1041_Inst_Qual Mortgage Insur Prem Wrksht

• Underpayments of federal, state, or
local income taxes.

Interest that is paid or incurred on
indebtedness allocable to a trade or
business (including a rental activity)
should be deducted on the appropriate
line of Schedule C (or C-EZ), E, or F
(Form 1040), the net income or loss
from which is shown on line 3, 5, or 6 of
Form 1041.
Types of interest to include on line
10 are:
1. Any investment interest (subject
to limitations — see below);
2. Any qualified residence interest
(see later); and
3. Any interest payable under
section 6601 on any unpaid portion of
the estate tax attributable to the value
of a reversionary or remainder interest
in property for the period during which
an extension of time for payment of
such tax is in effect.
Investment interest. Generally,
investment interest is interest (including
amortizable bond premium on taxable
bonds acquired after October 22, 1986,
but before January 1, 1988) that is paid
or incurred on indebtedness that is
properly allocable to property held for
investment. Investment interest does
not include any qualified residence
interest, or interest that is taken into
account under section 469 in figuring
income or loss from a passive activity.
Generally, net investment income is
the excess of investment income over
investment expenses. Investment
expenses are those expenses (other
than interest) allowable after application
of the 2% floor on miscellaneous
itemized deductions.
The amount of the investment
interest deduction may be limited. Use
Form 4952, Investment Interest
Expense Deduction, to figure the

allowable investment interest
deduction.
If you must complete Form 4952,
check the box on line 10 of Form 1041
and attach Form 4952. Then, add the
deductible investment interest to the
other types of deductible interest and
enter the total on line 10.
Qualified residence interest. Interest
paid or incurred by an estate or trust on
indebtedness secured by a qualified
residence of a beneficiary of an estate
or trust is treated as qualified residence
interest if the residence would be a
qualified residence (that is, the principal
residence or the secondary residence
selected by the beneficiary) if owned by
the beneficiary. The beneficiary must
have a present interest in the estate or
trust or an interest in the residuary of
the estate or trust. See Pub. 936, Home
Mortgage Interest Deduction, for an
explanation of the general rules for
deducting home mortgage interest.
See section 163(h)(3) for a definition
of qualified residence interest and for
limitations on indebtedness.
Qualified mortgage insurance
premiums. Enter (on the worksheet
below) the qualified mortgage
insurance premiums paid under a
mortgage insurance contract issued
after December 31, 2006, in connection
with qualified residence acquisition debt
that was secured by a principal or
secondary residence. See Prepaid
mortgage insurance below if the estate
or trust paid any premiums allocable
after 2009. If at least one other person
was liable for and paid the premiums in
connection with the loan, and the
premiums were reported on Form 1098,
include the estate’s or trust’s share of
the 2009 premiums on the worksheet
below.
Qualified mortgage insurance is
mortgage insurance provided by the
Department of Veterans Affairs, the

Qualified Mortgage Insurance Premiums Deduction Worksheet

Federal Housing Administration, or the
Rural Housing Service, and private
mortgage insurance (as defined in
section 2 of the Homeowners
Protection Act of 1998 as in effect on
December 20, 2006).
Mortgage insurance provided by the
Department of Veterans Affairs and the
Rural Housing Service is commonly
known as a funding fee and guarantee
fee, respectively. These fees can be
deducted fully in 2009 if the mortgage
insurance contract was issued in 2009.
Contact the mortgage insurance issuer
to determine the deductible amount if it
is not included in box 4 of Form 1098.
Prepaid mortgage insurance. If
the estate or trust paid mortgage
insurance premiums allocable to
periods after the end of its tax year,
such premiums must be allocated over
the shorter of:
• The stated term of the mortgage, or
• 84 months, beginning with the month
the insurance was obtained.
The premiums are treated as paid in
the year to which they are allocated. If
the mortgage is satisfied before its
term, no deduction is allowed for the
unamortized balance. See Pub. 936 for
details. These allocation rules do not
apply to qualified mortgage insurance
provided by the Department of
Veterans Affairs or the Rural Housing
Service.
Limit on the amount that is
deductible. The estate or trust cannot
deduct mortgage insurance premiums if
the estate’s or trust’s AGI is more than
$109,000. If the estate’s or trust’s AGI
is more than $100,000, its deduction is
limited and you must use the worksheet
below to figure the deduction. See How
to figure AGI for estates and trusts on
page 22 for information on figuring AGI.
Keep for Your Records

1. Enter the total premiums the estate or trust paid in 2009 for qualified mortgage insurance for a contract issued
after December 31, 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2. Enter the estate’s or trust’s AGI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.
3. Enter $100,000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.
4. Is the amount on line 2 more than the amount on line 3?
The deduction is not limited. Include the amount from line 1 above on Form
No.
1041, line 10. Do not complete the rest of this worksheet.
Yes. Subtract line 3 from line 2. If the result is not a multiple of $1,000, increase it to
the next multiple of $1,000. For example, increase $425 to $1,000, increase
$2,025 to $3,000, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.
5. Divide line 4 by $10,000. Enter the result as a decimal. If the result is 1.0 or more, enter 1.0 . . . . . . . . . . . . .
6. Multiply line 1 by line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7. Qualified mortgage insurance premiums deduction. Subtract line 6 from line 1. Enter the result here and
include the amount on Form 1041, line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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