Form 1041-N - U.S. Income Tax Return for Electing Alaska Native Settlement Trusts

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Instructions for Form 1041-N

Department of the Treasury
Internal Revenue Service

(Rev. December 2014)

U.S. Income Tax Return for Electing Alaska Native Settlement Trusts
Section references are to the Internal Revenue
Code unless otherwise noted.

Future Developments

For the latest information about
developments related to Form 1041-N
and its instructions, such as legislation
enacted after they were published, go to
www.irs.gov/form1041n .

General Instructions
Use this revision for tax years beginning
after 2013.

Purpose of Form

Under section 646, an Alaska Native
Settlement Trust (ANST) may elect to
apply special income tax treatment to
the trust and its beneficiaries. This
one-time election is made by filing Form
1041-N in the first tax year of the trust.
Form 1041-N is used to report an
ANST's income, deductions, gains,
losses, etc., and to compute and pay
any income tax due. Form 1041-N is
also used to report special information
applicable to an ANST's filing
requirements.

Definitions

An ANST is a settlement trust within the
meaning of section 3(t) of the Alaska
Native Claims Settlement Act (ANCSA).
An Alaska Native Corporation (ANC)
has the same meaning as the term
"Native Corporation" has under section
3(m) of the ANCSA.
A sponsoring ANC means the ANC
that transfers assets to an electing
ANST.
A trustee is a fiduciary of the trust.
Any reference in these instructions to
“you” means the trustee of the trust.

Tax Treatment of an
Electing ANST
Taxable Income

In general, an electing ANST's taxable
income is computed in the same
manner as any other taxable trust (See
Internal Revenue Code Subchapter J).
However, the electing ANST is not
allowed to take an income distribution
deduction, though it can claim an
exemption deduction, the amount of
which depends on the terms of the trust.
Jun 24, 2014

See the Schedule K instructions for
information on the beneficiaries' tax
treatment of distributions received from
the ANST.

Tax

An electing ANST pays tax on its
taxable income at the lowest rate
specified for single individuals (10%). If
the ANST has net capital gain or
qualified dividends, use the tax
computation on Part IV of Schedule D
which applies a zero percent rate on its
adjusted net capital gain.

Disqualifying Acts

If, at any time, a beneficial interest in an
ANST may be disposed of to a person
in a manner that is not permitted by
section 7(h) of ANCSA (if the interest
were settlement common stock), then:
If no election has previously been
made, the ANST may not elect special
tax treatment under section 646 for the
trust and its beneficiaries.
If the election is in effect at that time:
1. The election will not apply as of
the first day of the tax year in which a
prohibited disposition is first allowed,
2. The section 646 tax treatment will
not apply to the trust for that tax year or
in any subsequent tax years, and
3. The distributable net income of
the trust will be increased by the current
or accumulated earnings and profits of
the sponsoring ANC as of the close of
the tax year, after adjustment is made
for all distributions made by the
sponsoring ANC during the taxable
year. However, this increase is limited to
the fair market value (FMV) of the trust's
assets as of the date the beneficial
interest of the trust first becomes
disposable.
If stock in the sponsoring ANC may
be disposed of to a person in a manner
that is not allowed by section 7(h) of
ANCSA (if the stock were settlement
common stock) and at any time after
such disposition of stock is first allowed,
the corporation transfers assets to an
ANST, then Items 1, 2, and 3 above will
apply to the ANST in the same manner
as if the ANST allowed dispositions of
beneficial interests in the ANST in a
manner not allowed by section 7(h) of
ANCSA.

Cat. No. 38105U

The surrender of an interest in an
ANC or an electing ANST by the
shareholder or beneficiary, for a whole
or partial redemption or for the whole or
partial liquidation of the corporation or
trust, will be considered a transfer
allowed by section 7(h) of the ANCSA.

Information Reporting
Requirements

Electing ANSTs must complete
Schedule K and file it with Form 1041-N.
The ANST must also provide a copy of
Schedule K to the sponsoring ANC by
the date Form 1041-N is required to be
filed with the IRS. The ANST is not
required to provide information to the
beneficiaries on distributions made to
them. The sponsoring ANC will provide
the beneficiaries with any required
information.

Who Must File

The trustee of any electing ANST
having any taxable income, or having
gross income of at least $600 for the tax
year, must file Form 1041-N for that
year.

Making the Election
The trustee of an ANST must
make this election by the due
CAUTION
date (including extensions) for
filing the ANST's tax return for its first
taxable year.

!

The trustee makes the election for the
ANST by signing Form 1041-N in the
signature block on page 1. The return
must be filed by the due date (including
extensions) for filing the ANST's tax
return for its first taxable year. Once the
election is made, it applies to all
subsequent years and may not be
revoked.

When To File

ANSTs file Form 1041-N by the 15th
day of the 4th month following the close
of the tax year. If the due date falls on a
Saturday, Sunday, or legal holiday, file
on the next business day.

Private Delivery Services

You can use certain private delivery
services designated by the IRS to meet
the "timely mailing as timely filing/
paying" rule for tax returns and

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payments. These private delivery
services include only the following.
DHL Express (DHL): DHL Same Day
Service.
Federal Express (FedEx): FedEx
Priority Overnight, FedEx Standard
Overnight, FedEx 2Day, FedEx
International Priority, and FedEx
International First.
United Parcel Service (UPS): UPS
Next Day Air, UPS Next Day Air Saver,
UPS 2nd Day Air, UPS 2nd Day Air
A.M., UPS Worldwide Express Plus,
and UPS Worldwide Express.
Private delivery services
cannot deliver items to P.O.
CAUTION
boxes. You must use the U.S.
Postal Service to mail any item to an
IRS P.O. box address.

!

The private delivery service can tell
you how to get written proof of the
mailing date.
Any changes to this list will be
published in the Internal Revenue
Bulletin.

Extension of Time To File

Use Form 7004, Application for
Automatic Extension of Time To File
Certain Business Income Tax,
Information, and Other Returns, to
request an automatic 6-month extension
of time to file.
An extension of time to file does not
extend the time to pay the tax.

Where To File

File Form 1041-N at the following
address:
Department of the Treasury
Internal Revenue Service
Ogden, UT 84201–0027

Who Must Sign

The trustee or an authorized
representative must sign Form 1041-N.

Paid Preparer

Generally, anyone who is paid to
prepare a tax return must sign the return
and provide the information requested
in the Paid Preparer Use Only area of
the return. The person required to sign
the return must:
Complete the required preparer
information,
Sign it in the space provided for the
preparer's signature, and
Give you a copy of the return for your
records, in addition to the copy to be
filed with the IRS.

Paid Preparer Authorization

If the trustee wants to allow the IRS to
discuss the ANST's tax return with the
paid preparer who signed it, check the
“Yes” box in the signature area of the
return. This authorization applies only to
the individual whose signature appears
in the Paid Preparer Use Only section of
the ANST's return. It does not apply to
the firm, if any, shown in that section.
If the “Yes” box is checked, the
trustee is authorizing the IRS to call the
paid preparer to answer any questions
that may arise during the processing of
the ANST's return. The trustee is also
authorizing the paid preparer to:
Give the IRS any information that is
missing from the ANST's return,
Call the IRS for information about the
processing of the ANST's return or the
status of its refund or payment(s), and
Respond to certain IRS notices that
the trustee has shared with the preparer
about math errors, offsets, and return
preparation. The notices will not be sent
to the preparer.
The trustee is not authorizing the
paid preparer to receive any refund,
enter into any agreement (including
those regarding additional tax liability),
or otherwise represent the ANST before
the IRS. If the trustee wants to expand
the paid preparer's authorization, see
Pub. 947, Practice Before the IRS and
Power of Attorney.
The authorization cannot be revoked.
However, the authorization will
automatically end no later than the due
date (without regard to extensions) for
filing the ANST's next tax return.

Accounting Methods

Figure taxable income using the method
of accounting regularly used in keeping
the ANST's books and records.
Generally, permissible methods include
the cash method, the accrual method,
or any other method authorized by the
Internal Revenue Code. In all cases, the
method used must clearly reflect
income.
Generally, the ANST may change its
accounting method (overall method or
for any material item) only by getting
consent on Form 3115, Application for
Change in Accounting Method. For
more information, see Pub. 538,
Accounting Periods and Methods.

Accounting Periods

All electing ANSTs must adopt a
calendar year.
-2-

Rounding Off to Whole
Dollars

You may round off cents to whole
dollars on the ANST's return and
schedules. If you do round to whole
dollars, you must round all amounts. To
round, drop amounts under 50 cents
and increase amounts from 50 to 99
cents to the next dollar. For example,
$1.39 becomes $1 and $2.50
becomes $3.
If you have to add two or more
amounts to figure the amount to enter
on a line, include cents when adding the
amounts and round off only the total.

Estimated Tax

Generally, an ANST must pay estimated
income tax if it expects to owe at least
$1,000, after subtracting withholding
and credits. For details and exceptions,
see Form 1041-ES, Estimated Income
Tax for Estates and Trusts.

Interest and Penalties
Interest

Interest is charged on taxes not paid by
the due date, even if an extension of
time to file is granted. Interest is also
charged on the failure-to-file penalty, the
accuracy-related penalty, and the fraud
penalty. The interest charge is figured at
a rate determined under section 6621.

Late Filing of Return

The law provides a penalty of 5% of the
tax due for each month, or part of a
month, that the return is not filed up to a
maximum of 25% of the tax due. If the
return is more than 60 days late, the
minimum penalty is the smaller of $135
or the tax due. The penalty will not be
imposed if you can show that the failure
to file on time is due to reasonable
cause. If you receive a notice about
penalty and interest after you file this
return, send us an explanation and we
will determine if you meet
reasonable-cause criteria. Do not
attach an explanation when you file
Form 1041-N.

Late Payment of Tax

Generally, the penalty for not paying the
tax when due is 1/2 of 1% of the unpaid
amount for each month or part of a
month it remains unpaid. The maximum
penalty is 25% of the unpaid amount.
The penalty is imposed on the net
amount due. Any penalty is in addition
to interest charges on late payments.

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If you include interest or either
of these penalties with your
CAUTION
payment, identify and enter
these amounts in the bottom margin of
Form 1041-N. Do not include the
interest or penalty amount in the
balance of tax due on line 18.

!

Underpaid Estimated Tax

If the trustee underpaid estimated tax,
use Form 2210, Underpayment of
Estimated Tax by Individuals, Estates,
and Trusts, to figure any penalty due.
Enter the amount of the penalty in the
bottom margin of Form 1041-N. Do not
include it in the balance of tax due on
line 18.

Other Penalties

Other penalties can be imposed for
negligence, substantial understatement
of tax, and fraud. See Pub. 17, Your
Federal Income Tax, for details on these
penalties.

Specific Instructions
Enter the year (or period) for which you
are filing for the electing ANST.

Part I — General
Information
Line 1—Name of Trust

Enter the exact name that was used to
apply for the employer identification
number (EIN) for the trust to file Form
1041-N.

Line 3a—Name and Title of
Trustee

Enter the name and title (if any) of the
trustee. If a fiduciary relationship was
created or terminated, file Form 56,
Notice Concerning Fiduciary
Relationship.
If a fiduciary relationship was not
created or terminated but the fiduciary
had a change in name or another
fiduciary's name was entered, check the
“Change in fiduciary's name” box on
line 6.

Line 3b—Address

Include the suite, room, or other unit
number after the street address. If the
post office does not deliver mail to the
street address and you have a P.O. box,
show the box number instead of the
street address.
If you change your address after filing
Form 1041-N, use Form 8822-B,
Change of Address or Responsible
Party—Business, to notify the IRS.

If a different address from the prior
year was entered and Form 8822-B was
not filed, check the box on line 6 for
“Change in fiduciary's address.”

Line 6

Be sure to check all the boxes that
apply. Also, see the line 3a and 3b
instructions above for information
regarding a change in the fiduciary's
name and for information on changes to
the fiduciary's address.

Part II — Tax Computation
Income
Line 2a—Total Ordinary Dividends
Report the total of all ordinary dividends
received during the tax year.

Payments in lieu of dividends, but
only if you know or have reason to know
that the payments are not qualified
dividends.

Line 3—Capital Gain or (Loss)
Enter the gain from Schedule D, line 11
or the loss from Schedule D,
line 12.
Note. Report capital gain distributions
on Schedule D (Form 1041-N), line 7.

Line 4—Other Income
List the type and amount of income not
included on lines 1a through 3. List the
types and amounts on an attached
schedule if the ANST has more than
one item of other income.

Line 2b—Qualified Dividends

Deductions

Enter the ANST's total qualified
dividends on line 2b and use Part IV of
Schedule D to figure the ANST's tax.
Qualified dividends are eligible for a
lower tax rate than other ordinary
income. Generally, these dividends are
shown in box 1b of Form(s) 1099-DIV,
Dividends and Distributions. See Pub.
550, Investment Income and Expenses,
for the definition of qualified dividends if
you received dividends not reported on
Form 1099-DIV.

Allocation of Deductions for
Tax-Exempt Income

Exceptions. Some dividends may be
reported as qualified dividends in
box 1b of Form 1099-DIV but are not
qualified dividends. These include:
Dividends received on any share of
stock that the ANST held for less than
61 days during the 121-day period that
began 60 days before the ex-dividend
date. The ex-dividend date is the first
date following the declaration of a
dividend on which the purchaser of a
stock is not entitled to receive the next
dividend payment. When counting the
number of days the ANST held the
stock, include the day you disposed of
the stock but not the day you acquired it.
Dividends attributable to periods
totaling more than 366 days that the
ANST received on any share of
preferred stock held for less than 91
days during the 181-day period that
began 90 days before the ex-dividend
date. Preferred dividends attributable to
periods totaling less than 367 days are
subject to the 61-day holding period rule
above.
Dividends on any share of stock to
the extent that the ANST is under an
obligation (including a short sale) to
make related payments with respect to
positions in substantially similar or
related property.
-3-

Generally, no deduction is allowed for
any expense that is allocable to
tax-exempt income, such as interest on
state or local bonds.
Exceptions. State income taxes and
business expenses that are allocable to
tax-exempt interest are deductible.
Expenses that are directly allocable
to tax-exempt income are allocable only
to tax-exempt income. A reasonable
proportion of expenses indirectly
allocable to both tax-exempt income
and other income must be allocated to
each class of income.

Limitations on Deductions
Generally, the amount an ANST has
"at-risk" limits the loss it can deduct in
any tax year. Also, section 469 and its
regulations generally limit losses from
passive activities to the amount of
income derived from all passive
activities. Similarly, credits from passive
activities are generally limited to the tax
attributable to such activities.
For details on these and other
limitations on deductions, see generally
Deductions in the Instructions for Form
1041.

Line 9—Other Deductions Not
Subject to the 2% Floor
Attach a schedule listing by type and
amount all allowable deductions that are
not deductible elsewhere on the form.
No deduction is allowed for distributions
to beneficiaries.

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Line 10—Allowable Miscellaneous
Itemized Deductions Subject to the
2% Floor
These are deductible only to the extent
that the total amount of such deductions
exceeds 2% of adjusted gross income
(AGI).
AGI is figured by subtracting from
total income (line 5) administration costs
(lines 7 through 9) and the exemption
amount (line 11). Administration costs
are deductible to the extent they would
not have been incurred if the property
were not held by the ANST.
Among the miscellaneous itemized
deductions that must be included on
line 10 are expenses for the production
or collection of income, such as
investment advisory fees.

Line 11—Exemption
A trust whose governing instrument
requires all income to be distributed
currently is allowed a $300 exemption,
even if it distributed amounts other than
income during the tax year. All other
trusts are allowed a $100 exemption.

Tax and Payments
Line 14—Tax
If the ANST does not have a net capital
gain or qualified dividends and has an
amount greater than zero on line 13,
check the first box on line 14, multiply
the amount on line 13 by 10%, and
enter the result on line 14.
Schedule D. If the ANST had a net
capital gain (or qualified dividends) and
any taxable income, complete Part IV of
Schedule D (Form 1041-N), enter the
tax (or -0-, if applicable) from line 28 of
Schedule D on line 14, and check the
“Schedule D” box.

Line 15—Credits
Specify the type of credit being claimed
or form number and attach any required
credit forms. If you are claiming more
than one type of credit, attach a
schedule listing the type and amount of
each credit claimed. See the
Instructions for Form 1041 for details on
the credits that may be claimed.

Line 17—Reserved
Do not enter any information on line 17.

Line 18—Total Tax
If the ANST owes any additional taxes
(for example, recapture taxes), include

these taxes on line 18. To the left of the
entry space, write the type and amount
of the tax. Also attach to Form 1041-N
any forms required to figure these taxes.
See the Instructions for Form 1041 for
more details on additional taxes that
may apply.

!

Do not include line 17 in the
calculations.

CAUTION

Line 19—Payments
Include on line 19 any:
Estimated tax payments made for the
tax year,
Tax paid with a request for an
extension of time to file,
Federal income tax withheld (for
example, backup withholding), and
Credit for tax paid on undistributed
capital gains. Attach Copy B of Form
2439, Notice to Shareholder of
Undistributed Long-Term Capital Gains.

Line 20—Tax Due
You must pay the tax in full when the
return is filed to avoid interest charges
and possible penalties. Make the check
or money order payable to “United
States Treasury.” Write the EIN, the tax
year, and Form 1041-N on the payment.
Enclose, but do not attach, the payment
with Form 1041-N.

Part III — Other
Information
Question 1

If you answered “Yes” to this question,
attach a schedule with the following
information for each asset received from
the sponsoring ANC:
A description of the asset,
The date the asset was distributed to
the ANST, and
The asset's FMV on that date.

Question 2

The ANST 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.

-4-

Note. An owner of a foreign trust must
ensure that the trust files Form 3520-A,
Annual Information Return of Foreign
Trust With a U.S. Owner.

Question 3

Check the “Yes” box and enter the
name of the foreign country if either 1 or
2 below applies.
1. The ANST owns more than 50%
of the stock in any corporation that owns
one or more foreign bank accounts.
2. At any time during the year, the
ANST 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 ANST:
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.
Refer to FinCEN Form 114, Report of
Foreign Bank and Financial Accounts
(FBAR), to see if the ANST 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,
electronically file FinCEN Form 114, by
June 30 of the year following the
ANST's tax year with the Department of
the Treasury using FinCEN's BSA
E-Filing System. Because FinCEN Form
114 is not a tax form, do not file it with
Form 1041-N.
See www.fincen.gov for more
information.
If you are required to file
FinCEN Form 114 but do not,
CAUTION
you may have to pay a penalty
of up to $10,000 (or more in some
cases).

!

Question 4

To make the section 643(e)(3) election
to recognize gain on property distributed
in kind, check the box and complete
Schedule D. For more information, see
Section 643(e)(3) Election, below.

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Schedule D—Capital
Gains and Losses
General Instructions
Purpose of Schedule
Use Schedule D to report gains and
losses from the sale or exchange of
capital assets by an ANST.
Details of each transaction must be
reported on this schedule. If there are
more transactions than spaces on lines
1 or 5, you can report the transactions
on an attached statement containing all
the same information as Schedule D
using a similar format. Enter on
Schedule D, lines 1 and 5, as
appropriate, the totals from all attached
statements for lines 1 and 5.

Other Forms You May Have To File
Use Form 4797, Sales of Business
Property, to report the following:
The sale or exchange of property
used in a trade or business.
The sale or exchange of depreciable
and amortizable property.
The involuntary conversion (other
than from casualty or theft) of property
and capital assets held for business or
profit.
The disposition of noncapital assets
other than inventory or property held
primarily for sale to customers in the
ordinary course of trade or business.
Use Form 4684, Casualties and
Thefts, to report involuntary conversions
of property due to casualty or theft.
Use Form 6781, Gains and Losses
From Section 1256 Contracts and
Straddles, to report gains and losses
from section 1256 contracts and
straddles.
Use Form 8824, Like-Kind
Exchanges, if the ANST made one or
more like-kind exchanges. A like-kind
exchange occurs when the ANST
exchanges business or investment
property for property of a like kind.

Capital Asset
Each item of property held by the ANST
is a capital asset, except:
Stock in trade, inventory or property
held primarily for sale to customers;
Depreciable or real property used in a
trade or business;
Copyrights, literary, musical, or
artistic compositions, letters or
memoranda, or similar property eligible
for copyright protection that the trust

received from someone whose personal
efforts created them or for whom they
were created in a way (such as by gift)
that entitled the trust to the basis of the
previous owner (in the case of letters,
memoranda, or similar property such
property may also be prepared or
produced for the trust);
Note. Pursuant to section 1221(b)(3),
the trust can elect to treat musical
compositions and copyrights in musical
works as capital assets if it sold or
exchanged them in a tax year beginning
after May 17, 2006, and acquired the
assets under circumstances entitling it
to the basis of the person who created
the property or for whom it was
prepared or produced.
Accounts or notes receivable
acquired in the ordinary course of a
trade or business for services rendered
or from the sale of inventoriable assets
or property held primarily for sale to
customers;
Certain U.S. Government
publications not purchased at the public
sale price;
Certain "commodities derivative
financial instruments" held by a dealer
(see section 1221(a)(6));
Certain hedging transactions entered
into in the normal course of the ANST's
trade or business (see section 1221(a)
(7)); and
Supplies regularly used in the ANST's
trade or business.
You may find additional helpful
information in the following publications:
Pub. 544, Sales and Other Dispositions
of Assets, and Pub. 551, Basis of
Assets.

Short-Term or Long-Term
Separate the capital gains and losses
according to how long the ANST held or
owned the property. The holding period
for short-term capital gains and losses is
1 year or less. The holding period for
long-term gains and losses is more than
1 year.
To figure the length of the period the
ANST held property, begin counting on
the day after the ANST acquired the
property and include the day the ANST
disposed of it. Use the trade dates for
the date of acquisition and sale of
stocks and bonds traded on an
exchange or over-the-counter market.

Section 643(e)(3) Election
For in-kind noncash property
distributions, a fiduciary may elect to
have the ANST recognize gain or loss in
-5-

the same manner as if the distributed
property had been sold to the
beneficiary at its FMV. If the election is
made, the beneficiary's basis of such
property is its FMV. This election
applies to all distributions made by the
ANST during the tax year and, once
made, may be revoked only with IRS
consent.
Note. Section 267 does not allow an
ANST to claim a deduction for any loss
on property to which a section 643(e)(3)
election applies. In addition, when an
ANST distributes depreciable property,
section 1239 applies to deny capital
gains treatment for any gain on property
to which a section 643(e)(3) election
applies.
For more information on making the
643(e)(3) election, see Part III — Other
Information, line 4, earlier.

Column (d)—Sales Price
Enter either the gross sales price or the
net sales price from the sale. On sales
of stocks and bonds, report the gross
amount as reported to the ANST on
Form 1099-B, Proceeds From Broker
and Barter Exchange Transactions, or
similar statement. However, if the ANST
was advised that gross proceeds less
commissions and option premiums
were reported to the IRS, enter only the
net amount in column (d).

Column (e)—Cost or Other Basis
Generally, the basis of property
acquired by gift is the same as its basis
in the hands of the donor. However, if
the FMV of the property at the time it
was transferred to the trust is less than
the transferor's basis, then the FMV is
used for determining any loss on
disposition.
If the property was transferred to the
ANST and a gift tax was paid under
Chapter 12, then increase the donor's
basis as follows: Multiply the amount of
the gift tax paid by a fraction, the
numerator of which is the net
appreciation in value of the gift (defined
below), and the denominator of which is
the amount of the gift. For this purpose,
the net appreciation in value of the gift is
the amount by which the FMV of the gift
exceeds the donor's adjusted basis.
Then, add the result to the donor's
basis.
Adjustments to basis. Before figuring
any gain or loss on the sale, exchange,
or other disposition of property owned
by the ANST, adjustments to the

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Capital Loss Carryover Worksheet

Keep for Your Records

Use this worksheet to figure the ANST's capital loss carryovers from the current tax year to the following tax year if Schedule D, line 12, is a loss and (a) the
loss on Schedule D, line 11, is more than $3,000, or (b) Form 1041-N, page 1, line 13 is a loss.
1. Enter taxable income (or loss) from Form 1041-N, line 13

................................................

1.

...............................................

2.

3. Enter amount from Form 1041-N, line 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.

4. Adjusted taxable income. Combine lines 1, 2, and 3. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4.

5. Enter the smaller of line 2 or line 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5.

2. Enter loss from line 12 of Schedule D as a positive amount

Note: If line 4 of Schedule D is a loss, go to line 6; otherwise, enter -0- on line 6 and go to line 10.
6. Enter loss from Schedule D, line 4, as a positive amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7. Enter gain, if any, from Schedule D, line 10. If that line is blank or shows a loss, enter -0- . . . . . . . .
8. Add lines 5 and 7

6.

7.

............................................................................

8.

9. Short-term capital loss carryover. Subtract line 8 from line 6. If zero or less, enter -0-. Enter this loss on the short-term
capital loss carryover line of next year's Schedule D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9.

Note: If line 10 of Schedule D is a loss, go to line 10; otherwise, skip lines 10 through 14.
10. Enter loss from Schedule D, line 10, as a positive amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11. Enter gain, if any, from Schedule D, line 4. If that line is blank or shows a loss, enter -012. Subtract line 6 from line 5. If zero or less, enter -0-

........

11.

..................................

12.

10.

13. Add lines 11 and 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13.

14. Long-term capital loss carryover. Subtract line 13 from line 10. If zero or less, enter -0-. Enter this loss on the long-term
capital loss carryover line of next year's Schedule D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

14.

property's basis may be required. See
Pub. 551 for additional information.

Column (f)—Gain or (Loss)
Make a separate entry in this column for
each transaction reported on lines 1 and
5 and any other lines that apply to the
ANST. For lines 1 and 5, subtract the
amount in column (e) from the amount
in column (d). Enter negative amounts in
parentheses.

Line 23
Add line 18 from the Unrecaptured
Section 1250 Gain Worksheet and line 7
from the 28% Rate Gain Worksheet.

Unrecaptured Section 1250 Gain
Complete the Unrecaptured Section
1250 Gain Worksheet on the next page
if any of the following apply.
During the tax year, the ANST sold or
otherwise disposed of section 1250
property (generally, real property that
was depreciated) held more than 1 year.
The ANST received installment
payments during the tax year for section
1250 property held more than 1 year for
which it is reporting gain on the
installment method.
The ANST received a Schedule K-1
from an estate or trust, partnership, or S
corporation that shows "unrecaptured
section 1250 gain" reportable for the tax
year.
The ANST received a Form 1099-DIV
or Form 2439 from a real estate

investment trust or regulated investment
company (including a mutual fund) that
reports "unrecaptured section 1250
gain" for the tax year.
The ANST reported a long-term
capital gain from the sale or exchange
of an interest in a partnership that
owned section 1250 property.

Instructions for the Unrecaptured
Section 1250 Gain Worksheet
Lines 1 through 3. If the ANST had
more than one property described on
line 1, complete lines 1 through 3 for
each property on a separate worksheet.
Enter the total of the line 3 amounts for
all properties on line 3 and go to line 4.
Line 4. To figure the amount to enter
on line 4, follow the steps below for
each installment sale of trade or
business property held more than 1
year.
Step 1. Figure the smaller of (a) the
depreciation allowed or allowable or (b)
the total gain for the sale. This is the
smaller of line 22 or line 24 of the 2014
Form 4797 (or the comparable lines of
Form 4797 for the year of sale) for that
property.
Step 2. Reduce the amount figured
in step 1 by any section 1250 ordinary
income recapture for the sale. This is
the amount from line 26g of the 2014
Form 4797 (or the comparable line of
Form 4797 for the year of sale) for that
property. The result is the total
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unrecaptured section 1250 gain that
must be allocated to the installment
payments received from the sale.
Line 10. Include on line 10 the ANST's
share of the partnership's unrecaptured
section 1250 gain that would result if the
partnership had transferred all of its
section 1250 property in a fully taxable
transaction immediately before the
ANST sold or exchanged its interest in
that partnership. If the ANST recognized
less than all of the realized gain, the
partnership will be treated as having
transferred only a proportionate amount
of each section 1250 property.
Line 12. An example of an amount to
include on line 12 is unrecaptured
section 1250 gain from the sale of a
vacation home previously used as a
rental property but converted to
personal use prior to the sale.
Installment sales. To figure the
amount to include on line 12, follow the
steps below for each installment sale of
property held more than 1 year for which
you did not make an entry in Part I of
Form 4797 for the year of sale.
Step 1. Figure the smaller of (a) the
depreciation allowed or allowable or (b)
the total gain for the sale. This is the
smaller of line 22 or line 24 of the 2014
Form 4797 (or comparable lines of Form
4797 for the year of sale) for that
property.
Step 2. Reduce the amount figured
in step 1 by any section 1250 ordinary

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Unrecaptured Section 1250 Gain Worksheet

Keep for Your Records

If the ANST is not reporting a gain on Form 4797, Sales of Business Property, line 7 (for 2014, or the comparable line for the current tax year),
skip lines 1 through 9 and go to line 10.
1. If the ANST has section 1250 property in Part III of Form 4797 for which you made an entry in Part I of Form 4797 (but not on
Form 6252, Installment Sale Income), enter the smaller of line 22 or line 24 of Form 4797 (for 2014, or the comparable line for
the current tax year) for that property. If the ANST did not have any such property, go to line 4. If it had more than one such
property, see instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.
2. Enter the amount from Form 4797, line 26g (for 2014, or the comparable line for the current tax year), for the property for which
you made an entry on line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.
3. Subtract line 2 from line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.
4. Enter the total unrecaptured section 1250 gain included on line 26 or line 37 of Form(s) 6252 (for 2014, or the comparable line
for the current tax year), from installment sales of trade or business property held more than 1 year (see instructions) . . . . . .
4.
5. Enter the total of any amounts reported to the ANST on a Schedule K-1 from a partnership or an S corporation as
“unrecaptured section 1250 gain” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.
6. Add lines 3 through 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.
7. Enter the smaller of line 6 or the gain from Form 4797, line 7 (for 2014, or the comparable line for
the current tax year) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.
8. Enter the amount, if any, from Form 4797, line 8 (for 2014 or the comparable line for the current tax
year) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.
9. Subtract line 8 from line 7. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.
10. Enter the amount of any gain from the sale or exchange of an interest in a partnership attributable to unrecaptured section 1250
gain (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10.
11. Enter the total of any amounts reported to the ANST on a Schedule K-1, Form 1099-DIV, or Form 2439 as "unrecaptured
section 1250 gain" from an estate, trust, real estate investment trust, or mutual fund (or other regulated investment
company) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11.
12. Enter the total of any unrecaptured section 1250 gain from sales (including installment sales) or other dispositions of section
1250 property held more than 1 year for which you did not make an entry in Part I of Form 4797 for the year of sale (see
instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.
13. Add lines 9 through 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13.
14. If the ANST had any section 1202 gain or collectibles gain or (loss), enter the total of lines 1 through
4 of the 28% Rate Gain Worksheet. Otherwise, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.
15. Enter the (loss), if any, from Schedule D, line 4. If Schedule D, line 4, is zero or a gain,
enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.
16. Enter the ANST's long-term capital loss carryover from Schedule D, line 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
)
16. (
17. Combine lines 14 through 16. If the result is zero or a gain, enter -0-. If the result is a (loss), enter it as a positive
amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17.
18. Unrecaptured section 1250 gain. Subtract line 17 from line 13. If zero or less, enter -0-. Combine this result with the result on
line 7 of the 28% Rate Gain Worksheet, if any, and enter that result on Schedule D, line 23 . . . . . . . . . . . . . . . . . . . . . . . . .
18.

income recapture for the sale. This is
the amount from line 26g of the 2014
Form 4797 (or the comparable line of
Form 4797 for the year of sale) for that
property. The result is the total
unrecaptured section 1250 gain that
must be allocated to the installment
payments received from the sale.
Step 3. Generally, the amount of
capital gain on each installment
payment is treated as unrecaptured
section 1250 gain until the total
unrecaptured section 1250 gain figured
in step 2 has been used in full. Figure
the amount of gain treated as
unrecaptured section 1250 gain for
installment payments received during
the tax year as the smaller of (a) the
amount from line 26 or line 37 of the
2014 Form 6252, Installment Sale
Income, (or comparable lines for the
current tax year), whichever applies, or
(b) the amount of unrecaptured section
1250 gain remaining to be reported.
This amount is generally the total
unrecaptured section 1250 gain for the
sale reduced by all gain reported in prior
years (excluding section 1250 ordinary
income recapture). However, if you
chose not to treat all of the gain from
payments received after May 6, 1997,
and before August 24, 1999, as
unrecaptured section 1250 gain, use

only the amount you chose to treat as
unrecaptured section 1250 gain for
those payments to reduce the total
unrecaptured section 1250 gain
remaining to be reported for the sale.
Include this amount on line 12.
Other sales or dispositions of
section 1250 property. For each sale
of property held more than 1 year (for
which an entry was not made in Part I of
Form 4797), figure the smaller of (a) the
depreciation allowed or allowable or (b)
the total gain for the sale. This is the
smaller of line 22 or line 24 of Form
4797 (for 2014, or the comparable line
for the current tax year) for that
property. Next, reduce that amount by
any section 1250 ordinary income
recapture for the sale. This is the
amount from line 26g of Form 4797 (for
2014, or the comparable line for the
current tax year) for that property. The
result is the total unrecaptured section
1250 gain for the sale. Include this
amount on line 12.

28% Rate Gain or (Loss)
Complete the 28% Rate Gain
Worksheet if lines 10 and 11 of
Schedule D are both greater than zero
and the ANST reports in Part II, column
(f) either:
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A section 1202 exclusion from the
eligible gain on qualified small business
stock, or
A collectibles gain or (loss).
A collectibles gain or loss is any
long-term gain or deductible long-term
loss from the sale or exchange of a
collectible that is a capital asset.
Collectibles include works of art,
rugs, antiques, metals (such as gold,
silver, and platinum bullion), gems,
stamps, coins, alcoholic beverages, and
certain other tangible property.
Also, include gain (but not loss) from
the sale or exchange of an interest in a
partnership, S corporation, or trust held
for more than 1 year and attributable to
unrealized appreciation of collectibles.
For details, see Regulations section
1.1(h)-1. Also, attach the statement
required under Regulations section
1.1(h)-1(e).

Schedule K —
Distributions to
Beneficiaries

Use this schedule to report the type and
amount of distributions that were made
to each beneficiary. A copy of this
schedule must be furnished to the

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28% Rate Gain Worksheet

Keep for Your Records

1. Enter the total of all collectibles gain or (loss) from items reported on line 5, column (f),
of Schedule D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.

2. Enter as a positive number the amount of any section 1202 exclusion reported on line 5, column (f),
of Schedule D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2.

3. Enter the total of all collectibles gain or (loss) from items reported on Schedule D, line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.

4. Enter the total of all collectibles gain from capital gain distributions reported on line 7 of Schedule D . . . . . . . . . . . . . . . . . . .

4.

5. Enter the long-term capital loss carryover from Schedule D, line 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5. (

6. If Schedule D, line 4, is a (loss), enter that (loss) here. Otherwise, enter -0-

....................................

6.

7. Combine lines 1 through 6. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7.

sponsoring ANC. The sponsoring ANC,
not the ANST, provides information to
the beneficiaries regarding distributions.
Distributions for each year are
considered to have been made in the
following order.
Tier I Distributions (Section 646(e)
(l))
These are distributions from the ANST
to the extent of the ANST's taxable
income, reduced by any income tax
paid by the ANST on that income, and
increased by any tax-exempt interest
income.
Tier I distributions are excluded from the
gross income of the beneficiary.
Tier II Distributions (Section 646(e)
(2))

These are distributions of amounts that
would have been Tier I distributions in
prior years (during which a section 646
election was in effect), but that have not,
in fact, been distributed in any prior
year.
Tier II distributions are excluded from
the gross income of the beneficiary.
Tier III Distributions (Section 646(e)
(3))
These are distributions considered to
have been made by the sponsoring
ANC with respect to its stock.
Tier III distributions are taxable to
beneficiaries as dividends, to the extent
of current or accumulated earnings and

)

profits of the sponsoring ANC (after
adjustment for distributions made by the
sponsoring ANC during the year).
Section 643(e) applies for purposes of
determining the amount of a Tier III
distribution of property (other than
cash).
Tier IV Distributions (Section 646(e)
(4))
These are distributions of any amounts
that remain after applying the above
rules. They are considered as amounts
in excess of distributable net income for
the year.
Tier IV distributions are excluded from
the gross income of the beneficiary.

Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws of the
United States. You are required to give us the information. We need it to ensure that you are complying with these laws and to
allow us to figure and collect the right amount of tax.
You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless
the form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long
as their contents may become material in the administration of any Internal Revenue law.
is:

The time needed to complete and file this form will vary depending on individual circumstances. The estimated average time

Recordkeeping . . . . . . . . . . . . . . . . . . . . . . . . . .
Learning about the law or the form . . . . . . . . . . . . .
Preparing the form . . . . . . . . . . . . . . . . . . . . . . .
Copying, assembling, and sending the form to the IRS

32 hr., 16 min.
2 hr., 39 min.
4 hr., 12 min.
16 min.

. . . . . . . . .
. . . . . . . . .
. . . . . . . . .
. . . . . . . . .

If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler, we would
be happy to hear from you. You can send your comments to Internal Revenue Service, Tax Forms and Publications Division,
1111 Constitution Ave. NW, IR-6526, Washington, DC 20224. Do not send the tax form to this address. Instead, see Where To
File, earlier.

-8-