MICHIGAN 2019 E-filing your return is easy, fast, and secure! Tax preparers who complete 11 or more fiduciary tax returns are required to e-file all eligible returns supported by their software. Visit www.MIfastfile.org for more information on e-file services. This booklet is intended as a guide to help complete your return. It does not take the place of the law. Fiduciary Income Tax Return FILING DUE DATE: APRIL 15, 2020 (OR THE 15TH DAY OF THE FOURTH MONTH AFTER THE CLOSE OF YOUR TAX YEAR) WWW.MICHIGAN.GOV/TAXES WWW.MIFASTFILE.ORG MI-1041 UNCLAIMED PROPERTY. The Michigan Department of Treasury is holding millions of dollars in abandoned and unclaimed property belonging to Michigan residents. In the past three years nearly $260 million has been returned to rightful owners. To check if Treasury is holding funds for you or your family visit www.michigan.gov/unclaimedproperty.
This booklet is intended as a guide to help complete your return. It does not take the place of the law.
Fiduciary Income Tax Return
FILING DUE DATE: APRIL 15, 2020
(OR THE 15TH DAY OF THE FOURTH MONTH AFTER THE CLOSE OF YOUR TAX YEAR)
W W W. M I C H I G A N . G OV/ TA X E S
W W W. M I FA S T F I L E .O R G
MI-1041
UNCLAIMED PROPERTY.TheMichiganDepartmentofTreasuryisholdingmillionsofdollarsinabandonedandunclaimedpropertybelongingtoMichiganresidents.In the past three years nearly $260 million has been returned to rightful owners.TocheckifTreasuryisholdingfundsforyouoryourfamilyvisitwww.michigan.gov/unclaimedproperty.
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Tax Assistance Internet OptionsCurrentyearformsareavailableatwww.michigan.gov/iitTelephone OptionsYou may also call 517-636-4486 to have current yearformsmailedtoyou,or ifyouhavequestions, tospeaktoacustomerservicerepresentative.Assistance is available using TTY through the MichiganRelayServicebycalling711.Printedmaterialinanalternateformatmaybeobtainedbycalling517-636-4486.Who Must File You must file a Michigan Fiduciary Income Tax Return (FormMI-1041)andpay the taxdue ifyouare the fiduciaryforanestateortrustthatwasrequiredtofileaU.S.Form1041 or990-T orthathadincometaxabletoMichiganthatwasnottaxableontheU.S.Form1041.Ifnotaxisdue,youmustfileaninformationalMI-1041.Theonlyexceptionsare:1. Tax-exempt trusts unless the trust has unrelated businessincomeattributabletoMichigan.Note:Estatesortrustswithacharitablepurposeorcharitablebeneficiaries should contact the Michigan Department ofAttorney General, Charitable Trust Section at 517-373-1152regardingfilingrequirements.2. Common trust funds. The trustee must notify eachbeneficiaryoftheirportionofMichiganincomefromthefundandofthegainsand/orlossesavailabletoeachunderSection271oftheMichiganIncomeTaxAct.3. Nonresident estate or trust with income from Michigansources less than the federal exemption deduction. Thedeductions are $600 for estates, $300 for trusts currentlydistributing all income, and $100 for all other trusts. See Fiduciary Nonresident Schedule (MI-1041ScheduleNR)instructionsformoreinformation.4. A grantor trust.When the grantor, or another person, istreated as the owner of the trust’s assets (Internal RevenueCode(IRC)sections671through678),donotfileanMI-1041.Instead,theownermustreportthetrust’sincome,deductions,and credits on the owner’sMichigan Individual Income Tax Return(FormMI-1040).5. Michigan cannot impose an income tax on incomeaccumulated by a trust that became irrevocable by the deathof the settlor (while a Michigan resident) when all of thefollowingconditionsaremet:• ThetrusteeisnotaMichiganresident.• The assets of the trust are neither held, located, nor
When to FileFiduciaryreturnsaredueonorbeforeApril15,2020,oronthe15thdayofthefourthmonthafterthecloseofthetaxyear.Ifarefundisdue,areturnmustbefiledwithinfouryearsoftheduedatetoobtaintherefund.Keepacopyofthereturnandallsupportingschedulesforsixyears.Choose e-file Instead of Paper ReturnsE-filing your return is easy, fast, and secure. Beginningwith tax year 2018,Michigan fiduciary returnsmay be filedelectronically. When e-filing federal and Michigan returnstogether, much of the same data is used, so information isentered only once, lessening the possibility of error. Taxpreparerswhocomplete11ormore fiduciary tax returns are
requiredtoe-filealleligiblereturns.Visitwww.MIfastfile.org formoreinformationone-fileservices.Whene-filing,donotmailapapercopyofyourreturn.Where to Mail the ReturnMailreturnswithoutpaymentsto:
Michigan Department of TreasuryP.O. Box 30058Lansing, MI 48909
Mailreturnswithpaymentsto:Michigan Department of TreasuryDepartment 781041P.O. Box 78000Detroit, MI 48278-1041
To ensure accurate processing of the return, send one check for each return. Make the check payable to “State of Michigan.” Enter the FEIN of the estate or trust and “2019 MI-1041”onthefrontofthecheck.Penalty and InterestIf the fiduciary payment is late, theMichiganDepartment ofTreasury(Treasury)willaddapenaltyof5percentofthetaxdue.Afterthesecondmonth,penaltywillincreasebyanadditional5percentpermonth,or fraction thereof,up toamaximumof25percentofthetaxdue.Ifthefiduciarypaymentislate,addpenalty and interest to the amount due. For the latest interestratesvisit,www.michigan.gov/taxes.Capital Gains/Losses Adjustments of Capital Gains and Losses (Form MI-1041D)mustbeusedforthefollowing:• Capital gains election under Section 271 for property
acquiredbeforeOctober1,1967;• Sale or exchange of U.S. obligations which cannot be
taxedbyMichigan;or• Sale or exchange of property subject to allocation or
apportionmentprovisions.MI-1041,Schedule4mustbecompletedifacapitalgain/lossisdistributedtobeneficiariesandMI-1041Disfiled.Excess Business Loss LimitationEstatesortrustswithafederalexcessbusinesslosslimitationmustcompleteMichigan Excess Business Loss (FormMI-461).RefertoinstructionsonFormMI-461forfurtherinformationonadjustmentstoMichiganincome.Tax Credits an Estate or Trust Can ClaimAnestateortrustmaybeabletoclaimcreditsforeachofthefollowing:• IncometaximposedbygovernmentunitsoutsideMichigan
onincomealsotaxedbyMichigan.• Michigan Historic Preservation Tax Credit (refundable or
nonrefundable).Taxpayerseligible for thiscredit receiveacertificate from the State Historic Preservation Officeindicating their eligibility. To claim this credit see theMichigan Historic Preservation Tax Credit (Form 3581). For information regarding certification, visit www.michigan.gov/shpo.
Resident and Nonresident Estates or TrustsIfadecedentwasdomiciledinMichiganatthetimeofdeath,theestateisaresident estate.If a decedent was not domiciled inMichigan at the time ofdeath,theestateisanonresident estate.Atrustcreatedbythenonresidentdecedent’swillisanonresident trust.
GENERAL INFORMATION
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If a trustwas created by a grantor domiciled inMichigan atthetimethetrustbecomesirrevocable,thetrustisa resident trust.IfthegrantorwasnotdomiciledinMichiganatthetimethetrustbecameirrevocable,thetrustis anonresident trust.Amended ReturnsTo amendMI-1041, check the box at the top of theMI-1041and explain the reason for amending. Include a copy of theamendedU.S.Form1041withallsupportingschedules.U.S. Form 1041 changes. Treasurymust be notified of anychanges to the estate’sor trust’sU.S.Form1041 if the itemschangedaffect theMichiganliability.Fileanamendedreturnwithin120daysofthechangeandincludepaymentofthetaxdue. If there was an overpayment of tax, file an amendedreturntorequestarefund.ExtensionsAn extension of time to file may be requested by sendingTreasury payment of the estimated tax liability with a copyofthefederalextension.Treasurywillextendtheduedatetothenewfederalduedate.Ifafederalextensionwasnotfiled,fileanApplication for Extension of Time to File Michigan Tax Returns(Form4)withthepaymentandTreasurywillgranta51/2monthextensionforfiduciaryreturns.Treasurydoesnotsendanoticeofapproval.An extension of time to file is not an extension of time to pay. If the tax due is underestimated and the paymentmadewith the extension request is insufficient, interest is due onthe unpaid amount. Interest is computed from April 15 (orthe due date of the return) to the date the tax is paid. Interestis 1 percent above prime rate and is adjusted on July 1 and January1.Treasurymay charge a penalty of 10 percent ormore if thebalancedueisnotpaidwiththeextensionrequest.When MI-1041 is filed, include the amount of tax that waspaidwith theextension requeston line20. Includeacopyofthefederalorstateextension.Closing an EstateBefore closing an estate, all taxes due must be paid on theliability of the estate and of the decedent. You may thenrequestataxclearancelettertoclosetheestatebywritingto: MichiganDepartmentofTreasuryP.O.Box30058Lansing,MI48909Estimated Tax PaymentsIngeneral,afiduciaryforanestateortrustmustfilequarterlyestimated payments if the estate or trust is expected to owemorethan$500withthe2020returnaftercreditinganyotherrefundable or nonrefundable credits, and amounts you paidthroughwithholding.Iftheestateortrustowesmorethan$500,estimatedpaymentsmaynothavetobemadeiftheestateortrustexpectsthe2020 withholdingtobeatleast:• 90percentofthetotaltaxfor2020,• 100percentofthetotaltaxshownonthe2019return,or• 110percent of the total 2019 tax if the estate’s or trust’s
If estimated payments are necessary, use the Estimated Income Tax Voucher for Fiduciary and Composite Filers (Form MI-1041ES). Filing instructions are with the form. Do Not Use MI-1040ES tomake estimatedpayments for anestateortrust.
Ifanestateowesmorethan$500,estimatedpaymentsdonothavetobemadeifthedecedentdiedwithinthelasttwoyears.Ifafiduciaryfailstomakerequiredestimatedpayments,payslate,orunderpays,Treasurymaychargepenaltyandinterest.Penaltyis25percentofthetaxdue(withaminimumof$25)for failing to file estimated payments, or 10 percent (witha minimum of $10) for underpaying estimated payments.Interest is 1 percent above the prime rate and is computedmonthly.TherateisadjustedonJuly1andJanuary1.A financial institution that submits estimated paymentsthrough the Federal Tax Deposit System on magnetic tapeand acts as a fiduciary for 250 or more trusts must submitMichiganestimatedpaymentsonmagnetictape.Aninstitutionactingas fiduciary formore than49and less than250 trustsmaymakeanirrevocableagreementtofilemagnetically.Farmland Preservation Tax CreditsThereisnoprovisionforafarmlandpreservationtaxcreditonthefiduciaryreturn.Ifthefiduciaryisclaimingthiscredit,usetheMichigan Farmland Preservation Tax Credit (Form4594).Bankruptcy EstatesEvery trustee (or debtor-in-possession) for an individual’sbankruptcy estate under Chapter 7 or 11, of the U.S. CodeTitle 11, who must file a U.S. Form 1041 must also filean MI-1041. Use the MI-1041 only as a transmittal for the MI-1040. Write “Attachment to MI-1041: Do not detach”in the top margin of the MI-1040. Include the MI-1040behind theMI-1041.Complete only the identification area of MI-1041. Enter the name of the debtor on line 2 (e.g., “JohnSmith, Public Bankruptcy Estate”). Enter the name of thetrusteeonline4aandtheirtitleonline4b(e.g.,“AllenSnow,Trustee”). Enter the trustee’s contact information on lines4c through 4f. OnMI-1041, line 24, enter the amount from MI-1040, line33.Ifapplicable,enteronMI-1041, line27, theamountfromMI-1040,line36.CopiesoftheU.S.Forms1040, 1041, and all supporting schedules must be included withyourMichiganreturn.
LINE-BY-LINE INSTRUCTIONSMichigan’sfiduciarylawisverysimilartofederallaw.Theseinstructions include only those points ofMichigan laws andprocedures that differ from federal laws and procedures. Ifa federal short-year returnmust be filed, aMichigan short-yearreturn must also be filed. Before preparing the MI-1041,completetheU.S.Form1041andallsupportingschedules.• Allestatesandtrustsmustcompletepage1.• ResidentestateandtrustfilersmustcompleteSchedule1
ifthereareanynecessaryadjustments.• CompleteSchedule2ifincomeisdistributed• Complete Schedule 3 if income is distributed and there
areadjustmentsonSchedule1.• If the resident estate or trust distributed a capital gain,
filers must also complete Schedule 4 and MI-1041D. See“CapitalGains/Losses”onpage2.
Nonresidentestateortrustfilersmayomitlines8through11on page 1, Schedule 1 and Schedule 3. Nonresident estatesor trusts must complete MI-1041D (if applicable), Schedule2, MI-1041 Schedule NR if any income is distributed, andSchedule4iftheestatesortrustsdistributedanycapitalgainsorlosses.Include a copy of the U.S. Form 1041 and all supportingscheduleswiththeMichiganreturn.
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Line 18: Enter amount fromyour 2019 Form3581, line 16aor16b.Line 19: State Income Tax Withheld. Useline19toclaimacreditforanyMichiganincometaxwithheldby:• Anemployer onwagesandsalariesofadecedentreceived
bythedecedent’sestate• Apayerofcertaingamblingwinnings (forexample, state
lotterywinnings)• A payer of distributions from pensions, annuities,
retirement or profit-sharing plans, IRAs, insurancecontracts,etc.,receivedbyadecedent’sestateortrust.
Includea2019 Michigan Fiduciary Withholding Tax Schedule (FormMI-1041ScheduleW)andallsupportingdocuments.Line 20: Payments. Enterthetotalestimatedtaxpaidwiththe 2019MI-1041ES and anyMichigan tax paidwith an extensionrequest.Seeline24instructions.Note: Michigandoesnotallowtheestate’sortrust’sestimatedtaxpaymentsand/orwithholdingpaymentstobetransferredtobeneficiaries.Line 21: Enter the amount of the 2018overpayment appliedtothisyear’staxfrom2018MI-1041,line27.Line 22: This line is for amended returns only. Enter therefundand/orcredit forwardamount receivedon theoriginalreturn as a negative number. Enter the amount paid withthe original return as a positive number.Do not include anyinterestorpenaltypaidwiththeoriginalreturn.PART 4: Balance Due or RefundLine 24: Tax Due. If line23 is less than line17, enter thedifference. This is the tax owedwith the return. The returnmust be filed even if the balance due is less than $1 and nopaymentisrequired.Ife-filingthereturnwithataxdue,makeapaymentusingtheFormMI-1041-V.If penalty and interest are due for late payment of tax, enterthese amounts on the appropriate lines. See “Penalty andInterest” on page 2.Add penalty and interest to the tax dueandenterthetotal.If the estate or trust owes more than $500 and is requiredto file estimated payments, penalty and interest may bedue for underpayment, late payment, or failing to payestimatedpayments.UseUnderpayment of Estimated Income Tax (Form MI-2210) to compute interest and penalty. If MI-2210isfiled,entertheinterestandpenaltyamountonthelineprovided.ObtaincompleteinstructionsforMI-2210fromtheresourceslistedonpage2.Line 27: Refund. Subtract line 26 from line 25. This is therefund.TheStatedoesnotrefundamountslessthan$1. SCHEDULE 1: Net Michigan Adjustment for Resident Estates or TrustsADDITIONSLine 28: Enter gross interest and dividend incomefrom obligations or securities of states and their politicalsubdivisionsotherthanMichigan.Includethisinterestincomefrompartnerships,Scorporations,andotherestatesandtrusts.Line 29: Enter taxes deducted on U.S. Form 1041, line 11,whichwereimposedonormeasuredbyincome,suchasstateorcityincometaxes.Line 31: Enter expenses and interest incurred in productionof income from obligations of the U.S. government onU.S. Form 1041. Enter on this line any interest expense onindebtedness incurred in carrying the obligations and anyrelated expenses that were deducted in arriving at federaltaxableincome.
Line numbers not listed are explained on the form.PART 1: Name and IdentificationLines 1 through 7: Complete all items. Enter the full nine-digit Federal Employer Identification Number (FEIN).EnteramailingaddressthatTreasurycanusetorequestmoreinformationortoissuearefund.PART 2: Income and AdjustmentsLine 8: Enter federal taxable income of the estate or trustfromU.S.Form 1041,line23,orU.S.Form990-T.Line 9: Enter federal taxable income of Electing SmallBusiness Trusts from the Sec. 641(c) worksheet attached totheU.S.Form1041.IncludeacopyoftheworksheetwiththeMichiganreturn.Line 10: A fiduciary for a resident estate or trust shouldcomplete Schedule 1 if there are Michigan adjustments tofederaltaxableincome.Ifnoincomewasdistributed,entertheamountfromline39online10.Ifanyincomewasdistributed,complete Schedules 2 and 3. Enter the amount from line 41,columnC,online10.Line 11: Capital Gain/Loss Adjustments for Resident Estates or Trusts.EntertheamountfromMI-1041D,line21,ifany(see“CapitalGains/Losses”onpage2).Line 13: Tax. If line 12 is a negative number, enter “0” on line13.PART 3: Credits and PaymentsLine 14: Credit for Income Tax Paid to Another State. Includetheamountofincometaxpaidto:• Anonreciprocalstate• AlocalgovernmentunitoutsideMichigan, including tax
paidtolocalunitslocatedinreciprocalstates• TheDistrictofColumbia• ACanadianprovince.Include only income tax paid to another state on income earned by a resident estate or trust and taxed by Michigan.Include a copyof the return filedwith theothergovernmentunitwiththeMI-1041.Do not include taxes paid on income subtracted on lines34 through 37 of MI-1041 (e.g., rental or business incomefrom another state). If credit is claimed for a Canadianprovincial tax, file aResident Credit for Tax Imposed by a Canadian Province (Michigan Form 777). Include copiesoftheappropriateCanadianfederalT-3fiduciarytaxreturn,Foreign Tax Credit (U.S. Form 1116) and U.S. Form 1041.The credit is limited to the part of theCanadian provincial taxnot used as a credit on the U.S. Form 1041. The credit is notavailablefortaxpaidtootherforeigncountries.Line 14a: Enter the total income tax paid to othergovernmentunitsonincomealsotaxedbyMichigan.Includeascheduleiftaxwaspaidtomorethanonesource.Line 14b: Calculate the maximum allowable credit asfollows:1.Divideout-of-state incomesubject to taxbyboth statesbytotalincomesubjecttoMichigantax.
Line 15: Michigan Historic Preservation Tax Credit (Form 3581) Line 15a: Entertheamountfromyour2019Form3581,line9.Line 15b: Entertheamountfromyour2019Form3581,line14.
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• FederalgainfromMI-4797,line17• MichiganlossfromMI-4797,line17• IncomefromMI-461,line9,columnF• MichiganNOLNote: Retirementorpensionbenefitsmaynotbesubtracted.Line 39: Subtract line 38 from line 33. If no incomewas distributed, enter the amount from line 39 on line 10.Otherwise,completeSchedules2and3.Signatures and DeclarationsThe fiduciary or the officer representing the fiduciary mustsignthereturn.Beforemailingthereturn:• Verify thatall formsarecompletedusing thecorrect tax
year.• IncludeallrequiredMichiganattachments.• ThecorrespondingU.S.Form1041mustalsobeincluded.SCHEDULE 2: Beneficiary IdentificationNote: Schedule 2 must be completed if any income isdistributed.Enter in the appropriate column the name, residency status,address, and Social Security number or Federal EmployerIdentificationNumber(FEIN)ofeachbeneficiaryoftheestateor trust, both residents and nonresidents. Identify residentswith an“R”andnonresidentswith “NR.” Whencompletingthe rest of this form, use the lower-case letter (a, b, c, etc.)to the left of each name to refer to a beneficiary listed inSchedule 2. If you havemore than 4 beneficiaries, continuethose entries on the 2019 Michigan Fiduciary Income Tax Information Continuation Schedule(Form5680).SCHEDULE 3: Allocation of Net Michigan Adjustment for Resident Estates or TrustsIf income is distributed, the net Michigan adjustment forresident estates or trusts from MI-1041, line 39, must beallocated in the proportion that each beneficiary’s share offederal distributable net income bears to the total federaldistributable net incomewith the remainingportiongoing tothefiduciary.If the estate or trust has no distributable net income for thetaxableyear,thenetMichiganadjustmentwillbeallocatedintheproportion thateachbeneficiary’sshareof thedistributedestateor trust incomefor theyearbears to the totalestateortrustincomewiththeremainingportiongoingtothefiduciary.(Distributed income includes amounts required to bedistributedcurrentlyunderlocallaworthetermsoftheestateortrustinstrument,andanyotheramountsdistributed.)Use Schedule 3 to compute this allocation. See Example forCompletingSchedule3onpage6.Thesepercentagesmaynotbethesameasthedistributionpercentageslistedintheestateortrustinstrument.Complete column A for all beneficiaries before completing B,then C. If you have more than 4 beneficiaries, continue thoseentries on the 2019Michigan Fiduciary Income Tax Information Continuation Schedule(Form5680).Identify each beneficiary using the lower-case beneficiaryidentificationletterfromSchedule2.Column A: Enter the distributions reported to eachbeneficiary on his or her U.S. Schedule K-1 in the columnsprovided. Indicate the type of income such as dividends,interest,rents,etc.andincludethelocationoftheactivityandamount foreach. If the incomehasmultipleactivity locationsenter “various” as the location and provide support detailingthe type, locations, and amount, for each. For assistance,
Line 32: Enter any adjustments not taken into accounton lines 28 through 31 as a positive number including thefollowing(provideanadditionalscheduleifnecessary):• Gross expenses from the production of oil and gas or
extraction of nonferrous metallic minerals subject toMichigan severance tax to the extent deducted fromfederaltaxableincome
• Losses from a business or property located in anotherstate. Include a schedule or statement showing thisactivity and the location. For assistance see “MichiganBusiness,Rental&RoyaltyActivityWorksheet”availableon Treasury’s Web site. If there are business lossesattributable to both Michigan and another state, theymust be apportioned. Include a Michigan Schedule of Apportionment(MI-1040H).
• FederallossfromMI-4797,line17• MichigangainfromMI-4797,line17• LossfromMI-461,line9,columnF• Federal net operating loss (NOL) deduction that is
includedonline8.SUBTRACTIONSLine 34: EntertheincomefromU.S.governmentobligations(e.g., U.S. Series E Bonds). This income may be subtractedeven if it comes through a partnership, S corporation, oranotherestateortrust.IncludeascheduleshowingthesourceoftheincomefromU.S.obligations(TreasuryBonds,SeriesEbonds,etc.)andtheamountofincomefromeachsource.Line 35: Enter income attributable to another state. If thereis business income sourced to Michigan and another state,the income must be apportioned using theMI-1040H. Enterthe amount from MI-1040H, line 12. Filers with more thanone formMI-1040H should combine the amounts from line12 and enter here. Include a schedule or statement showingthe activity and the location. For assistance, see “MichiganBusiness, Rental & Royalty Activity Worksheet” availableonTreasury’sWebsite.IncomereportedontheMI-4797andcarried to the MI-1041D is business income and subject toapportionment, if applicable. The following are examples ofincomeattributedtoanotherstate:• Net rents and royalties from real and personal property
locatedorusedinotherstates.• Business income included in taxable income that was
earned solely inother states. (Losses fromanactivity inanother state that have reduced federal taxable incomemustbeenteredasapositivefigureonline32.)
Salaries,wages,andothercompensationforpersonalservicesare not business income. Resident estates cannot subtractsalaries and wages earned by the decedent in another state.However, the estate may be entitled to a tax credit for taximposedbyanotherstate.Seeline14instructionsonpage4.Note: Capitalgainsfromthesaleofrealorpersonalpropertylocated inotherstatesat the timeofdisposalareadjustedonMI-1041Dandfactoredintoline11.Line 36: Enter expenses related to obligations of otherstates not deducted on U.S. Form 1041 or not allowed as adeductionbyIRCSection265.Alsoenterinterestexpenseonindebtedness incurred in carrying theobligations and relatedexpensesthatwerenotusedonU.S.Form 1041.Line 37: Enter any adjustments not taken into accounton lines 34 through 36 as a positive number including thefollowing(provideanadditionalscheduleifnecessary):• Gross income subject to Michigan severance tax from
theMichigan production of oil and gas or extraction ofnonferrous metallic minerals to the extent included infederaltaxableincome.
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you may refer to the “Michigan Business, Rental & RoyaltyActivity Worksheet.” Enter the fiduciary’s share on line 41.Thetotalon line42shouldequal thedistributablenet incomereportedonU.S.Form1041, Schedule B.Column B: Divide each amount in column A by the totalamountonline42andenterthepercentincolumnB.Column C: Multiply the amount on Schedule 1, line 39, bythepercentageincolumnB.Enter theresult incolumnCforeachbeneficiaryandthefiduciary.Carrythefiduciary’sshare(line41)toPart2,line10.Thetotalonline42CmustequaltheamountonSchedule1,line39.SCHEDULE 4 - Capital Gain or (Loss) Distributed to Beneficiaries When Form MI-1041D Is FiledComplete Schedule 4 if capital gains or losses have beendistributedtobeneficiariesandMI-1041Dwascompleted.Identify each beneficiary using the lower-case beneficiaryidentificationletterfromSchedule2.Column A: (Federal)Entereachbeneficiary’sshareofcapitalgain/lossasreportedonU.S.Form1041 Schedule K-1.Column B: (Michigan) Enter each beneficiary’s share ofcapitalgain/lossasrecomputedonFormMI-1041D.Line 43: Enter the total of all beneficiaries’ shares inthe federal and Michigan columns. This must equal thebeneficiaries’amountsreportedonU.S.Form1041 Schedule D PartIII,column(1)orFormMI-1041D,line15,columnC.
OTHER INFORMATIONFor the FiduciaryThe fiduciary must provide a U.S. Schedule K-1 to eachbeneficiary. The fiduciary must also provide notice ofMichiganadjustmentstoeachbeneficiary.Thenoticemaybenotedonacopyof theU.S.Schedule K-1oraseparate letterto each beneficiary. If a letter is used, it must include thenameandfederal identificationnumberof theestateor trust.Each beneficiarymust be advised of his or her share of thefollowing:• Michiganadjustmentsfromresidentestatesortrusts.• Michiganincomefromnonresidentestatesortrusts.• Capitalgains/lossesavailableforadjustmentunderSection
271oftheMichiganIncomeTaxAct.
For the BeneficiaryBoth resident and nonresident beneficiaries may have anobligation to file aMichigan income tax return.Refer to theMI-1040 instruction booklet to determine individual filingrequirements.IfanMI-1040isrequired,includecopiesofthefollowing:• U.S. Schedule K-1 includingfootnotesandstatements.• The letter received from the fiduciary notifying the
lossesunderSection271oftheMichiganIncomeTaxAct.Note: Excess deductions available upon termination ofan estate or trust may be passed on to the beneficiaries.TheyarereportedonU.S.Form1040,Schedule A,anddonot reduce federal adjusted gross income (AGI). Itemizeddeductions are not an allowable subtraction on theMichigan return. Michigan follows the federal guidelinesregarding the termination of an estate or trust and thetreatment of any unused NOL carryover. To be eligibleto claim the unused NOL carryover, a copy of the final U.S.Form1041 Schedule K-1mustbeprovided.
Example for Completing Schedule 3For this example, the fiduciary has reported $5,000 on MI-1041 Schedule 1, line 39.
Beneficiary Type of Income (Multiply amount on ntification from (Dividend, Interest, Location Percentage of Amount line 39 by percentage Schedule 2 Rent, etc.) (City, State) Amount in Column A in Column B)
a. Interest and Rent Lansing, MI $2,420 9.4642% $473
b. Interest and Rent Lansing, MI 20,550 80.3676% 4,018
