Schedule K-1 - Beneficiary's Share of Income, Deductions, Credits, etc.

2022

Instructions for Schedule K-1
(Form 1041) for a Beneficiary
Filing Form 1040 or 1040-SR

Department of the Treasury
Internal Revenue Service

Note. The fiduciary’s instructions for completing Schedule K-1 are in the
Instructions for Form 1041.
Section references are to the Internal Revenue Code unless
otherwise noted.

Future Developments

For the latest information about developments related to
Schedule K-1 (Form 1041) and its instructions, such as
legislation enacted after they were published, go to IRS.gov/
Form1041.

Reminders
Excess deductions on termination. Under Final Regulations TD9918, each excess deduction on termination of an estate or
trust retains its separate character as an amount allowed in
arriving at adjusted gross income, a non-miscellaneous itemized
deduction, or a miscellaneous itemized deduction.
See Box 11, Code A—Excess Deductions on
Termination—Section 67(e) Expenses and Box 11, Code
B—Excess Deductions on Termination—Non-Miscellaneous
Itemized Deductions, later, for more information.
Beneficiary's identification number. For your protection,
Schedule K‐1 may show only the last four digits of your
identifying number (social security number (SSN), etc.).
However, the estate or trust has reported your complete
identifying number to the IRS.
Backup withholding. If Schedule K-1 shows backup
withholding in box 13, code B, attach a copy to your return.

treatment of the item consistent with that shown on the estate’s
or trust’s return. Any deficiency that results from making the
amounts consistent may be assessed immediately.

Errors

If you believe the fiduciary has made an error on your
Schedule K-1, notify the fiduciary and ask for an amended or a
corrected Schedule K-1. Don’t change any items on your copy.
Be sure that the fiduciary sends a copy of the amended
Schedule K-1 to the IRS. If you are unable to reach an
agreement with the fiduciary regarding the inconsistency, you
must file Form 8082.
If you are the executor of an estate and you received a
decedent's Schedule K-1 from an estate or trust in which the
decedent had a beneficial interest, but the decedent died in a
prior year, then you should request that the fiduciary send you a
corrected Schedule K-1 to reflect the proper allocation of tax
items under the will or the trust's governing instrument.

Beneficiaries of Generation-Skipping Trusts

If you received Form 706-GS(D-1), Notification of Distribution
From a Generation-Skipping Trust, and paid a
generation-skipping transfer (GST) tax on Form 706-GS(D),
Generation-Skipping Transfer Tax Return for Distributions, you
can deduct the GST tax paid on income distributions on
Schedule A (Form 1040), line 6. To figure the deduction, see the
Instructions for Form 706-GS(D).

General Instructions

Specific Instructions

Purpose of Form

Part I—Information About the Estate or Trust
Item E

Use Schedule K-1 to report a beneficiary's share of the estate’s
or trust’s income, credits, deductions, etc., on your Form 1040 or
1040-SR. Keep it for your records. Don’t file it with your tax
return, unless backup withholding was reported in box 13, code
B.

Inconsistent Treatment of Items

Generally, you must report items shown on your Schedule K-1
(including attached schedules) the same way that the estate or
trust treated the items on its return.
If the treatment of an item on your original or amended return
is inconsistent with the estate’s or trust’s treatment (or if the
estate or trust was required to but hasn't filed a return), you must
file Form 8082, Notice of Inconsistent Treatment or
Administrative Adjustment Request (AAR), with your original or
amended return to identify and explain any inconsistency (or to
note that an estate or trust return hasn't been filed).
If you are required to file Form 8082 but fail to do so, you may
be subject to the accuracy-related penalty. This penalty is in
addition to any tax that results from making your amount or
Dec 14, 2022

If the item E box is checked, this is the final year of the estate or
trust.
Note. If the “Final K-1” box at the top of Schedule K-1 is
checked, this is the final return for the beneficiary.

Part III—Beneficiary’s Share of Current Year
Income, Deductions, Credits, and Other Items

The amounts shown in boxes 1 through 14 reflect your share of
income, loss, deductions, credits, etc., from an estate or trust.
For Form 1040 or 1040-SR filers, page 2 of Schedule K-1
provides summarized reporting information. The summarized
reporting information reflects references to forms in use for
calendar year 2022.
Note. If you are not an individual, report the amounts in each
box as instructed on your tax return.
Codes. In box 9 and boxes 11 through 14, the fiduciary will
identify each item by entering a code in the column to the left of

Cat. No. 11374Z

Any losses reported in boxes 6 through 8 may be subject to
the passive loss limitations of section 469, which generally limits
deducting passive losses only from passive activity income. The
rules for applying these limitations to beneficiaries haven't yet
been issued. For more details, see Pub. 925, Passive Activity
and At-Risk Rules.

the dollar amount entry space. These codes are identified on
page 2 of Schedule K-1.
Attached statements. The fiduciary will enter an asterisk (*)
after the code, if any, in the column to the left of the dollar
amount entry space for each item for which it has attached a
statement providing additional information. For those
informational items that cannot be reported as a single dollar
amount, the estate or trust will enter an asterisk (*) in the left
column and write “STMT” in the dollar amount entry space to
indicate the information is provided on an attached statement.

Box 9—Directly Apportioned Deductions
The fiduciary must attach a statement showing depreciation,
depletion, and amortization directly apportioned to you, if any,
for each activity reported in boxes 5 through 8.

Box 1—Interest Income

Box 10—Estate Tax Deduction (Including Certain
Generation-Skipping Transfer Taxes)

This box reports the beneficiary’s share of the taxable interest
income. This amount is reported on line 2b of Form 1040 or
1040-SR and Schedule B, Part I, line 1, if applicable.

If an estate or trust distributes IRD to a beneficiary, the
beneficiary is entitled to deduct the portion of the estate tax
imposed on the decedent's estate which is attributable to the
IRD distributed to the beneficiary. You may claim this amount on
line 16 of Schedule A (Form 1040). For an example of how this
amount was computed, see Regulations section 1.691(c)-2 and
Pub. 559, Survivors, Executors, and Administrators.

Box 2a—Ordinary Dividends
This box reports the beneficiary’s share of ordinary dividends.
This amount is reported on line 3b of Form 1040 or 1040-SR and
Schedule B, Part II, line 5, if applicable.

Box 2b—Qualified Dividends

Box 11, Code A—Excess Deductions on
Termination—Section 67(e) Expenses

This box reports the beneficiary’s share of qualified dividends.
This amount is reported on line 3a of Form 1040 or 1040-SR.

If this is the final return of the estate or trust, and there are
excess deductions on termination that are section 67(e)
expenses reported to you as a beneficiary, you may deduct the
excess deductions shown in box 11, code A, as an adjustment
to income. Report this amount on Schedule 1 (Form 1040), Part
II, line 24k.

Boxes 3 and 4a—Net Short-Term and Net
Long-Term Capital Gain
Net short-term capital gains are reported on line 5 of Schedule D
(Form 1040) and net long-term capital gains are reported on
line 12 of Schedule D (Form 1040).

See Final Regulations - TD9918 for examples of allowable
excess deductions on termination of an estate or trust.

If there is an attachment to this Schedule K-1 reporting a
disposition of a passive activity, see the Instructions for Form
8582, Passive Activity Loss Limitations, for information on the
treatment of a disposition of an interest in a passive activity.

Excess deductions on termination occur only during the last
tax year of the trust or decedent’s estate when the total
deductions (excluding the charitable deduction and exemption)
are greater than the gross income during that tax year. Only the
beneficiary of an estate or trust that succeeds to its property is
allowed to deduct that entity’s excess deductions on termination.
A beneficiary who doesn’t have enough income in that year to
absorb the entire deduction can’t carry the balance over to any
succeeding year.

Boxes 4b and 4c—28% Rate Gain and
Unrecaptured Section 1250 Gain
A 28% rate gain is reported on line 4 of the 28% Rate Gain
Worksheet—Line 18 in the Schedule D (Form 1040) instructions.

Box 11, Code B—Excess Deductions on
Termination—Non-Miscellaneous Itemized
Deductions

An unrecaptured section 1250 gain is reported on line 11 of
the Unrecaptured Section 1250 Gain Worksheet—Line 19 in the
Schedule D (Form 1040) instructions.

If this is the final return of the estate or trust, and there are
excess deductions on termination that are non-miscellaneous
itemized deductions reported to you as a beneficiary, you may
deduct the excess deductions shown in box 11, code B, on the
applicable line of Schedule A (Form 1040). The fiduciary will
provide you with a statement of allowable deductions. See Final
Regulations - TD9918 for examples of allowable excess
deductions on termination of an estate or trust. A beneficiary
who doesn’t have enough income in the tax year to absorb the
entire deduction can’t carry the balance to any succeeding year.

Box 5—Other Portfolio and Nonbusiness Income
The amount reported in this box is your distributive share of
royalties, annuities, and other income that isn't subject to the
passive activity rules. It also includes income in respect of a
decedent (IRD), which isn't included in box 1, 2a, 3, 4a, 6, 7, or
8.

Boxes 6 Through 8—Ordinary Business Income,
Net Rental Real Estate Income, and Other Rental
Income

Note. Section 67(g) suspends miscellaneous itemized
deductions subject to the 2% floor for tax years 2018 through
2025. Therefore, miscellaneous itemized deductions are not
deductible as excess deductions on termination. Consult your
state taxing authority for information about deducting
miscellaneous itemized deductions on your state tax return.

The fiduciary will provide you with a separate schedule showing
your distributive share of income from each trade or business,
net rental real estate, or other rental activity.
-2-

2022 Instructions for Schedule K-1 (Form 1041)

Box 11, Codes C and D—Unused Capital Loss
Carryover

Note. Form 1041-T, Allocation of Estimated Tax Payments to
Beneficiaries, must be timely filed by the fiduciary for the
beneficiary to get the credit for an estimated tax payment.

Upon termination of the trust or decedent’s estate, the
beneficiary succeeding to the property is allowed to deduct any
unused capital loss carryover under section 1212.

Code B. Credit for backup withholding. Include this amount
on line 25c of your Form 1040 or 1040-SR and attach a copy of
Schedule K-1 (Form 1041) to your return.
Code C. Low-income housing credit. Report this amount on
Form 8586, line 4. If your only source for the credit is a
pass-through entity, such as an estate or trust, you can report
the amount from Form 8586, line 4, directly on Form 3800, Part
III, line 4d.

A short-term capital loss carryover, reported as code C, is
reported on Schedule D (Form 1040), line 5.
A long-term capital loss carryover, reported as code D, is
reported, as appropriate, on Schedule D (Form 1040), line 12;
line 5 of the 28% Rate Gain Worksheet—Line 18 in the
Schedule D (Form 1040) instructions; and line 16 of the
Unrecaptured Section 1250 Gain Worksheet—Line 19 in the
Schedule D (Form 1040) instructions.

Code D. Rehabilitation credit and energy credit. The
fiduciary must give you a statement that shows the information
you will need and where to enter it on Form 3468, Investment
Credit, so that you can figure the amount of any rehabilitation
credit and energy credit that you may claim.

Box 11, Codes E and F—NOL Carryover
Upon termination of a trust or decedent’s estate, a beneficiary
succeeding to its property is allowed to deduct any unused net
operating loss (NOL) if the carryover would be allowable to the
trust or estate in a later tax year but for the termination. The
deduction for regular tax purposes, reported as code E, is
reported on Schedule 1 (Form 1040), line 8a.

Code E. Other qualifying investment credit. This code is
used to report the qualified investment for figuring the qualifying
advanced coal project credit, the qualifying gasification project
credit, and the qualifying advanced energy project credit. The
fiduciary must provide you with a statement that shows the
information you will need and where to report it on Form 3468 so
that you can figure the amount of the previously listed credits
that you may claim.

A deduction for an Alternative Tax NOL (ATNOL) carryover
for alternative minimum tax (AMT) purposes, reported as code F,
is reported on Form 6251, line 2f.

Code H. Biofuel producer credit. See the Instructions for
Form 6478 for more information. If your only source for the credit
is a pass-through entity, such as an estate or trust, you can
report the amount on Form 3800, Part III, line 4c.
Code J. Renewable electricity, refined coal, and Indian coal
production credit. The fiduciary must provide you with a
statement showing the amount of credit to report on Form 8835,
line 19 (including the allocation of the credit for production during
the 4-year period beginning on the date the facility was placed in
service and for production after that period). If your only source
for the credit is a pass-through entity, you can report the amount
from line 19 directly on Form 3800, Part III, lines 1f and 4e, as
applicable. Otherwise, complete Form 8835 as directed.

Box 12—Alternative Minimum Tax Items
The information reported in box 12, codes A through I, is used to
prepare your Form 6251. Code A, Adjustment for minimum tax
purposes, is the total amount reported on Form 6251, line 2j.
Codes B through F represent the portion, if any, of the amount
included in code A.
Codes B through F. If you have an amount in box 12 with code
B, C, D, E, or F, see the instructions for lines 13, 14, and 15 of
Form 6251.

Code O. Biodiesel, renewable diesel, or sustainable aviation fuels credit. If this credit includes the small agri-biodiesel
producer credit, the fiduciary will provide additional information
on an attached statement. If no statement is attached, report this
amount on line 10 of Form 8864. If a statement is attached, see
the instructions for Form 8864, line 12.

Codes G through I. Include the amount with any of these
codes on the applicable line of Form 6251.
Code J. Exclusion items. If you pay AMT in 2022, the amount
in box 12, code J, will help you figure any minimum tax credit for
2023. See the 2023 Form 8801, Credit for Prior Year Minimum
Tax—Individuals, Estates, and Trusts, for more information.

Code R. Recapture of credits. If you are required to recapture
any credits, the fiduciary will provide a statement with the
information you need to figure your credit recapture.

Box 13—Credits and Credit Recapture

Code Z. Other credits. Use this code to report the beneficiary's
share of all other credits.
Employee retention credit. This code is used to report the
beneficiary’s share of the employee retention credit. For more
information on the employee retention credit, see the
Instructions for Form 5884-A, Employee Retention Credit for
Employers Affected by Qualified Disasters. If your only source
for the employee retention credit is a pass-through entity, such
as an estate or trust, you can report the amount directly on Form
3800, Part III, line 1aa.
Advanced manufacturing production credit. Section
13502 of the Inflation Reduction Act of 2022 (IRA 22) created the
advanced manufacturing production credit for certain
components produced and sold after 2022. This may be
applicable to fiscal year filers. See Form 7207 and its
instructions and section 45X.

Codes A through Q, and code Z, list all the credits that may be
allocated to you as a beneficiary.
Generally, you must file the source credit form along with
Form 3800, General Business Credit, to claim the general
business credits listed on Schedule K-1 (Form 1041), codes C
through Q, and code Z. However, if your only source for the
credits listed on Form 3800, Part III, is from pass-through
entities, you may not be required to complete the source credit
form. Instead, you may be able to report the credit directly on
Form 3800. See below for the instructions for specific credits.
Code A. Credit for estimated taxes. The beneficiary treats
this amount as a payment of estimated tax. To figure any
underpayment and penalty on Form 2210, Underpayment of
Estimated Tax by Individuals, Estates, and Trusts, treat the
amount entered in box 13, code A, as an estimated tax payment
made on January 17, 2023.
2022 Instructions for Schedule K-1 (Form 1041)

-3-

Patrons of specified agricultural and horticultural
cooperatives. If the trust or estate was a patron of an
agricultural or horticultural cooperative (specified cooperative),
you must use Form 8995-A to figure your QBI deduction. In
addition, you must complete Schedule D (Form 8995-A) to
determine your patron reduction.
QBI items allocable to qualified payments from specified
cooperatives subject to beneficiary-specific
determinations. The amounts reported to you reflect your
apportioned pro rata share of items from the trust’s or estate’s
trade(s) or business(es), or aggregation(s) and include items
that may not be includible in your calculation of the QBI
deduction and patron reduction. When determining QBI items
allocable to qualified payments, you must include only qualified
items that are included or allowed in determining taxable income
for the tax year. To determine your QBI items allocable to
qualified payments, see the Instructions for Form 8995-A.
Wages allocable to qualified payments from specified
cooperatives. The amounts reported reflect your apportioned
pro rata share of the trust’s or estate’s W-2 wages allocable to
qualified payments of each qualified trade or business, or
aggregation. See the Instructions for Form 8995-A.
Section 199A(g) deduction from specified cooperatives.
The amount reported reflects your apportioned pro rata share of
the trust’s or estate’s net section 199A(g) deduction. See the
Instructions for Form 8995-A.

Box 14—Other Information
Code F. Gross farming and fishing income. The amount of
farming and fishing income is included in box 6. This income is
separately stated to help determine if you are subject to a
penalty for underpayment of estimated tax. Report the amount of
gross farming and fishing income on Schedule E (Form 1040),
Supplemental Income and Loss, line 42.
Code H. Net investment income tax. This amount is the
beneficiary's adjustment for section 1411 net investment income
or deductions. Enter this amount on line 7 of Form 8960, as
applicable. See the Instructions for Form 8960.
Code I. Section 199A information. Generally, you may be
allowed a deduction of up to 20% of your apportioned net
qualified business income (QBI) plus 20% of your apportioned
qualified REIT dividends, also known as section 199A dividends,
and qualified publicly traded partnership (PTP) income from the
trust or estate. The trust or estate will provide the information you
need to help figure your deduction.
Once you have this information, you will use one of two forms
to help you figure your QBI deduction.
1. Use Form 8995, Qualified Business Income Deduction
Simplified Computation, if:
a. You have QBI, section 199A dividends, or PTP income
(defined below);
b. Your 2022 taxable income before your QBI deduction is
less than or equal to $170,050 if single, head of household, or
qualifying surviving spouse, or are a trust or estate ($340,100 if
married filing jointly); and
c. You aren’t a patron in a specified agricultural or
horticultural cooperative.
2. Use Form 8995-A, Qualified Business Income Deduction,
if you don’t meet all three of these requirements.

Code Z. Other information. If this code is used, the fiduciary
will provide you with any additional information you may need to
file your return that isn't shown elsewhere on this Schedule K-1.
The fiduciary will provide you with any information needed to
figure capital gains with respect to a section 1061 partnership
interest. For more information, see Section 1061 Reporting
Guidance FAQs.
If you receive a statement regarding the splitting of foreign tax
credits from the income to which it relates, section 909 may
prevent you from deducting the foreign tax credit until the related
foreign income is taken into account. See Form 1116, Foreign
Tax Credit, and Pub. 514, Foreign Tax Credit for Individuals, for
more information.
The fiduciary will provide you the information that you need to
figure your section 951A income. Report your section 951A
income on Schedule 1 (Form 1040), line 8o, or the comparable
line of your income tax return. For details, see the Instructions for
Form 8992.
Your distributive share of the net amount of section 965(a)
inclusion less the corresponding section 965(c) deduction
should be reported in box 14, code Z. In addition, the fiduciary
will provide a statement detailing your distributive share of the
section 965(a) inclusion, the section 965(c) deduction, and any
section 960 deemed paid foreign tax credits related to your
distributive share of the section 965(a) inclusion (relevant to
corporate beneficiaries and individual beneficiaries electing to
be taxed as a corporation on gross income under section 951(a),
including such gross income by reason of section 965).
If an estate or trust is required to file Form 8990, the adjusted
taxable income of an estate or trust beneficiary is reduced by
any income (including any distributable net income) received
from the estate or trust by the beneficiary to the extent such
income supported a deduction for business interest expense
under section 163(j)(1)(B) in computing the estate's or trust's
taxable income. If applicable, the fiduciary will provide you the
necessary information to calculate this amount in an attachment
to Schedule K-1.

QBI pass-through entity reporting information. Using the
information provided to you by the trust or estate, complete the
appropriate form as identified above.
QBI or qualified PTP items subject to beneficiary-specific
determinations. The amounts reported to you reflect your
apportioned pro rata share of items from the trust’s or estate’s
trade(s) or business(es), or aggregation(s) and may include
items that aren’t includible in your calculation of the QBI
deduction. When determining QBI or qualified PTP income, you
must include only those items that are qualified items of income,
gain, deduction, and loss included or allowed in determining
taxable income for the tax year. To determine your QBI or your
qualified PTP income amounts and for information on where to
report them, see the instructions for Form 8995 or Form 8995-A,
as applicable.
W-2 wages. The amounts reported reflect your apportioned
pro rata share of the trust’s or estate’s W-2 wages allocable to
the QBI of each qualified trade or business, or aggregation. See
the instructions for Form 8995 or Form 8995-A, as applicable.
UBIA of qualified property. The amounts reported reflect
your apportioned pro rata share of the trust’s or estate’s
unadjusted basis immediately after acquisition (UBIA) of
qualified property of each qualified trade or business, or
aggregation. See the instructions for Form 8995 or Form 8995-A,
as applicable.
Section 199A dividends. The amount reported reflects your
apportioned pro rata share of the trust’s or estate’s net section
199A dividends. See the instructions for Form 8995 or Form
8995-A, as applicable.

-4-

2022 Instructions for Schedule K-1 (Form 1041)