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Tax 990

Form 1041 Schedule I - Alternative Minimum Tax - Estates and Trusts

- Updated March 27, 2025 - 11.00 AM - Admin, Tax990

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Form 1041 Schedule I

Table of Contents

1.

What is Form 1041 Schedule I?

2.

When should Form 1041 Schedule I be attached with 990-T?

3.

What information is needed to complete Form 1041 Schedule I?

4.

How to complete Form 1041 Schedule I?

5.

Tax990 Includes Form 1041 Schedule I with your 990-T Form for Free!

What is Form 1041 Schedule I?

​Schedule I (Form 1041) is used by estates and trusts to calculate the Alternative Minimum Tax (AMT). The AMT is a parallel tax system designed to ensure that entities with substantial income cannot avoid paying taxes through deductions and credits. 1041 Schedule I adjusts taxable income by adding back items that receive favorable treatment under regular tax rules, such as depreciation or passive activity losses, ensuring that the estate or trust pays at least the minimum amount of tax required by law. It calculates:

  • The estate’s or trust’s taxable income under AMT rules,

  • The income distribution deduction adjusted for AMT, and

  • The AMT amount owed by the estate or trust.

When should I attach 1041 Schedule I with Form 990-T?

Trusts that file Form 990-T and are subject to the Alternative Minimum Tax (AMT) must attach Schedule I (Form 1041) to calculate and report their AMT liability.

What information is needed to complete Form 1041 Schedule I?

Below are the key information required to complete this 1041 Schedule I:

  • Adjusted total income

  • AMT adjustments & preferences

  • Income distribution deduction

  • Exemption & phase-out thresholds

  • AMT tax calculation & liability

How to complete Form 1041 Schedule I?

​Completing Schedule I (Form 1041) involves determining if an estate or trust is subject to the Alternative Minimum Tax (AMT) by making specific adjustments to its taxable income. Here's an overview of each part:

Part I: Estate’s or Trust’s Share of Alternative Minimum Taxable Income

This section recalculates taxable income under AMT rules by adjusting for items that receive preferential treatment under regular tax calculations.

  • Adjusts taxable income by adding back deductions such as:

    • Certain tax-exempt interest
    • Accelerated depreciation
    • Passive activity losses
    • Incentive stock options

  • Determines the Adjusted AMTI after applying required adjustments.

  • Includes deductions such as the income distribution deduction and estate tax deduction to calculate final AMTI.

  • If the final AMTI exceeds the AMT exemption threshold, further tax calculations are required.

For Form 990-T Filers:

If the trust filing Form 990-T has unrelated business taxable income (UBTI) and is subject to AMT, this section is used to determine its Adjusted AMTI before computing the AMT liability.

Part II: Income Distribution Deduction on a Minimum Tax Basis

  • This part calculates adjusted AMT income, determine distributable net AMTI, applies distribution deductions, and finalizes the AMT-based income distribution deduction.

  • Adjusts taxable income by accounting for:

    • Tax-exempt interest
    • Capital gains and losses
    • Distributable Net AMTI (DNAMTI)

  • Calculates the tentative income distribution deduction, considering adjustments for AMT.

  • Ensures that only the deductible portion of distributions is used to reduce AMTI.

For Form 990-T Filers:

If the trust distributes income that includes UBTI, AMT adjustments in this section may impact the final tax liability reported on Form 990-T.

Part III: Alternative Minimum Tax

This part is used to finalize the Alternative Minimum Tax (AMT) through various calculations on each line.

  • Applies an AMT exemption amount based on AMTI.

  • If AMTI exceeds the exemption threshold, the exemption is phased out.

  • Computes AMT liability by applying:

    • A 26% tax rate for lower-income amounts.
    • A 28% tax rate for higher-income amounts.

  • Compares AMT liability with regular tax liability to determine the final tax owed.

For Form 990-T Filers:

If the trust is subject to AMT on unrelated business income, the AMT tax amount is reported on Form 990-T, Part II, Line 5 to ensure the correct tax is applied.

Part IV: Line 50 Computation Using Maximum Capital Gains Rates

This part computes line 50 value using the maximum capital gains rates.

Note:

If you haven’t completed Part V of 1041 Schedule D, the Schedule D Tax Worksheet, or the Qualified Dividends Tax Worksheet, refer to the instructions before proceeding.

  • Identify AMT Taxable Income – Determine the taxable AMT income from Line 49 and extract capital gains and qualified dividends from Schedule D or related worksheets.

  • Adjust for AMT Capital Gains – Compare total AMT taxable income and capital gains to identify the portion subject to capital gains tax treatment.

  • Apply AMT Tax Rates – Use the 26% or 28% AMT tax rate for non-capital gains income while applying preferential rates (0%, 15%, or 20%) to eligible capital gains.

  • Compute Capital Gains Tax – Determine the tax on capital gains using applicable thresholds, ensuring the correct rates apply to different portions of the gains.

  • Compare Final Tax Amounts – Calculate the total tax using both the standard AMT rate method and the capital gains rate method. Enter the smaller amount on Line 50.

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