Schedule G - Tax Computation
Line 1a
2002 tax rate schedule. For tax years beginning in 2002, figure the tax using the Tax Rate Schedule below. Enter the tax on line 1a and check the Tax rate schedule box.
| 2002 Tax Rate Schedule
|
| If taxable income is:
|
| Over - |
But not over - |
Its tax is: |
Of the amount over - |
| $0 |
$1,850 |
15% |
$0 |
| 1,850 |
4,400 |
$277.50 + 27% |
1,850 |
| 4,400 |
6,750 |
966.00 + 30% |
4,400 |
| 6,750 |
9,200 |
1,671.00 + 35% |
6,750 |
| 9,200 |
----- |
2,528.50 + 38.6% |
9,200 |
Schedule D. If the estate or trust had both net capital gain and any taxable income, complete the applicable lines of Part V of Schedule D (Form 1041), enter the tax from line 38 of Schedule D, and check the Schedule D box.
Line 2a - Foreign Tax Credit
Attach Form 1116, Foreign Tax Credit (Individual, Estate, Trust, or Nonresident Alien Individual), if you elect to claim credit for income or profits taxes paid or accrued to a foreign country or a U.S. possession. The estate or trust may claim credit for that part of the foreign taxes not allocable to the beneficiaries (including charitable beneficiaries). Enter the estate's or trust's share of the credit on line 2a. See Pub. 514, Foreign Tax Credit for Individuals, for details.
Line 2b - Other Nonbusiness Credits
Nonconventional source fuel credit. If the estate or trust claims any section 29 credit for producing fuel from a nonconventional source, figure the credit on a separate sheet and attach it to the return. Include the credit on line 2b.
Qualified electric vehicle credit. Complete and attach Form 8834, Qualified Electric Vehicle Credit, if the estate or trust claims a credit for the purchase of a new qualified electric vehicle. Include the credit on line 2b.
Line 2c - General Business Credit
Complete this line if the estate or trust is claiming any of the credits listed below. Use the appropriate credit form to figure the credit. If the estate or trust does not have to file Form 3800, General Business Credit, enter the form number and the amount of the credit in the space provided.
The estate or trust must file Form 3800 if any of the following apply.
- The estate or trust has more than one of the credits listed below (other than the empowerment zone and renewal community employment credit or the New York Liberty Zone business employee credit).
- The estate or trust has general credits from an electing large partnership shown in box 7 of Schedule K-1 (Form 1065-B).
- The estate or trust has a carryback or carryforward of any of these credits (other than the empowerment zone and renewal community employment credit or the New York Liberty Zone business employee credit).
- Any of these credits (other than the low-income housing credit, the empowerment zone and renewal community employment credit, or the New York Liberty Zone business employee credit) is from a passive activity.
Enter the amount from Form 3800 on line 2c. Also, be sure to check the box for Form 3800.
Do not include any amounts that are allocated to a beneficiary. Credits that are allocated between the estate or trust and the beneficiaries are listed in the instructions for Schedule K-1, line 14, on page 40. Generally, these credits are apportioned on the basis of the income allocable to the estate or trust and the beneficiaries. Report the estate's or trust's share of the following general business credits on Schedule G, line 2c.
- Investment credit (Form 3468).
- Work opportunity credit (Form 5884).
- Welfare-to-work credit (Form 8861).
- Credit for alcohol used as fuel (Form 6478).
- Credit for increasing research activities (Form 6765).
- Low-income housing credit (Form 8586).
- Enhanced oil recovery credit (Form 8830).
- Disabled access credit (Form 8826).
- Renewable electricity production credit (Form 8835).
- Empowerment zone and renewal community employment credit (Form 8844).
- Indian employment credit (Form 8845).
- Credit for employer social security and Medicare taxes paid on certain employee tips (Form 8846).
- Orphan drug credit (Form 8820).
- New markets credit (Form 8874).
- Credit for small employer pension plan startup costs (Form 8881).
- Credit for employer-provided child care facilities and services (Form 8882).
- New York Liberty Zone business employee credit (Form 8884).
- Credit for contributions to selected community development corporations (Form 8847).
- General credits from an electing large partnership. Report these credits on Form 3800, line 1r.
Line 2d - Credit for Prior Year Minimum Tax
An estate or trust that paid alternative minimum tax in a previous year may be eligible for a minimum tax credit in 2002. See Form 8801, Credit for Prior Year Minimum Tax - Individuals, Estates, and Trusts.
Line 3 - Total Credits
If the estate or trust received a qualified zone academy bond credit as a shareholder in an S corporation, include the credit in the line 3 total. To figure the amount of the allowable credit, the estate or trust must complete Form 8860, Qualified Zone Academy Bond Credit. On the dotted line to the left of the entry, write QZAB and the amount of the credit. This credit can be claimed only after all other credits on lines 2c and 2d have been taken.
Line 5 - Recapture Taxes
Recapture of investment credit. If the estate or trust disposed of investment credit property or changed its use before the end of the recapture period, see Form 4255, Recapture of Investment Credit, to figure the recapture tax allocable to the estate or trust.
Recapture of low-income housing credit. If the estate or trust disposed of property (or there was a reduction in the qualified basis of the property) on which the low-income housing credit was claimed, see Form 8611, Recapture of Low-Income Housing Credit, to figure any recapture tax allocable to the estate or trust.
Recapture of qualified electric vehicle credit. If the estate or trust claimed the qualified electric vehicle credit in a prior tax year for a vehicle that ceased to qualify for the credit, part or all of the credit may have to be recaptured. See Pub. 535 for details. If the estate or trust owes any recapture tax, include it on line 5 and write QEVCR on the dotted line to the left of the entry space.
Recapture of the Indian employment credit. Generally, if the estate or trust terminates a qualified employee less than 1 year after the date of initial employment, any Indian employment credit allowed for a prior tax year by reason of wages paid or incurred to that employee must be recaptured. See Form 8845 for details. If the estate or trust owes any recapture tax, include it on line 5 and write IECR on the dotted line to the left of the entry space.
Recapture of the new markets credit. If the estate or trust owes any new markets recapture tax, include it on line 5 and write NMCR on the dotted line to the left of the entry space. For more information, including how to figure the recapture amount, see section 45D(g).
Line 6 - Household Employment Taxes
If any of the following apply, get Schedule H (Form 1040), Household Employment Taxes, and its instructions, to see if the estate or trust owes these taxes.
- The estate or trust paid any one household employee cash wages of $1,300 or more in 2002. Cash wages include wages paid by checks, money orders, etc. When figuring the amount of cash wages paid, combine cash wages paid by the estate or trust with cash wages paid to the household employee in the same calendar year by the household of the decedent or beneficiary for whom the administrator, executor, or trustee of the estate or trust is acting.
- The estate or trust withheld Federal income tax during 2002 at the request of any household employee.
- The estate or trust paid total cash wages of $1,000 or more in any calendar quarter of 2001 or 2002 to household employees.
Line 7 - Total Tax
Tax on electing small business trusts (ESBTs). Attach the tax computation to the return. To the left of the line 7 entry space, write Sec. 641(c) and the amount of tax on the S corporation items. Include this amount in the total tax on line 7.
See Electing Small Business Trusts on page 5 for the special tax computation rules that apply to the portion of an ESBT consisting of stock in one or more S corporations.
Interest on tax deferred under the installment method for certain nondealer real property installment obligations. If an obligation arising from the disposition of real property to which section 453A applies is outstanding at the close of the year, the estate or trust must include the interest due under section 453A(c) in the amount to be entered on line 7 of Schedule G, Form 1041, with the notation Section 453A(c) interest. Attach a schedule showing the computation.
Form 4970, Tax on Accumulation Distribution of Trusts. Include on this line any tax due on an accumulation distribution from a trust. To the left of the entry space, write From Form 4970 and the amount of the tax.
Form 8697, Interest Computation Under the Look-Back Method for Completed Long-Term Contracts. Include the interest due under the look-back method of section 460(b)(2). To the left of the entry space, write From Form 8697 and the amount of interest due.
Form 8866, Interest Computation Under the Look-Back Method for Property Depreciated Under the Income Forecast Method. Include the interest due under the look-back method of section 167(g)(2). To the left of the entry space, write From Form 8866 and the amount of interest due.
Interest on deferral of gain from certain constructive ownership transactions. Include the interest due under section 1260(b) on any deferral of gain from certain constructive ownership transactions. To the left of the entry space, write 1260(b) and the amount of interest due.
Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts. If the estate or trust fails to receive the minimum distribution under section 4974, use Form 5329 to pay the excise tax. To the left of the entry space, write From Form 5329 and the amount of the tax.
Other Information
Question 1
If the estate or trust received tax-exempt income, figure the allocation of expenses between tax-exempt and taxable income on a separate sheet and attach it to the return. Enter only the deductible amounts on the return. Do not figure the allocation on the return itself. For more information, see the instructions for Allocation of Deductions for Tax-Exempt Income on page 14.
Report the amount of tax-exempt interest income received or accrued in the space provided below Question 1.
Also, include any exempt-interest dividends the estate or trust received as a shareholder in a mutual fund or other regulated investment company.
Question 2
All salaries, wages, and other compensation for personal services must be included on the return of the person who earned the income, even if the income was irrevocably assigned to a trust by a contract assignment or similar arrangement.
The grantor or person creating the trust is considered the owner if he or she keeps beneficial enjoyment of or substantial control over the trust property. The trust's income, deductions, and credits are allocable to the owner.
If you checked Yes for Question 2, see Special Filing Instructions for Grantor Type Trusts, Pooled Income Funds, and Electing Small Business Trusts on page 4.
Question 3
Check the Yes box and enter the name of the foreign country if either 1 or 2 below applies.
- At any time during the year the estate or trust had an interest in or signature or other authority over a bank, securities, or other financial account in a foreign country.
Exception. Check No if either of the following applies to the estate or trust:
- The combined value of the accounts was $10,000 or less during the whole year or
- The accounts were with a U.S. military banking facility operated by a U.S. financial institution.
- The estate or trust owns more than 50% of the stock in any corporation that owns one or more foreign bank accounts.
Get Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts, to see if the estate or trust is considered to have an interest in or signature or other authority over a bank, securities, or other financial account in a foreign country.
If you checked Yes for Question 3, file Form TD F 90-22.1 by June 30, 2003, with the Department of the Treasury at the address shown on the form.
Form TD F 90-22.1 is not a tax return, so do not file it with Form 1041.
You may order Form TD F 90-22.1 by calling 1-800-829-3676 (1-800-TAX-FORM).
Question 4
The estate or trust may be required to file Form 3520, Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts, if:
- It directly or indirectly transferred property or money to a foreign trust. For this purpose, any U.S. person who created a foreign trust is considered a transferor.
- It is treated as the owner of any part of the assets of a foreign trust under the grantor trust rules.
- It received a distribution from a foreign trust.
Note: An owner of a foreign trust must ensure that the trust files an annual information return on Form 3520-A, Annual Information Return of Foreign Trust With a U.S. Owner.
Question 5
An estate or trust claiming an interest deduction for qualified residence interest (as defined in section 163(h)(3)) on seller-provided financing, must include on an attachment to the 2002 Form 1041 the name, address, and taxpayer identifying number of the person to whom the interest was paid or accrued (i.e., the seller).
If the estate or trust received or accrued such interest, it must provide identical information on the person liable for such interest (i.e., the buyer). This information does not need to be reported if it duplicates information already reported on Form 1098.
Question 6
To make the section 663(b) election to treat any amount paid or credited to a beneficiary within 65 days following the close of the tax year as being paid or credited on the last day of that tax year, check the box. This election can be made by the fiduciary of a complex trust or the executor of a decedent's estate. For the election to be valid, you must file Form 1041 by the due date (including extensions). Once made, the election is irrevocable.
Question 7
To make the section 643(e)(3) election to recognize gain on property distributed in kind, check the box and see the instructions for Schedule D (Form 1041).
Question 9
Generally, a beneficiary is a skip person if the beneficiary is in a generation that is two or more generations below the generation of the transferor to the trust.
To determine if a beneficiary that is a trust is a skip person, and for exceptions to the general rules, see the definition of a skip person in the instructions for Schedule R of Form 706.
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