Instructions for Form 1041 and Schedules A, B, G, J, and K-1 (2012)

Future Developments

For the latest information about developments related to Form 1041 and Schedules A, B, G, J, K-1 and its instructions, such as legislation enacted after they were published, go to www.irs.gov/form1041.

What's New

American Taxpayer Relief Act of 2012. The following tax deductions and credits have been extended for tax year 2012 by the American Taxpayer Relief Act of 2012, P.L. 112–240:

The election to deduct state and local sales taxes instead of state and local income taxes,
Mortgage insurance premium deduction,
The deduction for certain domestic production activities in Puerto Rico,
Energy efficient appliance credit,
Credit for employer differential wage payments,
Credit for increasing research activities,
Empowerment zone credit,
Indian employment credit,
Biodiesel and renewable diesel fuels credit.

Bankruptcy estate filing threshold. For tax years beginning in 2012, the requirement to file a return for a bankruptcy estate applies only if gross income is at least $9,750.

Qualified disability trust. For 2012, qualified disability trusts can claim an exemption of up to $3,800. The exemption is no longer phased out.

Specified domestic entity. The IRS anticipates issuing regulations that will require a domestic entity to file Form 8938 if the entity is formed or availed of to hold specified foreign financial assets and the value of those assets exceeds the appropriate reporting threshold. Until the IRS issues such regulations, only individuals must file Form 8938.

Online IRS e-file provider application. Effective October 1, 2012, applications to become an IRS e-file provider must be submitted online. The IRS is no longer accepting paper applications on Form 8633, Application to Participate in the IRS e-file Program. See Electronic Filing, later, for complete information.

Reminders

Review a copy of the will or trust instrument, including any amendments or codicils, before preparing an estate's or trust's return.
We encourage you to use Form 1041-V, Payment Voucher, to accompany your payment of a balance of tax due on Form 1041, particularly if your payment is made by check or money order.
If an amended return is filed for an NOL carryback, write “ NOL Carryback ” at the top of the page. See Amended Return, later, for complete information.

Section 67(e) regulations. At the time of publication, the proposed regulations under section 67(e) were not yet final. These regulations clarify which costs, such as investment advisory and bundled fiduciary fees, incurred by estates and nongrantor trusts are not exempt from the 2% floor for miscellaneous itemized deductions. Notice 2011-37 (available at www.irs.gov/irb/2011-20_IRB/ar08.html) extends the existing interim guidance providing that taxpayers will not be required to determine the portion of a bundled fiduciary fee that is subject to the 2% floor under section 67 for taxable years that begin before the publication of final regulations. If the regulations are finalized later in the filing season, an update will be posted at www.irs.gov/form1041.

Section A clarification. On page 1 of Form 1041, we changed the text of Section A to clarify that taxpayers should select more than one box, when appropriate, to reflect the type of entity.

Section E clarification. On page 1 of Form 1041, we amended Section E to clarify that the checkbox for "not a private foundation" is available only for charitable trusts described in section 4947(a)(1), and not to split-interest trusts described in section 4947(a)(2).

Automatic 6-month extension of time to file bankruptcy estate return. Beginning June 24, 2011, an individual filing a Chapter 7 or Chapter 11 bankruptcy estate return is eligible for an automatic 6-month extension instead of a 5-month extension.

Photographs of Missing Children

The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in instructions on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.

Unresolved Tax Issues

If you have attempted to deal with an IRS problem unsuccessfully, you should contact the Taxpayer Advocate Service (TAS). The Taxpayer Advocate independently represents the estate's or trust's interests and concerns within the IRS by protecting its rights and resolving problems that have not been fixed through normal channels.

While Taxpayer Advocates cannot change the tax law or make a technical tax decision, they can clear up problems that resulted from previous contacts and ensure that the estate's or trust's case is given a complete and impartial review.

The estate's or trust's assigned personal advocate will listen to its point of view and will work with the estate or trust to address its concerns. The estate or trust can expect the advocate to provide:

An impartial and independent look at your problem,
Timely acknowledgment,
The name and phone number of the individual assigned to its case,
Updates on progress,
Timeframes for action,
Speedy resolution, and
Courteous service.

When contacting the Taxpayer Advocate, you should provide the following information:

The estate's or trust's name, address, and employer identification number (EIN).
The name and telephone number of an authorized contact person and the hours he or she can be reached.
The type of tax return and year(s) involved.
A detailed description of the problem.
Previous attempts to solve the problem and the office that had been contacted.
A description of the hardship the estate or trust is facing and supporting documentation (if applicable).

You can contact a Taxpayer Advocate as follows:

Call the Taxpayer Advocate's toll-free number: 1-877-777-4778.
Call, write, or fax the Taxpayer Advocate office in its area (see Pub. 1546, Taxpayer Advocate Service, Your Voice At The IRS, for addresses and phone numbers).
TTY/TDD help is available by calling 1-800-829-4059.
Visit the website at www.irs.gov/advocate.

How To Get Forms and Publications

Internet. You can access the IRS website 24 hours a day, 7 days a week, at IRS.gov to:

Download forms, including talking tax forms, instructions, and publications;
Order IRS products online;
Research your tax questions online;
Search publications online by topic or keyword; and
Sign up to receive local and national tax news by email.

DVD for tax products. You can order Pub. 1796, IRS Tax Products DVD, and obtain:

Current-year forms, instructions, and publications.
Prior-year forms, instructions, and publications.
Tax Map: an electronic research tool and finding aid.
Tax Law frequently asked questions.
Tax Topics from the IRS telephone response system.
Internal Revenue Code - Title 26 of the U.S. Code.
Links to other Internet-based tax research materials.
Fill-in, print, and save features for most tax forms.
Internal Revenue Bulletins.
Toll-free and email technical support.

The DVD is released twice during the year. The first release will ship the beginning of January 2013. The final release will ship the beginning of March 2013.

Purchase the DVD from National Technical Information Service at www.irs.gov/cdorders for $30 (no handling fee) or call 1-877-233-6767 toll free to buy the DVD for $30 (plus a $6 handling fee).

By phone and in person. You can order forms and publications by calling 1-800-TAX-FORM (1-800-829-3676). You can also get most forms and publications at your local IRS office.