hawaii.
three columns. You may use the Tax Table or Tax
accumulated distributions of certain domestic
Rate Schedules. The Tax Rate Schedules and
trusts. For tax years beginning after August 5,
Line 2.—Enter any amount from line 1 that
appropriate prior year forms can be obtained
1997, the tax on accumulation distributions from
represents UNI of a domestic trust accumulated
from any taxation district office.
trusts does not apply to most domestic trusts.
before you were born or reached age 21.
The tax continues to apply to foreign trusts,
However, if the multiple trust rule applies, see
Line 18.—Enter your income tax as originally
certain domestic trusts that were once foreign
the instructions for line 4.
reported,
corrected,
or
amended,
before
trusts, and certain domestic trusts created
reduction for any credits for your particular earlier
Line 4.—Multiple Trust Rule. If you received
before March 1, 1984. For more information,
year shown in each of the three columns.
accumulation distributions from two or more
see section 665(c).
other trusts that were considered to have been
Line 20.—Nonrefundable credits that are limited
made in any of the earlier tax years in which the
to tax liability may be changed because of an
Purpose of Form
current accumulation distribution is considered
accumulation distribution. If the total allowable
The beneficiary of a trust that accumulated,
to have been made, do not include on line 4 the
credits for any of the three computation years
instead of distributing, its income currently, uses
taxes attributable to the current accumulation
increases, enter the increase on line 20.
Form N-405 to figure the partial tax under section
distribution considered to have been distributed
However, do not treat as an increase the part of
667. The fiduciary notifies the beneficiary of an
in the same earlier tax year(s).
the credit that was allowable as a carryforward
“accumulation distribution” by completing Part
credit in the current or any preceding year other
For this special rule only count as trusts those
IV of Schedule J (Form N-40).
than the computation year.
trusts for which the sum of this accumulation
Thus, if you received a distribution for this
distribution
and
any
earlier
accumulation
To refigure these credits, you must consider
tax year from a trust that accumulated its
distributions from the trust which are considered
the changes to the tax before credits for each
income, instead of distributing it to you each
under section 666(a) to have been distributed in
of the three computation years due to previous
year (and the trust paid taxes on that income),
the same earlier tax year, is $1,000 or more.
accumulation distributions.
you must complete Form N-405 to compute any
Foreign trust.—If the trust is a foreign trust,
Attach the proper form for any credit you
additional tax liability. The trustee must give you
see section 665(d)(2).
refigure. The amount determined for items on
a completed Part IV of Schedule J (Form N-40)
this line is limited to tax law provisions in effect
so you can complete this form.
Line 8.—You can determine the number of
in those years involved.
years in which the UNI is deemed to have been
If you received accumulation distributions
distributed by counting the “throwback years” for
Line 26.—Attach this form to the current income
from more than one trust during the current tax
which there are entries on line 26 through 30
tax return being filed by the beneficiary and add
year, prepare a separate Form N-405 for each
of Part IV of Schedule J (Form N-40). These
the amount (if greater than zero) on line 26 to
trust from which you received an accumulation
throwback rules apply even if you would not
the total tax liability (before any tax credits) on
distribution. You can arrange the distributions
have been entitled to receive a distribution in
the current income tax return of the beneficiary.
in any order you want them considered to have
the earlier tax year if the distribution had actually
been made.
If Hawaii estate taxes or Hawaii generation-
been made then.
skipping transfer taxes apply to the accumulation
Definitions
Note:
There can be more than five
distribution, reduce the partial tax proportionately
“throwback years.”
for those taxes. See section 667(b)(6), for the
Undistributed
Net
Income
(UNI).—
computation and adjust the numerator and
Undistributed net income is the distributable
Line 11.—From the number of years entered on
denominator accordingly for Hawaii taxes paid.
net income (DNI) of the trust for any tax year
line 8, subtract any year in which the distribution
less: (1) the amount of income required to be
from column (a), Part IV of Schedule J (Form
distributed currently and any other amounts
N-40) is less than the amount on line 10 of Form
properly paid or credited or required to be
N-405. If the distribution for each throwback
distributed to beneficiaries in the tax year; and
year is more than line 10, then enter the same
(2) the taxes imposed on the trust attributable
number on line 11 as you entered on line 8.
to such DNI.
Line 13.—Enter your taxable incomes for years
Accumulation Distribution.—An accumulation
2007 - 2011, even if less than five years of the
distribution is the excess of amounts properly
trust had accumulated income after you became
paid, credited, or required to be distributed
21. Use the taxable income as reported,
(other than income required to be distributed
amended by you, or as changed by the Hawaii
currently) over the DNI of the trust reduced by
Department of Taxation. Include in the taxable
the amount of income required to be distributed
income amounts considered distributed in
currently.
that year as a result of prior accumulation
distributions whether from the same or another
Generally, except for tax-exempt interest, the
trust, and whether made in an earlier year or the
distribution loses it character upon distribution to
current year.
the beneficiary. See section 667(d) for special
rules for foreign trusts.
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