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Part 3. Submission Processing

Chapter 11. Returns and Documents Analysis

Section 14. Income Tax Returns for Estates and Trusts (Forms 1041, 1041-QFT, and 1041-N) (Cont. 1)

3.11.14  Income Tax Returns for Estates and Trusts (Forms 1041, 1041-QFT, and 1041-N) (Cont. 1)

3.11.14.8 
Special Conditions/Returns

3.11.14.8.8  (10-27-2009)
♦Compliance Secured/Prepared Returns♦

  1. Compliance functions (Collection and Examination) secure returns from the taxpayer and also prepare returns if the taxpayer does not provide them.

    1. Prepared tax returns are notated with 6020(b) or "SFR" (Substitute for return).

    2. Secured tax returns are notated with "TC 59X" or "ICS" (Integrated Collections System) or notated "Process as Original" with an attached Form 13133, Expedite Processing Cycle. The "Delinquent Return" box on Form 13133 should be checked.

3.11.14.8.8.1  (10-27-2009)
♦IRC Section 6020(b) - Prepared by Collection♦

  1. When the taxpayer fails to file a required return, IRC Section 6020(b) is the authority for the IRS to prepare the return.

  2. These returns are identified by the notation: "PREPARED AND SIGNED UNDER AUTHORITY OF SECTION 6020(b) OF THE INTERNAL REVENUE CODE" which is located in the center bottom of Page 1 of the return.

    1. Returns must have a Received Date. If no Received Date is present per the Compliance Function, follow the normal procedures for editing the Received Date.

    2. Returns must be signed by Compliance Function representatives. If not signed, route to Compliance using Form 4227.

    3. Edit CCC "4" . ( See IRM 3.11.14.7.15.)

      Note:

      CCC "R" should not be used with CCC "4" .

    4. ≡ ≡ ≡ ≡ ≡ "" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ " ≡ ≡

    5. Do not correspond with the taxpayer for unprocessable conditions. If the return is completely unprocessable, use "No Reply" procedures.

    6. Edit CCC "W" if the Received Date is more than 2 years and 9 months after the Return Due Date. Do not send the return to Statute Control. ( See IRM 3.11.14.8.10., Statute Returns)

3.11.14.8.8.2  (10-27-2009)
♦Collection Secured♦

  1. These returns are identified by the notations "TC 59X" or "ICS" .

    1. Do not edit CCC "G" on these returns.

    2. Use approved Correspondence Action Sheet to correspond for conditions that cannot be processed (e.g., missing signatures, missing schedules, etc.).

    3. Edit CCC "W" if the Received Date is more than 2 years and 9 months after the Return Due Date. Do not send the return to Statute Control.

3.11.14.8.8.3  (10-27-2009)
♦Examination Prepared♦

  1. These returns are identified by the notation "SFR" or "SUBSTITUTE FOR RETURN" on Page 1.

    1. Return must have a Received Date. If no Received Date is present, follow the normal procedures for editing the Received Date. ( See IRM 3.11.14.10.)

    2. Do not correspond with the taxpayer for unprocessable conditions. If the return is completely unprocessable, edit CCC 3 and continue processing.

    3. If Form 13133 is attached, edit the Computer Condition Codes that are checked on the form.

      Note:

      CCC "R" should not be used with a CCC "4" .

    4. Edit CCC "W" if the Received Date is more than 2 years and 9 months after the Return Due Date. Do not send the return to Statute Control. ( See IRM 3.11.14.8.10., Statute Returns)

3.11.14.8.8.4  (10-27-2009)
♦Examination Secured♦

  1. These returns are identified by the notation "Process as Original" on page 1 of the return and a Form 13133, Expedite Processing Cycle, attached with the "Delinquent Return" box checked.

    1. Do not edit CCC "G" on these returns.

    2. Use approved Correspondence Sheet to correspond for conditions that cannot be processed (e.g., missing signatures, missing schedules, etc.).

    3. Edit the Computer Condition Codes that are checked on Form 13133.

    4. Edit CCC "W" if the received date is more than 2 years and 9 months after the Return Due Date. Do not send the return to Statute Control. ( See IRM 3.11.14.7.10. )

3.11.14.8.9  (10-27-2009)
Qualified Settlement Fund Tax Returns

  1. In general, Qualified Settlement Funds are required to file a Form 1120-SF (U.S. Income Tax Return for Settlement Funds (Under Section 468B) to satisfy the filing requirement with the IRS. However, if a qualified settlement fund has only one transferor, the transferor may make a grantor trust election by attaching an election statement to a timely filed Form 1041 indicating the transferor's name, address, and taxpayer identification number, and the legend §1.468B-1(k) Election.

  2. If the filer notates that Form 1041 is for a "QUALIFIED SETTLEMENT FUND" or "SETTLEMENT FUND" , but lacks all the information listed in the preceding paragraph, determine if the document is numbered or unnumbered:

    If ... Then ...
    Numbered Returns,

    1. Do not continue editing the return.

    2. Edit Action Code 320 (Entity Control).

    3. Attach Form 4227 and notate "POSSIBLE FILING REQUIREMENT DISCREPANCY" .

    4. Leave the return in the block.
    Unnumbered Returns,

    1. Do not continue editing the return.

    2. Attach Form 4227 and notate "POSSIBLE FILING REQUIREMENT DISCREPANCY" .

    3. Withdraw the document from the batch.

    4. Route the return to Entity. ( See Figure 3.11.14-10.)

    Figure 3.11.14-10

    Settlement Fund Return - Possible filing discrepancy
    Please click here for the text description of the image.

    Settlement Fund Return - Possible filing discrepancy

3.11.14.8.10  (10-27-2009)
♦Statute Returns♦

  1. Any return with a Received Date that is 2 years and 9 months or more after the Return Due Date is a potential statute control return.

  2. Statute returns must be routed to the Statute Control Unit daily or more often if needed.

    Exception:

    Do not route to Statute Control Unit for clearance, edit CCC "W" and continue processing if any of the following conditions are present:
    • Compliance IRC Section 6020(b) returns.
    • Returns with "TC 59X" or "ICS" notated on the face of the return.
    • Returns that are substitute returns prepared by Examination (SFR) in top margin of the form.
    • Returns with a stamp indicating a previous clearance by Statute Control within the last ninety days.
    • Tax returns that are secured by Examination ("Process as Original" is notated on Page 1).

  3. Statute returns are unprocessable until they are cleared by Statute Control.

    If ... Then ...
    The return is numbered,

    1. Edit Action Code 310 on the return.

    2. Leave the return in the batch and continue processing.
    The return is unnumbered,

    1. Do not continue processing.

    2. Pull the return from the batch.

    3. Attach Form 4227 and route to Statute Control Unit.

  4. Edit CCC "W" if the return has been cleared by Statue Control Unit. Statutes will stamp or indicate clearance on the front of the return. ( See Figure 3.11.14-11.)

    Figure 3.11.14-11

    Statute Return
    Please click here for the text description of the image.

    Statute Return

3.11.14.8.11  (10-27-2009)
Foreign Address Returns (International)

  1. Ogden Submission Processing Campus (OSPC) will process all foreign address returns.

  2. A foreign address is any address other than the 50 states and the District of Columbia.

  3. An Army Post Office (APO), Diplomatic Post Office (DPO) or Fleet Post Office (FPO) is not considered a foreign address. See IRM 3.11.14.13.4.

  4. The determination of an International foreign address is based only on the address of the estate or trust located on Page 1 of the return. Do not consider a Form 1041 or Form 1041-QFT that has schedules or attachments indicating that the beneficiary, trustee or shareholder has a foreign address.

  5. U.S. Possessions/Territories - The following U.S. Possessions/Territories are considered foreign addresses and must be shipped to OSPC for processing:

    • American Samoa

    • Federal States of Micronesia

    • Guam

    • Marshall Islands

    • Northern Mariana Islands

    • Palau

    • Puerto Rico

    • Virgin Islands (U.S.)

  6. Consider a Form 1041 with any of the following attachments or indications to be an International return:

    • Form 1040 W/2555 or 2555EZ (Foreign Earned Income)

    • Form 1040 W/4563 (Exclusion of Income for Bona Fide Residents of American Samoa)

    • Form 1040 W/5074 (Allocation of Individual Income Tax to Guam or the Commonwealth of the Northern Mariana Islands)

    • Form 8288A (Statement of Withholding on Dispositions by Foreign Persons of U.S. Real Property Interests )

    • Form 8288B (Application for Withholding Certificate for Dispositions by Foreign Persons of U.S. Real Property Interests)

    • Form 1040GUAM

    • Form 1040NR

    • Form 1040PR

    • Form 1040SS or 1040SS (NMI)

    • Exemption or exclusion of the Tax or Income due to an International treaty (not an American Indian Treaty)

      Note:

      An American Indian Treaty is not considered International.

    • Section 911, 913, 931, or 933 of the Internal Revenue Code

    • Treaty Trader or Fulbright Grantee

  7. Route all returns with a foreign address to OSPC for processing. Prepare Letter 86C to inform the fiduciary or trustee that the return has been sent.

    1. When an International return is identified, discontinue perfection.

    2. Prepare Form 4227 and notate "PREPARE LETTER 86C IN DUPLICATE" . If there is a credit on the return, also notate "CREDIT TRANSFER" on Form 4227.

    If ... Then ...
    Numbered Returns,

    1. Edit the Name Control.

    2. Edit Action Code 650 (International).

    3. Leave the return in the block.
    Unnumbered Returns, Withdraw the return from the batch and forward for transshipment.

    Reminder:

    If the return is not date stamped, edit the Received Date.

3.11.14.8.12  (10-27-2009)
Blind Trust Returns

  1. Taxpayers who are presidential appointees are permitted to file their individual tax returns through a trustee of a blind trust.

  2. If there is any indication on the return or attachment, a General Power of Attorney, or Form 2848 attached that indicates "Blind Trust" , ensure Form 2848 must be processed to the CAF to reflect the Blind Trust Indicator on Master File to ensure that no correspondence is generated to the taxpayer.

3.11.14.9  (01-01-2010)
Additional Form 1041 Perfection

  1. This section provides instructions for coding additional entries.

  2. These entries are edited in the left margin next to Line 10 of Form 1041.

  3. Each entry will be preceded by the numeric for the applicable line from the edit sheet.

  4. Edit entries in numeric order, such as "1 - 4" , "5 - 38" , and "7 - 3" .

    If ... Then ...
    Audit Code, Edit "1" followed by the appropriate Audit Code, (e.g., "≡ ≡ ≡ ≡ ≡ " ). See IRM 3.11.14.9.1.
    Electing Small Business Trust Indicator (ESBT), Edit "2" followed by the ESBT Indicator "1" , (e.g., "2 - 1" ). See IRM 3.11.14.9.2.
    Pooled Income Fund, Edit "3" followed by the Pooled Income Code "1" , (i.e., "3 - 1" ). See IRM 3.11.14.9.3.
    Penalty and Interest Code, Edit "4" followed by the Penalty and Interest Code "1" , (i.e., "4 - 1" ). See IRM 3.11.14.9.4.
    Missing Schedule Code, Edit "5" followed by the appropriate Missing Schedule Code, (e.g.,"5 - 50" ). See IRM 3.11.14.9.5.
    Installment Sale Indicator, Edit "6" followed by the appropriate Installment Sale Indicator, (e.g., "6 - 2" ). See IRM 3.11.14.9.6.
    Historic Structure Code, Edit "7" followed by the Historic Structure Code "3" , (e.g., "7 - 3" ). See IRM 3.11.14.9.7.

3.11.14.9.1  (10-27-2009)
Audit Codes

  1. Edit Audit Codes in the left margin next to Line 10 of Form 1041.

  2. Edit as "1 - " followed by the appropriate code(s).

  3. Up to three Audit Codes may be edited. If more than three Audit Codes apply, edit only the first three Audit Codes using the following priority order:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡   ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
      ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡   ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡   ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  4. Determine the appropriate Audit Code as follows:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
      ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
      ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
      ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
      ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ ≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

      ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ " ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ ≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    3. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    4. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    5. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ " ≡ ≡

    Caution:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ " ≡

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    1. ≡ ≡ ≡ ≡

    2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    3. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
      ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
      ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
      ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡


    ≡ ≡ ≡ ≡

    Caution:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Caution:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Reminder:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Figure 3.11.14-12

    This image has been removed because it contains Official Use Only.
    Please click here for the text description of the image.

    This image has been removed because it contains Official Use Only.

3.11.14.9.2  (10-27-2009)
Electing Small Business Trusts (ESBT)

  1. Edit "2 - 1" in the left margin next to Line 10 of Form 1041 for the Electing Small Business Trust (ESBT) Indicator if the " ESBT" box (in Section A) on page 1 of Form 1041 is checked or there is an indication of ESBT. ( See Figure 3.11.14-13.)

    Figure 3.11.14-13

    ESBT Indicator
    Please click here for the text description of the image.

    ESBT Indicator

3.11.14.9.3  (10-27-2009)
Pooled Income Fund

  1. Edit "3 - 1" in the left margin next to Line 10 of Form 1041 if the "Pooled Income Fund" box (in Section "A" ) on page 1 of Form 1041 is checked. ( See IRM 3.11.14.12.3.)

    Exception:

    Code return with Fiduciary Code "9" and do not edit "3 - 1" in the left margin if the "Pooled Income Fund" box in (Section A) and " the Described in Section 4947(a)(2)" box in Section E are both checked.

3.11.14.9.4  (10-27-2009)
Penalty/Interest Code

  1. Edit "4 - 1" in the left margin next to Line 10 of Form 1041, when precomputed delinquency penalty and/or interest is shown on a return with a Received date within the grace period. ( See IRM 3.11.14.21.6.)

3.11.14.9.5  (10-27-2009)
Missing Schedule Codes

  1. Conditions for Missing Schedule Codes (MSCs) are described within this section.

    Note:

    Per taxpayer instructions, Forms 8826, 8830, 8847, 8874, 8881, 8896, 8906, 8908, 8910, 8911, 8923, and 8933 are not required to be attached to Form 1041 and correspondence is not required.

  2. Edit a MSC if the entry requiring support is $500 or more (either negative or positive). Edit MSC in "5 - NN" format in the left margin next to Line 10 of Form 1041 when the applicable required form or schedule is not attached ( See Figure 3.11.14-14.) For additional information, See Exhibit 3.11.14-17.

  3. Only two Missing Schedule Codes are valid per return.

    If ... Then ...
    More than two Missing Schedule Codes apply or there is a need to correspond for other types of information (other than for Missing Schedule Codes), Correspond with the taxpayer. Indicate all missing or incomplete information, forms and schedules required.

  4. Code "30" if Form 1041, Schedule G, Line 2a contains an entry, but Form 1116 is not attached.

  5. Code "31" if Form 3800, Line 1a or 29a has an entry, but Form 3468 is not attached.

  6. Code "33" if Form 1041, Schedule G, Line 5 contains an entry and the box for Form 4255 is checked, but Form 4255 is not attached.

  7. Code "35" if Form 1041, Page 1, Line 7 contains an entry, but Form 4797 is not attached.

  8. Code "38" if Form 3800, Line 29b has an entry, but Form 5884 or similar schedule is not attached.

  9. Code "39" if Form 3800, Line 29c has an entry, but Form 6478 or similar schedule is not attached.

  10. Code "40" if Form 3800, Line 1c has an entry, but Form 6765 or similar schedule is not attached.

  11. Code "42" if Form 3800, Line 1h has an entry, but Form 8820 or similar schedule is not attached.

  12. Code "43" if Form 1041, Schedule G, Line 2c contains an entry (for 2007 and prior the box for Form 3800 is also checked), but the Form 3800 is not attached.

  13. Code 44 if Form 3800, Line 1d and/or 29d has an entry, but Form 8586 is not attached.

  14. Code "45" if Form 1041, Schedule G, Line 5 contains an entry and the box for Form 8611 is checked, but Form 8611 is not attached.

  15. Code "46" if Form 1041, Schedule G, Line 2d contains an entry and Form 8801 is not attached.

  16. Code "49" if Form 3800, Line 1z has an entry or Form 1041, Schedule G, Line 2b contains an entry and Form 8834 is indicated, but Form 8834 is not attached.

  17. Code "50" if Form 3800, Line 29e has an entry or Form 1041, Schedule G, Line 2c contains an entry and Form 8835 is indicated, but Form 8835 is not attached.

  18. Code "51" if Form 3800, Line 1g has an entry, but Form 8845 is not attached.

  19. Code "52" if Form 3800, Line 29f has an entry, but Form 8846 is not attached.

  20. Code "54" if Form 3800, Line 24 has an entry or Form 1041, Schedule G, Line 2b contains an entry and Form 8844 is indicated, but Form 8844 is not attached.

  21. Code "55" if Form 3800, Line 1b has an entry, but Form 8861 is not attached.

  22. Code "59" if Form 3800, Line 1k has an entry, but Form 8882 is not attached.

  23. Code "61" if Form 3800, Line 1l has an entry, but Form 8864 is not attached.

  24. Code "63" if Form 3800, Line 29g has an entry, but Form 8900 is not attached.

  25. Code "66" if Form 3800, Line 1o has an entry, but Form 8907 is not attached.

  26. Code "71" if Form 3800, Line 1q has an entry, but Form 8909 is not attached.

  27. Code "72" if Form 1041, Schedule G, Line 3 (dotted portion) contains one of the following notations " BAB" , "CREB" , "GTCB" , "MTCB" , "NCREB" , "QECB" , "QFCB" , "QSCB" , or "QZAB" , but Form 8912 is not attached.

  28. Code "73" if Form 3800, Line 1v has an entry, but Form 8931 is not attached.

  29. Code "74" if Form 3800, Line 1w has an entry, but Form 8932 is not attached.

    Figure 3.11.14-14
    There is currently no description available for this image. For help with this image, please call the IRS.gov Helpdesk at 1-800-876-1715.

3.11.14.9.6  (10-27-2009)
♦Installment Sale Indicator♦

  1. Form 6252 (Installment Sale Income) is used to report the sale of property on the Installment plan.

  2. Codes are based solely on the taxpayer response to Question "3" of Form 6252. ( See Figure 3.11.14-15. )

  3. Edit the Installment Sale Indicator in the left margin next to Line 10 of Form 1041 in "6 - N" format.

  4. Valid codes for Installment Sale Indicator are as follows:

    Code One Form 6252 Multiple Forms 6252
    1 "Yes" response to Question "3" . At least one form has a "Yes" response.
    2 "No" response to Question "3" . All "No" responses or a combination of "No" and/or blank responses.
    3 "Yes" and "No" are both checked or Question "3" is blank. Question "3" is blank on all forms.

  5. If Form 6252 is attached to a nontaxable Grantor Trust or Bankruptcy Estate return, do not edit an Installment Sale Indicator Code. Form 6252 information will be included on the individual tax return.

    Figure 3.11.14-15
    Installment Sale Indicator Code
    Please click here for the text description of the image.

    Installment Sale Indicator Code

3.11.14.9.7  (10-27-2009)
Historic Structure Code

  1. Edit Code "7 - 3" in the left margin next to Line 10 of Form 1041 if Form 3468, Investment Credit, is attached, and there are entries present on any of the following lines totaling ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ : ( See Figure 3.11.14-16.)

    1. TY 2008 and subsequent: If there are entries under Part III, Line 10 (Rehabilitation Credit); specifically Lines e, f, g, h, i or j.

    2. TY 2006 and 2007: If there are entries under Line 1; specifically Lines e, f, g, or h.

    3. TY 1996 - 2005: If there are entries under Line 1, specifically, Lines b or c.

    Figure 3.11.14-16
    Editing Historic Structure Code for Form 3468
    Please click here for the text description of the image.

    Editing Historic Structure Code for Form 3468

3.11.14.10  (10-27-2009)
♦ Received Date ♦

  1. A Received Date is required on all Forms 1041, 1041-QFT, and 1041-N.

    If ... Then ...
    The return is received within ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ or extended due date (≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ), See Exhibit 3.11.14-12. The return is considered timely.
    The due date falls on a weekend or legal holiday, The return is timely if postmarked by the first business day following the weekend or legal holiday.
    The IRS Received Date stamp is after≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and the postmark or shipment date is on or before the due date, Edit the Received Date to agree with the postmark date.

  2. Paper returns received with proof of a failed attempt to file electronically should be considered timely filed if received within 10 calendar days of the denial of the electronic filing.

  3. The Received Date may or may not be stamped on the face of the return.

  4. If the Received Date stamp is not present or the date is illegible or invalid, edit the Received Date in MMDDYY format in the middle of Page 1 of the return. Edit the Received Date according to the following priority:

    1. The earliest legible Postmark Date (U.S. Postal Service, foreign postmark, or Private Delivery Service) on the envelope. Rules for using the U.S. Postal Service Postmark (USPS) or foreign postmark date are as follows:

      If ... Then ...
      An envelope is not attached, Use the postmark date stamped on the face of the return.
      An envelope has a USPS and private metered postmark, Always use the USPS postmark.
      An envelope has a foreign and private metered postmark, Always use the foreign postmark.
      An envelope has two private metered postmarks, Always use the latest private metered postmark.
      An envelope has only one private metered postmark, Use the private metered postmark.

      Note:

      A private metered postmark is to be considered timely ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    2. Revenue Officer's Signature date.

    3. Signature date (Only if within current year).

    4. Julian control date minus 10 days.

    5. Current date minus 10 days.

  5. Edit the Received Date as follows:

    If ... And ... Then ...
    A timely Received Date is the only Received Date stamped on the return,   No editing is required.
    Two or more dates are stamped on the return,  

    1. Use the earliest IRS stamped Received Date.

    2. Circle all other dates.
    A Federal return is addressed to the IRS, Delivered to a State agency, Use the postmark date as the Received Date.
    A Federal return is addressed to a State agency,   Use the IRS date stamp as the Received Date.

    Reminder:

    If an envelope is attached to the return, check the envelope for remittance. If found, handcarry remittance to manager.

3.11.14.11  (10-27-2009)
Tax Period

  1. This subsection details the actions to be taken to determine the proper Tax Period on Form 1041.

3.11.14.11.1  (10-27-2009)
Tax Period - General

  1. All returns must have a Tax Period.

  2. Edit the Tax Period to the right of the preprinted Calendar Year in YYMM format.

    Exception:

    Do not edit the Tax Period unless the Tax Period Ending is other than the current processing year (i.e., 200912).

    If ... Then ...
    The return is for the current processing year, No editing is necessary.
    The return is for a prior year, Edit the Tax Period.
    The taxpayers has notated a Tax Period other than the preprinted year on the return, Edit the Tax Period based on the taxpayer's indication. ( See Figure 3.11.14-17. and paragraph (3) below.)
    The tax period is missing, incomplete or illegible,

    1. Review the return or attachments for the correct period.

    2. If found, edit the Tax Period to the right of the preprinted Calendar Year.

    3. If unable to determine the Tax Period after researching, process the return for the year currently being processed.

  3. A Tax Period should end on the last day of a month except as otherwise specified. Ignore a minor discrepancy such as October 30 instead of October 31. The exceptions are a 52/53 week filer, and final and/or short period returns. The table below identifies examples of Tax Periods.

    If ... Then ...
    Oct. 3, 2009 (52-53 week return) 0909
    Oct. 3, 2009 (Final short period return) 0910
    Oct. 25, 2009 (52-53 week return) 0910
    Oct. 25, 2009 (Final short period return) 0910
    Nov. 30, 2009 0911
    Dec. 31, 2009 0912 (No editing of tax period required for current calendar year return)
    Feb. 28, 2010 1002

  4. Edit Audit Code "" if the taxpayer is filing a Fiscal Year return and the return is not for one of the following filers which are qualified to file on a Fiscal Year basis:

    1. ≡ ≡ ≡ ≡

    2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    3. One of the following notations is shown on the return:
      • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ;
      • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ;
      • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

      Note:

      Do not edit Audit Code "≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Figure 3.11.14-17

    Tax Period Editing
    Please click here for the text description of the image.

    Tax Period Editing

3.11.14.11.2  (10-27-2009)
52–53 Week Tax Period

  1. Tax Periods reported under the 52-53 week rule may not end more than 6 days before and not more than 3 days after the end of a month. ( See Figure 3.11.14-18.)

    If ... Then ...
    The Tax Period ending is not more than 3 days after the beginning of the month, Edit the previous month.
    The Tax Period ending is not more than 6 days before the end of the month, Edit the month shown on the return.
    Tax Period ending is more than 6 days before the end of the month or 3 days after the beginning of the month and is not a Final return,

    1. Correspond to determine the correct Tax Period ending.

    2. If no reply, edit CCC "3" .

  2. If the Tax Period is more than 12 months or 53 weeks, correspond.

    Figure 3.11.14-18
    52–53 WEEK TAX PERIODS
    Please click here for the text description of the image.

    52–53 WEEK TAX PERIODS

3.11.14.11.3  (10-27-2009)
"Final" Returns

  1. If the month of the Tax Period is equal to or later than the month of the Received Date (an early-filed return), process as follows:

    1. Edit the Tax Period using the month preceding the month of the Received Date. See Figure 3.11.14-19. , and follow the table below:

      Tax Period
      Ending      		 Received
      Date      		 Edit As
      5/31/2010 5/8/2010 1004
      6/30/2010 6/3/2010 1005
      9/30/2010 7/21/2010 1006

      Note:

      If the Tax Period ending is before the Received Date, then See IRM 3.11.14.11.2. for further editing instructions.

    Figure 3.11.14-19

    Early Filed "Final" Return
    Please click here for the text description of the image.

    Early Filed "Final" Return

  2. If the Received Date is after the short-period due date but on or before the regular full tax period due date ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ :

    1. Edit CCC "R" and "F" . ( See Figure 3.11.14-20. )

      Note:

      Also edit CCC "D" if the return is a Balance Due.

    Figure 3.11.14-20

    Short-Period "Final" Return
    Please click here for the text description of the image.

    Short-Period "Final" Return

3.11.14.11.4  (10-27-2009)
"Initial" Short Period Returns

  1. Initial returns can be determined by either of the following:

    • The taxpayer has checked the "Initial Return" box (below the address information of Form 1041).

    • The "Date Entity Created" (Section " D" ) is the same as the "Fiscal Year Beginning" (top of Form 1041).

    If ... Then ...
    The taxpayer is filing an initial short period Fiscal Year return that begins in one year and ends in another, Continue normal editing.
    The taxpayer is filing an initial short period Fiscal Year return which begins and ends in the same year, Continue normal editing.

3.11.14.11.5  (10-27-2009)
Early Filed Returns - Full Year and Short Period

  1. Never send an Early-Filed return back to the taxpayer.

  2. If the month of the Tax Period Ending (TPE) is the same or after the month of the Received Date, determine how early the return has been filed:

    If ... Then ...
    The received date and the Tax Period Ending (TPE) are the same month (i.e., the Received Date and the TPE are both April), OR

    The Received Date is prior to the TPE by four months or less (i.e., the Received Date is in April but the TPE is May, June, or July),

    1. Edit Action Code 480 (Early Filed - Suspense).

    2. Attach Form 4227 and notate "EARLY FILED FORM 1041" .

      Note:

      This action is taken only if it is not a "Final" return.

      ( See IRM 3.11.14.11.3.)

    3. Completely edit the return.
    The Received Date is prior to the Tax Period Ending (TPE) by more than four months (i.e., the Received Date is April but the TPE is August or later),

    1. Edit Action Code 211 (First Correspondence) and attach Form 3696 (to request confirmation of the Tax Period Ending).

    2. Completely edit the return. Edit the future tax period indicated by the taxpayer.

3.11.14.11.6  (10-27-2009)
Short Period Returns - Editing Proof of Entitlement

  1. A Short Period Return is one which covers a period of less than 12 months or 52 weeks.

  2. Do not process "Initial" or "Final " returns as a Change of Accounting

  3. Process all other Short Period Returns as a Change of Accounting Period. In such cases, proof of entitlement to the change is required.

  4. Use the table below to identify and edit proof of entitlement.

    If ... Then ...
    Form 1128 (Application to Adopt, Change or Retain a Tax Year), stamped "Accepted" , is attached, Edit CCC "Y" .
    A copy of Form 1128 is attached citing Rev. Proc. 68–41, Edit CCC "Y" .
    A statement that a change of accounting period has been granted by IRS, Edit CCC "Y"

    Note:

    Form 1128 does not need to be attached.

    See Figure 3.11.14-21.
    A statement the Trust is changing tax period under IRC Regulation 1.442.1(c),

    1. Edit CCC "Y" .

    2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ " .

    Taxpayer has cited one of the following:

    • Rev. Proc. 76-10,

    • Rev. Proc. 85-58,

    • Rev. Proc. 87-32,

    • Rev. Proc. 2003–38, or

    • Rev. Proc. 2006–46.

    		 Edit CCC "Y" .
    Taxpayer has notated that the return was filed in compliance with IRC Regulation 1.1502–76, Edit CCC "Y" .
    Taxpayer has notated that the return was filed under Section 806 of the Tax Reform Act of 1986, Edit CCC "Y" .
    Proof of entitlement cannot be determined, See IRM 3.11.14.11.7.

    Figure 3.11.14-21
    Proof of Entitlement
    Please click here for the text description of the image.

    Proof of Entitlement

3.11.14.11.7  (10-27-2009)
Short Period Returns - Missing Proof of Entitlement

  1. If proof of entitlement is missing or the taxpayer states on the return or an attachment that an application was filed, but has not received a response, research IDRS using BMFOLE for approval or disapproval information and proceed as follows:

    If... Then...
    BMFOLE shows a Transaction Code 053, 054 or 055,
    (This is an indication that the Form 1128 has been approved)     		Edit CCC "Y" .
    BMFOLE shows Transaction Code 058 or 059,
    (This is an indication that the Form 1128 has not been approved),     		The return is unprocessable. Follow the instructions for Short Period Returns - Editing a Disapproved Application. ( See IRM 3.11.14.11.8.)
    BMFOLE does not show a Transaction Code:, 053, 054, 055, 058 or 059, Correspond requesting confirmation of the Tax Period Ending.

3.11.14.11.8  (10-27-2009)
Short Period Returns - Editing a Disapproved Application (Form 1128)

  1. If Form 1128 is disapproved, the return is considered unprocessable:

    1. Enter Action Code 211 and Correspond.

    2. In the correspondence, instruct the taxpayer to file a return for the next regular full period due. Request a disposition of any remittance paid with the return or other credits which have posted to the short period module.

3.11.14.11.9  (10-27-2009)
Short Period Returns - Editing Form 1128 With No Indication of Approval or Disapproval

  1. When a Form 1128 with no indication of approval or disapproval is attached and no proof of entitlement is present, research IDRS using BMFOLE for approval or disapproval and proceed as follows:

    If... Then...
    BMFOLE shows a Transaction Code 053 or 054,
    (This is an indication that Form 1128 has been approved)     		Edit CCC "Y" .
    BMFOLE shows a Transaction Code 059,
    (This is an indication that Form 1128 has not been approved)     		The return is unprocessable. Follow the instructions for Short Period Returns - Editing a Disapproved Application. See IRM 3.11.14.11.8.
    BMFOLE does not show Transaction Code 053, 054, or 059, Take the actions in (2) below.

  2. Forms 1128 with neither approval or disapproval, discontinue processing Form 1041. Route Form 1041 and Form 1128 to Entity as directed in the paragraphs below:

    1. If Form 1128 is attached to a numbered return, enter Action Code 320. Attach Form 4227 and check the box for Entity Control. Edit the Form 1041 Received Date on Form 1128. (Do not detach Form 1128).

    2. If Form 1128 is attached to an unnumbered return, edit the Form 1041 Received Date on Form 1128, attach Form 4227 and route the return to Entity Control. (Do not detach Form 1128).

3.11.14.11.10  (10-27-2009)
Short Period Returns with Prepaid Credits

  1. A If a return is for a short period with prepaid credits (credits claimed on Lines 24a through 24d) and is not an "initial" return ( See IRM 3.11.14.20. ), edit as follows:

    1. Edit Action Code "342" on Form 1041.

    2. Attach Form 4227, check the Accounting box and notate "SHORT PERIOD RETURN WITH ES (Estimated Tax) CREDITS" . Accounting will move the credits to the correct Tax Period.

    3. Continue editing,

3.11.14.12  (10-27-2009)
Section A (Type of Entity)

  1. The fiduciary checks the appropriate "Type of Entity" box in "Section A" that describes the entity for the return being filed. In addition, they are instructed to check the ESBT (S-Portion Only) box when ESBT (Electing Small Business Trusts) tax applies. The Fiduciary and Trust Code is to be determined from the box checked, other than the ESBT box.

    Note:

    If the ESBT box is checked, edit "2-1" in the left margin next to Line 10, Form 1041. See IRM 3.11.14.9.2.

  2. All Forms 1041 must be edited with a Fiduciary Code and may be edited with a Trust Code.

    Exception:

    Do not edit a Fiduciary Code or a Trust Code to any Form 1041 which has CCC "G" (Amended return) or CCC "Q" (TETR only).

3.11.14.12.1  (10-27-2009)
Fiduciary Codes

  1. Fiduciary Codes are based on taxpayer entry in any of the following:

    1. Section A of Form 1041 (Type of Entity)

    2. Check mark in Described in Section 4947(a)(2) box (Section E of Form 1041)

    3. Check mark in Yes box on Line 9, Other Information, (page 2 of Form 1041)

  2. The Fiduciary Code consists of a single numeric digit.

  3. Edit the Fiduciary Code to the right of the Simple Trust box. ( See Figure 3.11.14-22.)

  4. The valid Fiduciary Codes for Form 1041:

    • Code 1 - Decedent's Estate

    • Code 2 - Simple Trust or Grantor Trust (taxable) ( See IRM 3.11.14.12.4., for taxable grantor trust)

    • Code 3 - Complex Trust or Pooled Income Fund

    • Code 4 - Grantor Trust (nontaxable) ( See IRM 3.11.14.12.4., for nontaxable grantor trust) or Generation Skipping Trust or Family Estate Trust

    • Code 5 - Bankruptcy Estate-Chapter 7

    • Code 6 - Bankruptcy Estate-Chapter 11

    • Code 8 - Qualified Disability Trust

    • Code 9 - Nonexempt Charitable and Split Interest Trust, Described in Section 4947(a)(2).

      Note:

      If the choice of multiple entries includes the box for Section 4947(a)(2) Trusts, Fiduciary Code 9 takes priority. See....

    Note:

    See IRM 3.11.14.12.4., to determine whether the Grantor Trust is coded as a taxable or nontaxable Grantor Trust.

    Figure 3.11.14-22

    Editing Fiduciary Code
    Please click here for the text description of the image.

    Editing Fiduciary Code

3.11.14.12.2  (10-27-2009)
Trust Codes

  1. Trust Codes are based on entries made by taxpayers in Section A of Form 1041 (Type of Entity).

  2. The Trust Code consists of a single numeric digit.

  3. Edit the Trust Code to the right of the Pooled Income Fund box. ( See Figure 3.11.14-23.)

  4. The valid Trust Codes for Form 1041.

    • Code 1 - Generation Skipping Trust

    • Code 2 - Reserved

    • Code 3 - Grantor Trust or Family Estate Trust when grantor trust box is checked

    • Code 4 - Family Estate

    Figure 3.11.14-23

    Editing Trust Code
    Please click here for the text description of the image.

    Editing Trust Code

3.11.14.12.3  (10-27-2009)
Fiduciary and Trust Code Editing

  1. On most returns, the Fiduciary and Trust Codes will be determined from the box checked in Section A (Type of Entity).

  2. When editing the Fiduciary and Trust Codes,

    1. Determine if the filer has notated Bankruptcy or GNMA (Government National Mortgage Association) on Name Line, or

    2. The Described in Section 4947(a)(2) box is checked in Section E of Form 1041

    If .... Fiduciary Code Trust Code
    Bankruptcy is notated on the Name Line and the bankruptcy boxes are not checked, 5 None
    GNMA is present on the Name Line, 4 3
    The Described in Section 4947(a)(2) box is checked, ( See Figure 3.11.14-24.)

    Reminder:

    Edit Audit Code "6" .

    		9 None

    Note:

    If the choice of multiple entities includes the box for Section 4947(a)(2) Trusts, Fiduciary Code "9" takes priority.

    Figure 3.11.14-24

    There is currently no description available for this image. For help with this image, please call the IRS.gov Helpdesk at 1-800-876-1715.

  3. Edit the following Fiduciary and Trust Codes when there is an entry in Section A:

    Reminder:

    If the ESBT box is checked, edit the ESBT indicator as "2-1" in the left margin next to Line 10, Form 1041. Determine the Fiduciary and Trust Code from the box checked, other than the ESBT box.

    Type of Entity Fiduciary
    Code    		 Trust
    Code
    Decedent's Estate 1 None
    Simple Trust 2 None
    Complex Trust 3 None
    Grantor Trust (taxable)

    Note:

    Entries other than 0 (zero) present on any of Lines 1 - 21

    		 2 3
    Grantor Trust (nontaxable)

    Note:

    No entries present on any of Lines 1 - 21

    		 4 3
    Bankruptcy Estate - Chapter 7 5 None
    Bankruptcy Estate - Chapter 11 6 None
    Qualified Disability Trust

    Note:

    If "Section 642(b)(2)(C)" is notated on Line 20 of a TY 2001 Form 1041, edit Fiduciary Code "8" .

    		8 None
    Pooled Income Funds

    Note:

    Also edit "3 - 1" in the left margin next to Line 10 of Form 1041. ( See IRM 3.11.14.9.3.)

    		3 None
    The Pooled Income Fund and the "Described in Section 4947(a)(2)" (Section E) boxes are both checked

    Note:

    Edit Audit Code "6" but DO NOT edit a Pooled Income Fund Indicator.

    		9 None
    The Pooled Income Fund box and GNMA is present on the name line 4 3

  4. If no boxes or multiple boxes are checked in Section A, edit Fiduciary Code "3" and Trust Code "1" if:

    1. The "Yes" box is checked on Line 9 of the Other Information Section (Page 2 of Form 1041), or

    2. There is any other indication that the return is for a " Generation Skipping Trust" , e.g., notation on Name Line or a hand-drawn checkbox indicating the return is for a GENERATION SKIPPING TRUST. ( See Figure 3.11.14-25. )

    Figure 3.11.14-25

    No Boxes or Multiple Boxes are Checked in Section A and the Yes box is checked on Line 9 page 2.
    Please click here for the text description of the image.

    No Boxes or Multiple Boxes are Checked in Section A and the Yes box is checked on Line 9 page 2.

  5. If no boxes or multiple boxes are checked in Section A and Form 1041 does not contain an indication that the return is for a Generation Skipping Trust, determine the proper Fiduciary and/or Trust Code based on the Exemption amount claimed on Line 20 of Form 1041 in the following priority order:

    If Line 20 Equals ... And... Edit Fiduciary Code Edit Trust Code
    $3,650 - TY09
    $3,500 - TY08
    $3,400 - TY07
    $3,300 - TY06
    $3,200 - TY05
    $3,100 - TY04
    $3,050 - TY03
    $3,000 - TY02
    $2,900 - TY01
    $2,800 - TY00
    $2,750 - TY99     		  8 None
    $600   1 None
    $300   2 None
    $100   3 None
    $0 or blank and there is an indication that the return is a grantor trust Entry is present on any of Lines 1 - 21 2 3
    $0 or blank and there is an indication the return is a grantor trust No entry is present on any of Lines 1 - 21 4 3
    An entry other than $0 or blank that does not equal one of the allowable exemption amounts (listed above) and there is an indication the return is a grantor trust Entry is present on any of Lines 1 - 21 and Line 22 (Taxable Income) shows an amount greater than 0 (zero)) 2 3
    An entry other than $0 or blank that does not equal one of the allowable exemption amounts (listed above) and there is an indication the return is a grantor trust Entry is present on any of Lines 1 - 21 and Line 22 (Taxable Income) shows a zero or negative amount) 4 3

    Note:

    "X" out the amounts on Lines 1 through 22 and supporting attachments.

    The type of return cannot be determined from either the Name Line, Exemption Amount (Line 20), or a notation on the return or attachments indicating the Entity type   3 None

3.11.14.12.4  (10-27-2009)
Grantor Trusts

  1. In addition to the Grantor Trust box checked in Section "A" of Form 1041, other indications that the trust is a grantor trust would be if the taxpayer has notated "Pre-Need Funeral Trust, Receivership, Substantial Owner, Revocable Trust, Revocable Living Trust, Rabbi Trust, or IRC Section 671 - 678" in the Entity Section.

  2. Taxable Grantor Trust - Only part of the trust is treated as a Grantor Trust. The income, deductions, etc., that are taxable to the trust are reported on Form 1041. The amounts that are taxable directly to the grantor are shown on an attachment to the return.

    Note:

    The attachment should state the name, taxpayer identification number and the address of the person to whom the income is taxable, and setting forth the income, deductions and credits.

  3. Nontaxable Grantor Trust - The entire trust is a Grantor Trust. Only the entity portion of Form 1041 will be completed. Lines 1 through 21 should be blank or zero. The amounts that are taxable to the grantor are shown on an attachment to the form.

    Note:

    The attachment should state the name, taxpayer identification number and the address of the person to whom the income is taxable, and setting forth the income, deductions and credits.

3.11.14.12.4.1  (10-27-2009)
Determining Taxable vs. Nontaxable Grantor Trusts

  1. Filers should report only the part of the Income, Deductions, and Credits which are taxable to the trust on Form 1041.

  2. If the taxpayer has filed a Form 1041 claiming to be a Grantor Trust, determine if part of the trust is taxable or nontaxable.

    1. Taxable Grantor Trust - Code as a taxable Grantor Trust if entries are reported on any of Lines 1 through 22 of Form 1041, even if Line 23 (Total Tax) is a zero or negative amount.

    2. Nontaxable Grantor Trust - If the entire trust is a grantor trust, only the entity portion of the return should be filled out. No entries should be present on any of Lines 1 through 22.

    If ... Edit ...
    Entries are present on any of Lines 1 - 21 Fiduciary Code 2 & Trust Code 3
    No entries are present on any of Lines 1 - 21 Fiduciary Code 4 - Trust Code 3

    Exception:

    Edit the return as a nontaxable Grantor Trust if the taxpayer has filed a GNMA Pool return but has erroneously entered Income and Deduction amounts that result in a zero or negative amount on Line 22. X Lines 1 through 22 and attachments to the return that support the line items (i.e., Schedule I and D).

3.11.14.13  (10-27-2009)
♦Entity Perfection – General♦

  1. The entity of a tax return identifies the taxpayer on the Business Master File. The entity area of the return contains the following:

    1. Employer Identification Number (EIN)

    2. Name

    3. "In-care-of" Name

    4. Address

    Note:

    Form 1041 returns do not contain pre-addressed labels.

3.11.14.13.1  (10-27-2009)
♦Entity Perfection – Employer Identification Number (EIN)♦

  1. The EIN is a nine-digit number (XX-XXXXXXX) assigned to identify the estate or trust.

  2. The EIN is located in the upper right of the return (Box "C" of Form 1041. Box "2" of Forms 1041-QFT and 1041-N).

  3. Determine the EIN as follows:

    1. Non-Preaddressed Returns

    If ... And ... Then ...
    EIN is missing, You can determine the correct EIN from the attachments and schedules, Edit or arrow the EIN to the appropriate location. ( See Figure 3.11.14-26.)
    The EIN is either a PTIN or ITIN, Unnumbered,

    1. Remove return from batch.

    2. Route to Entity Control following local procedures for EIN assignment.

    The EIN is either a PTIN or ITIN, Numbered,

    1. Edit Action Code 320.

    2. Leave return in batch.
    Multiple EIN's are present, Unnumbered,

    1. Remove return from batch.

    2. Route to Entity Control following local procedures for EIN assignment.

    Multiple EIN's are present, Numbered,

    1. Edit Action Code 320.

    2. Leave return in batch..
    The EIN contains any of the following conditions and cannot be determined from attachments and/or schedules:

    • Illegible;

    • Missing;

    • Other than 9 digits;

    • All zeroes; or,

    • All nines

    		 Unnumbered,

    1. Research IDRS.

    2. If found, edit to the proper location.

    3. If not found, route to Entity Control following local procedures.
    The EIN contains any of the following conditions and cannot be determined from attachments and/or schedules:

    • Illegible;

    • Missing;

    • Other than 9 digits;

    • All zeroes; or,

    • All nines

    		 Numbered,

    1. Circle out all illegible EIN's, zeroes or nines.

    2. Edit Action Code 320.

    3. Leave return in batch.
    "PENDING" , "APPLIED FOR" , etc., is indicated in the EIN area, Unnumbered,

    1. Research IDRS.

    2. If found, edit to the proper location.

    3. If not found, route to Entity Control following local procedures.
    "PENDING" , "APPLIED FOR" , etc., is indicated in the EIN area, Numbered,

    1. Edit Action Code 320.

    2. Leave return in batch.

    Figure 3.11.14-26

    EIN Found Elsewhere on Return
    Please click here for the text description of the image.

    EIN Found Elsewhere on Return

3.11.14.13.2  (10-27-2009)
♦Entity Perfection – Name Control♦

  1. The Name Control consists of four characters or less.

    1. Valid characters are alpha, numeric, ampersand (&), hyphen (-), and blank. However, blanks are only valid in the last three positions.

    2. Disregard the word "THE" in the Name Control only when followed by more than one word.

  2. Determine the Name Control from the "Name of Estate or Trust" line at the top-center of Form 1041 (or the "Name of Trust" line on Forms 1041-QFT and 1041-N).

  3. See Job Aid Document 7071A"Name Control Job Aid - For Use Outside of the Entry Area" , to determine the Name Control.

  4. Edit the Name Control as follows:

    Note:

    For Form 1041 processing, the Check Digit rules do not apply. Underline the Name Control and circle out the Check Digits (if present) for all Form 1041 series returns.

    If ... And ... Then ...
    The entity is not on an IRS label   Underline the Name Control
    A second name is present and begins with "FKA" (formerly known as),   Continue editing the return.
     
    A second name is present and begins with " AKA" (also known as) or "DBA" (doing business as),   Circle the abbreviations. See Figure 3.11.14-27.  
    Unable to determine the Name Control, Unnumbered

    1. Research IDRS.

    2. If found, edit to the proper location.

    3. If not found, Route to Entity Control following local procedures.

    		  
    Unable to determine the Name Control, Numbered

    1. Edit Action Code 352 (Name Research).

    2. Leave return in batch.

    		  
    A return indicates the taxpayer has filed bankruptcy (e.g., shows "RECEIVER" or "TRUSTEE" in the entity area, signature area or attachment,   Route to Entity Control following local procedures.

    See IRM 3.11.14.8.2.1. and See Figure 3.11.14-28., for further instructions.     		 

    Figure 3.11.14-27

    Second Name present and begins with AKA abbreviation
    Please click here for the text description of the image.

    Second Name present and begins with AKA abbreviation

    Figure 3.11.14-28
    Bankruptcy Returns
    Please click here for the text description of the image.

    Bankruptcy Returns

  5. "Clifford Trusts" should contain the Name Control of the Trust Name.

    Example:

    The Name Control for "MAXWELL A. KIWI CLIFFORD TRUST" should be "KIWI" , not "CLIF" .

  6. For numbered trusts and GNMA Pool returns, use the first four digits of the trust number, disregarding any leading zeros and/or trailing alpha characters.

    Exception:

    If there are fewer than four numbers present, use the letters "GNMA" to complete the Name Control.

    1. For examples of editing numbered trusts and GNMA Pools, see below:

    If ... Edit the Name Control As ...
    Trust No. 12190 FBO Margaret Laurel 1219
    ABCD Trust No. 001036 Elm Bank TTEE 1036
    GNMA Pool No. 00100B 100G
    0020, GNMA Pool 20GN

  7. A Fiduciary or Fiduciary name change will be indicated by a mark in the "Change in fiduciary or Change in fiduciary's name" box in Section "F" of Form 1041.

    If ... Then ...
    The "Change in fiduciary" box is checked,

    1. Notate "TC 016" in the upper-left margin of Form 1041.

    2. Input TC 016 to update the Fiduciary information, using local procedures.

    The "Change in fiduciary's name" box is checked,

    1. Notate "TC 016" in the upper-left margin of Form 1041.

    2. Input TC 016 to update the Fiduciary information, using local procedures.

    Neither the "Change in fiduciary" box nor the "Change in fiduciary's name" box is checked but the Fiduciary name and title line has been altered (i.e., crossed out and updated),

    1. Notate "TC 016" in the upper-left margin of Form 1041.

    2. Input TC 016 to update the Fiduciary information, using local procedures.

    Only the "Change in fiduciary's address" box is checked, Do not edit "TC 016" .

    Note:

    ISRP will input the new address.



    See IRM 3.11.14.13.4., if an In-Care-Of Name is also present.

  8. A Trust name change will be indicated by a mark in the "Change in trust's name" box in Section F of Form 1041.

    If ... Then ...
    The "Change in trust's name" box is checked,

    1. Notate "TC 013" in the upper-left margin of Form 1041.

    2. Input TC 013.

3.11.14.13.3  (10-27-2009)
♦Entity Perfection – "In-Care-of" Name♦

  1. An "in-care-of" name can be identified by the words "in care of" or the symbols " c/o" or "%" (percent). ( See Figure 3.11.14-29.)

  2. Ensure tthe "in-care-of" name is located in the proper location (above the street address).

    If … Then …
    The in-care-of name is located on the street address line preceding the street address, No editing is required.
    The "in-care-of" name is located above the first name line or below the street address, Arrow the "in-care-of" name so it appears below the first name line and above the street address.
    The "in-care-of" name is shown on an attachment,

    1. Edit the "in-care-of" name above the street address beginning with the "%" or "c/o" in the first position.

    The street address for the "in-care-of" name is different from the street address of the Fiduciary,

    1. Arrow the "in-care-of" street address below the "in-care-of" name or edit the "in-care-of " street address below the "in-care-of" name if located on an attachment.

    2. Circle the Fiduciary street address and input "TC 016" . ( See IRM 3.11.14.13.4. )

    Note:

    Always circle the "in-care-of" symbol ("%" or "c/o" ) if it is present with an address. Do not use the ampersand (&) and the percent sign (%) when editing address information.

  3. A change in the "in-care-of" name can be determined by any of the following:

    • A check mark in the "Change in the trust's name" box, or

    • A check mark in the "Change in fiduciary's address" box, or

    • An indication that the "in-care-of" name is changed (e.g., the taxpayer crossed out the original "in-care-of " name and added the new name or has entered a new "in-care-of " name in brackets).

    If ... Then ...
    An "In-care of" name is changed but there is no indication of an address change,

    1. Edit the "In-care of" name as shown above.

    2. Continue editing the return.
    An "In-care of" name is present and the "Change in fiduciary's address" box is checked (or there is an indication of an address change),.

    1. Edit the "In-care of" name as shown above.

    2. Correct the address.

    3. Continue editing the return.

    Figure 3.11.14-29
    Valid In-Care of Name
    Please click here for the text description of the image.

    Valid In-Care of Name

3.11.14.13.4  (10-27-2009)
♦Entity Perfection – Domestic Addresses♦

  1. Perfection of the address is necessary when the mailing address (Street or P.O. Box) is not easily identified.

    Exception:

    Do not perfect the address on amended returns (CCC "G" ).

  2. The procedures for perfection of addresses for preaddressed returns indicating an address change and non-preaddressed returns are as follows:

    If ... And ... Then ...
    The address contains information other than a street address or P.O. Box,   No perfection is necessary. ISRP will enter the complete Address.
    There is an indication on an attachment that the Address has been changed,   Edit the new address in the entity section of the return. ( See Figure 3.11.14-30. )
    Form 8822 (Change of Address ) is attached, Information is the same, Take no action.
    Form 8822 (Change of Address ) is attached, Information is different, Detach Form 8822 and route to Entity Control following local procedures.
    Both a P.O. box and a street address are shown,  

    1. Notate "TC 016" in the upper-left margin.

    2. Input "TC 016" .

    ( See Figure 3.11.14-31.)
    Two street addresses are shown, An "in-care-of" name includes a street address other than the Fiduciary's street address

    1. Circle the Fiduciary's street address.

    2. Notate "TC 016" in the upper left margin.

    3. Input TC 016.
    Two street addresses are shown,  

    1. Underline the second Street Address.

    2. Notate "TC 016" in the upper-left margin.

    3. Input TC 016.
    One street address is shown, The estate or trust changed the address to a P.O. Box,

    1. Notate "TC 016" in the upper-left margin.

    2. Input TC 016.
    The city and state are not shown on the return, but are shown on an attachment,   Edit the city and state in the Entity section of the return.
    The Zip Code is missing or illegible, Is not available from the return or attachments, See Document 7475, State and Address Abbreviations, Major City Codes (MCCs), Zip Codes and Countries, to determine the Zip Code.
    Only the first three digits of the Zip Code can be determined,   Edit "01" for the fourth and fifth digits.
    The "Change In fiduciary's address" box is checked, An "in-care-of" Name is present.

    1. Edit the "%" (percent sign) or "c/o " to the left of the "in-care of" name (in the first position followed by the appropriate name.

    2. Correct the address.
    The National Change of Address (NCOA) label is present,   Underline the Name Control.
    It is necessary to edit the street address,   See Document 7475, State and Address Abbreviations, Major City Codes (MCCs), Zip Codes and Countries for current Address/Street Abbreviations.

    Note:

    Always circle the "in-care-of " symbol ("c/o" or "%" ) if it is present with an address. Do not use the ampersand (&) and the percent symbol (%) when editing address information.

    Figure 3.11.14-30

    Address Change
    Please click here for the text description of the image.

    Address Change

    Figure 3.11.14-31

    P O Box and Street Address on return
    Please click here for the text description of the image.

    Both a P.O. Box and a Street Address

  3. The U.S. Postal Service established new Address requirements for APO/DPO/FPO Addresses. If the old Address appears , convert to the new state code abbreviation based on the Zip Code (e.g., APO New York, NY 091XX would be converted to APO AE 091XX). ( See Figure 3.11.14-32. ) APO/DPO/FPO addresses are considered domestic addresses. Refer to APO/DPO/FPO Conversion Chart below:

    ZIP Code State Code
    340 AA
    090 - 098 AE
    962 - 966 AP

    Figure 3.11.14-32

    Editing a return with an APO address
    Please click here for the text description of the image.

    APO/DPO/FPO Address

3.11.14.13.5  (10-27-2009)
♦Entity Perfection – Foreign Address♦

  1. A foreign (international) address is any address that is not in the 50 states or the District of Columbia.

  2. Returns with APO, DPO and FPO addresses are considered domestic addresses. ( See IRM 3.11.14.13.4.)

  3. Route returns with a foreign address to Ogden Submission Processing Campus (OSPC) for processing. Prepare Letter 86C to inform the taxpayer that the return has been sent to Ogden.

  4. Returns with addresses in the following U.S. Possessions/Territories are considered to be foreign for processing purposes but are edited in the same way as domestic addresses.

    1. A two-character alpha code must be edited for the Possession/Territory name;

      U.S. Possession/Territory Abbreviation
      American Samoa AS
      Federated States of Micronesia FM
      Guam GU
      Marshall Islands MH
      Northern Mariana Islands MP
      Palau PW
      Puerto Rico PR
      Virgin Islands (U.S.) VI

    2. A ZIP code must be present for U.S. Possessions/Territories. Edit the appropriate ZIP code if one is not provided. See Exhibit 3.11.14-15.

  5. All other foreign addresses are edited the same as a domestic address with the following exceptions:

    1. The foreign country must be the last entry in the address.

    2. Circle the foreign country and edit the country code preceded by a "/" and followed by "/$" (e.g., "/GM/$" is edited for Germany). See Document 7475, State and Address Abbreviations, Major City codes (MCCs), ZIP Codes and Countries, for official foreign country codes.

    3. A unique country code will be edited for returns filed with an address in Canada. See IRM 3.11.14.13.5.1., Country Code - Canada.

      Note:

      Submission Processing BMF Foreign Address Job Aid (Number 2324–002) provides examples for editing foreign addresses.

    4. If the foreign address is from Australia, Brazil, Canada, Cuba, Italy, Mexico or The Netherlands, check if the address contains a province, state or territory. See Exhibit 3.11.14-16.

    If .. Then ...
    A province, state or territory is present,

    1. Circle the province, state or territory name.

    2. Edit the appropriate abbreviation. ( See Exhibit 3.11.14-16. )

    Province, state or territory is shown in abbreviated format, Continue editing the return.
    A province, state or territory is not present, Continue editing the return.

  6. A ZIP code or state is not required on a foreign address. Foreign addresses use a postal code that is entered before the city or foreign country and is part of the address.

3.11.14.13.5.1  (10-27-2009)
Country Code - Canada

  1. In an effort to assist Compliance with workload assignment, returns filed with an address in Canada will be edited using a unique country code based on the province/territory.

    If ... Then ...
    The foreign address contains a Canadian Province/Territory name or abbreviation in the table below,

    1. Circle the country name.

    2. Edit the appropriate country code based on the province/territory preceded by a "/" and followed by a "/$ " as the last entry in the address.

    The foreign address does not contain a Canadian Province/Territory name or abbreviation shown in the table below,

    1. Circle the country name.

    2. Edit the country code "/CA/$" as the last entry in the address.

    Canadian Province Province Abbreviation Country Code
    Alberta AB XA
    British Columbia BC XB
    Manitoba MB XM
    New Brunswick NB XN
    Newfoundland and Labrador NL XL
    Northwest Territories NT XT
    Nova Scotia NS XS
    Nunavut NU XV
    Ontario ON XO
    Prince Edward Island PE XP
    Quebec QC XQ
    Saskatchewan SK XW
    Yukon YT XY

  2. The rest of the foreign address is edited using procedures in See IRM 3.11.14.13.5.

3.11.14.14  (10-27-2009)
Section "E" – Nonexempt Charitable and Split-Interest Trusts

  1. Section "E" is located in the upper-right corner of Form 1041.

  2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

    Reminder:

    Also, edit Fiduciary Code "9" if the "Described in Section 4947(a)(2)" box is checked in Section "E" .

3.11.14.15  (10-27-2009)
Section "F" – Type of Return Filed (Initial, Final, Amended, etc.)

  1. Section "F" of Form 1041 provides the taxpayer with check boxes to indicate any of the following:

    If ... Then ...
    Initial Return See IRM 3.11.14.11.4.
    Final Return See IRM 3.11.14.11.3.
    Amended Return See IRM 3.11.14.8.1.
    Change in Fiduciary See IRM 3.11.14.13.2.
    Change in Fiduciary's Name See IRM 3.11.14.13.2.
    Change in Fiduciary's Address See IRM 3.11.14.13.2.
    Change in Trust's Name See IRM 3.11.14.13.2.

3.11.14.16  (10-27-2009)
Form 1041, Income Section (Lines 1–9)

  1. This subsection provides instructions for editing Lines 1 through 9 of Form 1041. Edit Lines 1 through 9 in dollars only.

  2. Do not bracket any entry, unless editing or computing a negative amount.

  3. Perfect all illegible or misplaced entries (when possible).

  4. Delete misplaced entries and edit to the appropriate lines.

3.11.14.16.1  (10-27-2009)
Line 1 – Interest Income

  1. Total Taxable Interest Income is reported on Line 1 of Form 1041.

  2. Line 1 must be a positive amount. Never bracket a Line 1 amount as a loss.

    1. If Line 1 is bracketed, determine if this amount is a misplaced entry:

    If ... Then ...
    The amount on Line 1 is a misplaced entry,

    1. Delete the Line 1 amount.

    2. Edit the amount to the appropriate line.

    3. Bracket the loss.
    Unable to determine if Line 1 is a misplaced entry,

    1. Delete the Line 1 amount.

    2. Edit the amount to Line 10 as a positive amount.

    3. Increase Lines 9 and 16 by the same amount.

  3. If Line 1 is blank or illegible and Interest Income is reported on attachments to the return:

    1. Determine the correct interest amount and perfect Line 1. If the correct amount cannot be determined, do not perfect Line 1 or correspond for interest information.

3.11.14.16.2  (10-27-2009)
Line 2a – Total Ordinary Dividends

  1. Total Ordinary Dividends are reported on Line 2a of Form 1041.

  2. If present, Line 2a must be a positive amount. Never bracket a Line 2a amount as a loss.

    1. If Line 2a is bracketed, determine if this amount is a misplaced entry:

    If ... Then ...
    The amount on Line 2a is a misplaced entry,

    1. Delete the Line 2a amount.

    2. Edit the amount to the appropriate line.

    3. Bracket the loss.
    The amount on Line 2a cannot be determined to be a misplaced entry, Delete the Line 2a amount.

  3. If Line 2a is blank or illegible and Total Ordinary Dividends are reported on attachments to the return, determine the correct amount and perfect Line 2a. If the correct amount cannot be determined, do not perfect Line 2a or correspond for Ordinary Dividend information.

3.11.14.16.3  (10-27-2009)
Line 2b(2) – Qualified Dividends

  1. Qualified Dividends Allocable to Estate or Trust are reported on Line 2b(2) of Form 1041.

  2. If present, Line 2b(2) must be a positive amount. Never bracket a Line 2b(2) amount as a loss.

    1. Though transcribed, Line 2b(2) is not used in the computation of Total Income (Line 9). Instead, Line 2b(2) is combined with Line 2b(1) (Qualified Dividends Allocable to Beneficiaries) to equal the amount reported on Line 2a.

  3. If Line 2b(2) is blank or illegible and the Qualified Dividends Allocable to Estate or Trust are reported on attachments to the return, determine the correct amount and perfect Line 2b(2). If the correct amount cannot be determined, do not perfect Line 2b(2) or correspond for Qualified Dividend information.

  4. If an amount is present on Line 19 of Schedule D and Line 2b(2), page 1, of 1041 is blank, edit the amount from Line 19 to Line 2b(2) of 1041.

    Exception:

    If the ESBT box is checked on Form 1041, do not edit the amount to Line 2b(2) of Form 1041.

3.11.14.16.4  (10-27-2009)
Line 3 – Business Income (or Loss)

  1. Net Business Income (or Loss) is reported on Line 3 of Form 1041.

  2. A Schedule C/C-EZ (Form 1040) or equivalent (computer printouts, written attachments, etc.) must be attached to Form 1041 if an amount ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ is present on Line 3 of Form 1041. ( See Figure 3.11.14-33. )

  3. Edit Line 3 as follows:

    If ... And ... Then ...
    The amount on Line 3 of Form 1041 is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , Schedule C/C-EZ (Form 1040) or equivalent is blank or missing, Correspond for the missing Schedule C.
    If Line 3 is blank or illegible, Schedule C/C-EZ (Form 1040) or equivalent is present,

    1. Edit amount from Line 31, Schedule C to Line 3 of Form 1041.

    2. Bracket Line 3 if a loss.

    Note:

    Line 31 of Schedule C reflects the Business Income (or Loss) and Line 3 of Schedule C–EZ reflects Business Income only.

    Figure 3.11.14-33
    Edit of Line 3
    Please click here for the text description of the image.

    Line 3 - Business Income or Loss (Sch C or C EZ (Form 1040))

3.11.14.16.5  (10-27-2009)
Line 4 – Capital Gain or Loss (Schedule D)

  1. The total gain or loss from the sale or exchange of capital assets is reported on Line 4 of Form 1041.

    Note:

    Only a Schedule D (Form 1041) is acceptable. Schedule D (Form 1041) cannot be substituted with a Schedule D from any other tax return (i.e., Forms 1040, 1065, 1120, etc.).

  2. Only one Schedule D can be processed. If more than one is attached, take the following actions:

    • Combine related transcription line amounts onto one schedule D. "X" those schedules not used.

    • If "Alternative minimum tax" (AMT) is notated on one or more of the multiple Schedule D(s), "X" the "AMT" Schedule D.

    • If "Alternative minimum tax" is notated on one or more of the multiple Schedule D(s), determine if the amount on Line 4 of Form 1041 equals Line 15(3) or Line 16 of one of the multiple Schedule D(s) attached.

    If ... Then ...
    Line 4 of Form 1041 equals Line 15(3)/16 of one of the Schedule D(s),

    1. Process the Schedule D that matches Line 4 of Form 1041.

    2. "X" the remaining Schedule D(s).

    Line 4 of Form 1041 equals the totals of Line 15(3)/16,

    1. Edit the combined totals of the Schedule D(s) to the first Schedule D.

    2. "X" the remaining Schedule D(s).

    Line 4 of Form 1041 does not equal Line 15(3)/16 on any of the Schedule D(s), Correspond to determine the correct Schedule D amount.

  3. Schedule D must be attached if an amount ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ is present on Line 4 of Form 1041.

  4. If an amount is present on Line 4 of Form 1041, compare the amount with Schedule D:

    If ... And ... Then ...
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Schedule D is blank or missing, Correspond to obtain the missing information.
    Form 8824 is attached with an amount greater than zero on Line 22, Schedule D is blank or missing, Correspond for Schedule D, regardless of the entry on Line 4 of Form 1041.

    Reminder:

    Edit CCC "1" if Form 8824 is attached.

  5. If Line 4, Form 1041 is a positive amount, compare the amount with Line 15(3), Schedule D, Page 2:

    If ... Then ...
    Line 4 of Form 1041 equals Line 15(3), Accept the amount reported on Line 4.
    Line 4 of Form 1041 does not equal Line 15(3).

    Note:

    Add Lines 15(1) and 15(2) to get 15(3), when necessary,

    1. "X" the amount on Line 4.

    2. Edit the amount reported on Line 15(3) of Schedule D in its place.

    Note:

    If there is no entry on Line 15(3) of Schedule D or Page 2 is missing, See IRM 3.11.14.34.

  6. If Line 4 of Form 1041 is a negative amount: verify the amount on Line 4 with Line 16 of Schedule D. If Line 16 is blank or illegible, verify the amount on Line 4 with Line 15(3) of Schedule D.

    If ... Then ...
    The negative amount on Line 4 of Form 1041 is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , Reduce the amount ≡ ≡ ≡ ≡ and bracket the amount. ( See Figure 3.11.14-34.)

    Exception:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ ≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    The negative amount on Line 4 is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , Compare Line 4 to Line 16 of Schedule D (or Line 15(3) if Line 16 is blank or missing).
    Line 4 equals Line 16 or 15(3) (if Line 16 is blank or missing),

    1. Accept the amount reported on Line 4.

    2. Continue editing the return.
    Line 4 does not equal Line 16 or 15(3) (if line 16 is blank or missing),

    1. Delete the Line 4 amount.

    2. Edit the amount reported on Line 16 (or Line 15(3)) of Schedule D in its place.

    3. Bracket the Line 4 amount if negative.

    Exception:

    Forms 1041 that are "Final " returns, accept the taxpayer's amount on Line 4.

    Note:

    If there is no entry on Line 16 [or Line 15(3)] of Schedule D, or if Page 2, Schedule D is missing, See IRM 3.11.14.34.

    Figure 3.11.14-34
    Edit of Line 4 when Loss is more than $3,000
    Please click here for the text description of the image.

    Line 4 - Capital Gains and Losses (Sch D, Form 1041)

  7. If Line 4 of Form 1041 is blank, zero, or illegible but a Schedule D is attached, determine the amount to be edited to Line 4 of Form 1041 from Lines 15(3) or 16 of Schedule D (Form 1041). ( See Figure 3.11.14-35. )

    If ... Then ...
    A positive amount (a gain) is present on Line 15(3), Edit the amount from Line 15(3) to Line 4 of Form 1041.
    A negative amount (a loss) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ is present on Line 15(3),

    1. Edit the amount from Line 15(3) to Line 4 of Form 1041.

    2. Bracket the Line 4 amount.
    A negative amount ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ is present on Line 15(3),

    1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    2. Bracket the Line 4 amount.
    A positive amount is present on Line 16 of Schedule D (i.e., the taxpayer crossed out the brackets), Edit the amount from Line 16 to Line 4 of Form 1041.
    A negative amount ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ is present on Line 16 of Schedule D,

    1. Edit the amount from Line 16 to Line 4 of Form 1041.

    2. Bracket the Line 4 amount.
    A negative amount ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ is present on Line 16 of Schedule D,

    1. Edit ≡ ≡ ≡ ≡ to Line 4 of Form 1041.

    2. Bracket the Line 4 amount.
    Line 15(3) of Schedule D is blank and an amount is present on Lines 3 or 4a of Schedule K-1, Leave Line 4 of Form 1041 blank.

    Exception:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ ≡ ≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Figure 3.11.14-35

    Edit of Line 4 when missing and Schedule D is attached with positive entry.
    Please click here for the text description of the image.

    Line 4 blank - Determine Schedule D Income/Loss

  8. If an amount is present on Line 19 of Schedule D and Line 2b(2), page 1, of 1041 is blank, edit the amount from Line 19 to Line 2b(2) of 1041.

    Exception:

    If the ESBT box is checked on Form 1041, do not edit the amount to Line 2b(2) of Form 1041.

3.11.14.16.6  (10-27-2009)
Line 5 – Rents, Royalties, Partnerships, Other Estates and Trusts, etc.

  1. All income or losses from rents, royalties, partnerships, other estates and trusts (except dividends, certain interest, and capital or ordinary gains and losses and depreciation) are reported on Line 5 of Form 1041.

    Note:

    Effective TY 2007 and subsequent, farm rental is no longer reported on Form 4835, and should be reported on Schedule E, line 40.

  2. A Schedule E (Form 1040) or equivalent (e.g., computer printouts, written attachments, etc.) must be attached to Form 1041 if an amount ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ is present on Line 5 of Form 1041.

  3. Edit Line 5 as follows:

    If ... And ... Then ...
    The entry on Line 5 of Form 1041 is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Schedule E (Form 1040) or equivalent is blank or missing, Correspond for the missing Schedule E.
    If Line 5 is blank or illegible, Schedule E (Form 1040) or equivalent is present, Edit amount from Line 41, Schedule E to Line 5 of Form 1041. See Figure 3.11.14-36.

    Figure 3.11.14-36

    There is currently no description available for this image. For help with this image, please call the IRS.gov Helpdesk at 1-800-876-1715.

3.11.14.16.7  (10-27-2009)
Line 6 – Farm Income (Loss)

  1. All farm income or losses are reported on Line 6 of Form 1041.

  2. A Schedule F (Form 1040) or equivalent (e.g., computer printouts, written attachments, etc.) must be attached to Form 1041 if an amount ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ is present on Line 6 of Form 1041.

  3. Edit Line 6 as follows:

    If ... And ... Then ...
    The entry on Line 6 of Form 1041 is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , Schedule F (Form 1040) or equivalent is blank or missing, Correspond for the missing information.
    Line 6 of Form 1041 is blank or illegible, Schedule F (Form 1040) or equivalent is attached, Edit amount from Line 36, Schedule F to Line 6 of Form 1041. ( See Figure 3.11.14-37.)

    Figure 3.11.14-37

    Editing Line 6 when entry does not match Schedule F
    Please click here for the text description of the image.

    Line 6 - Farm Income and Loss (Sch F, Form 1040)

3.11.14.16.8  (10-27-2009)
Line 7 – Ordinary Gain (or Loss) from Form 4797

  1. All income or losses from the sale or exchange of property other than capital assets (and involuntary conversions) from Form 4797 (Sales of Business Property) are reported on Line 7 of Form 1041.

  2. A Form 4797 or equivalent (e.g., computer printouts, written attachments, etc.) must be attached to Form 1041 if an amount is present on Line 7 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

  3. Edit Line 7 as follows:

    If ... Then ...
    Line 7 entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and Form 4797 (or equivalent) is not attached, Edit Missing Schedule Code "35" .
    Form 4797 is attached, compare Line 7, of Form 1041 with Line 17 of Form 4797, If different, edit Form 4797 amount to Form 1041, Line 7.

  4. If Form 8824 (Like-Kind Exchanges) is present, edit CCC "1" .

3.11.14.16.9  (10-27-2009)
Line 8 – Other Income (or Loss)

  1. Other income or loss not shown on lines 1 through 7 is reported on Line 8 of Form 1041.

  2. An amount on Line 8 may be supported by an attached statement:

    If ... Then ...
    A statement is not attached, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    The attachment shows the type of income to be the same as that reported on any of Lines 1 through 7, Decrease the Line 8 amount by that amount and increase the appropriate Income line (Lines 1 through 7). ( See Figure 3.11.14-38. )
    Line 8 is blank or illegible and "Other Income" is reported on an attachment to Form 1041, Determine if the amount has been reported elsewhere on the return. If unable to determine, edit the amount to Line 8 of Form 1041.
    The amount on Line 8 does not match the amount on the attachment and there are entries leading to the correct amount, Edit the correct amount on Line 8 of Form 1041.

    Caution:

    The Net Operating Loss (NOL) must be reported on Line 15a. If reported on any other line, "X" the amount, edit to Line 15a as a positive amount only, and adjust the appropriate Total line(s).

    Figure 3.11.14-38

    Editing Line 8
    Please click here for the text description of the image.

    Line 8 - Other Income

3.11.14.16.10  (10-27-2009)
Line 9 – Total Income (Loss)

  1. The total income or loss (sum of Lines 1 through 8) is reported on Line 9 of Form 1041.

    If ... Then ...
    Line 9 is blank or illegible but there are entries on Lines 1 through 8 and/or attachments, Compute and edit amount to Line 9 of Form 1041.
    Line 9 is the only entry in the Income Section, Edit the Line 9 amount to Line 8 of Form 1041.

3.11.14.17  (10-27-2009)
Form 1041, Deductions Section (Lines 10–21)

  1. This subsection provides instructions for editing Lines 10 through 21 on Form 1041. Edit Lines 10 through 21 in dollars only.

  2. Do not bracket any entry, unless editing or computing a negative amount.

  3. Perfect all illegible or misplaced entries (when possible).

  4. Delete misplaced entries and edit to the appropriate lines.

3.11.14.17.1  (10-27-2009)
Lines 10 through 15b

  1. All authorized deductions on Page 1 of Form 1041 are to be reported on Lines 10 through 15b.

  2. Lines 10 through 15b consist of the following items:

    • Line 10 – Interest Deduction.

    • Line 11 – Taxes.

    • Line 12 – Fiduciary Fees.

    • Line 13 – Charitable Deductions.

    • Line 14 – Attorney, Accountant and Return Preparer Fees.

    • Line 15a – Other Deductions not Subject to the 2% Floor.

    • Line 15b – Allowable Miscellaneous Itemized Deductions Subject to the 2% Floor.

  3. After perfecting Lines 10 through 14, from taxpayer entry on return, edit the balance to Line 15(a). ( See Figure 3.11.14-39. )

    Figure 3.11.14-39

    This image is too large to be displayed in the current screen. Please click the link to view the image.

  4. Lines 10 through 15b will normally be positive.

  5. If a negative amount is present on any of Lines 10 through 15b, determine from Lines 16 and 17 as instructed in the table below:

    If ... Then ...
    Line 16 is positive,

    1. "X" (delete) the negative amounts on Lines 10 through 15b

    2. Move the deleted amounts from Lines 10 through 15b to Line 8 as a positive amount.

    3. If an amount was already present on Line 8, delete the existing Line 8 amount and recalculate Line 8 to include the amounts moved from Lines 10 through 15b.

    4. Recalculate the amounts on Lines 9, 16, 17, and 22. ( See Figure 3.11.14-40. )

    Line 16 is negative and Line 17 is less than Line 9,

    Note:

    Taxpayers (particularly on computer-generated tax returns) may enter negative amounts on Lines 10 through 15b which are actually positive.

    		Do not bracket or move the entries in Lines 10 through 15b.
    Line 16 is negative and Line 17 is greater than Line 9,

    1. "X" (delete) the negative amount(s) on Lines 10 through 15b.

    2. Move the deleted amount(s) from Lines 10 through 15b to Line 8 as a positive amount.

    3. If an amount was already present on Line 8, delete the existing Line 8 amount and recalculate to include the amounts moved from Lines 10 through 15b.

    4. Recalculate the amounts on Lines 9, 16, 17, and 22.

  6. If a negative amount is on Line 15a and the taxpayer indicates a NOL (net operating loss), ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ . Do not bracket or move the entry.

    Exception:

    If a negative entry is present on Line 15a or 15b and the taxpayer indicates that all of a negative amount is for a Tax Exempt Allocation, there is only one other deduction claimed within Lines 10 through 14, and Line 1 in the "Other Information" Section (Page 2 of Form 1041) is marked "Yes" or is blank and no computation is present, process as instructed in See IRM 3.11.14.17.8.

    Figure 3.11.14-40

    Editing return when negative deductions are reported and Line 16 is positive
    Please click here for the text description of the image.

    Negative Deductions and Line 16 is Positive

  7. The Net Operating Loss (NOL) must be reported on Line 15a. If reported on any other line, delete the amount, edit to Line 15a, and adjust the appropriate Total line(s). ( See Figure 3.11.14-41.)

  8. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Figure 3.11.14-41
    There is currently no description available for this image. For help with this image, please call the IRS.gov Helpdesk at 1-800-876-1715.

3.11.14.17.2  (10-27-2009)
Line 16 – Total of Lines 10 through 15b

  1. Line 16 is the total of Lines 10 through 15b on Form 1041.

  2. Line 16 will normally be positive. However, taxpayers (particularly on computer-generated tax returns) may enter negative amounts on Lines 10 through 15b which are actually positive, resulting in a negative amount on Line 16.

    If ... Then ...
    Line 16 is negative and Line 17 is less than Line 9, Do not bracket or move the entries in Lines 10 through 15b.
    Line 16 is negative and Line 17 is greater than Line 9,

    1. Delete the negative amount(s) on Lines 10 through 15b.

    2. Move the deleted amount(s) from Lines 10 through 15b to Line 8 as a positive amount.

    3. If an amount was already present on Line 8, delete the existing Line 8 amount and recalculate to include the amounts moved from Lines 10 through 15b.

    4. Recalculate the amounts on Line 9, Line 16, Line 17, and Line 22.

  3. If Line 16 is blank, add the amounts on Lines 10 through 15b and edit to Line 16.

  4. If an entry is present on Line 16 but all of Lines 10 through 15b are blank, determine if an attachment or schedule is present which clarifies the deduction.

    1. If documentation is present, edit the amount to the appropriate Line 10 through 15b.

    2. If documentation is not present, correspond to determine the proper deduction amount, if any.


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