Exemption Worksheet for Qualified Disability Trusts Only

included in the decedent’s gross estate
for estate tax purposes, the estate or
trust is allowed to deduct in the same
tax year that the income is included that
portion of the estate tax imposed on the
decedent’s estate that is attributable to
the inclusion of the IRD in the
decedent’s estate. For an example of
the computation, see Regulations
section 1.691(c)-1 and Pub. 559.
If any amount properly paid,
credited, or required to be distributed
by an estate or trust to a beneficiary
consists of IRD received by the estate
or trust, do not include such amounts in
determining the estate tax deduction for
the estate or trust. Figure the deduction
on a separate sheet. Attach the sheet
to your return.
If you claim a deduction for
estate tax attributable to
CAUTION qualified dividends or capital
gains, you may have to adjust the
amount on Form 1041, page 1, line
2b(2), or Schedule D (Form 1041), line
18.

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Also, a deduction is allowed for the
GST tax imposed as a result of a
taxable termination or a direct skip
occurring as a result of the death of the
transferor. See section 691(c)(3). Enter
the estate’s or trust’s share of these
deductions on line 19.

Trusts required to distribute all
income currently. A trust whose
governing instrument requires that all
income be distributed currently is
allowed a $300 exemption, even if it
distributed amounts other than income
during the tax year.
Qualified disability trusts. A qualified
disability trust is allowed a $3,650
exemption if the trust’s modified AGI is
less than or equal to $166,800. If its
modified AGI exceeds $166,800,
complete the worksheet below to figure
the amount of the trust’s exemption. To
figure modified AGI, follow the
instructions for figuring AGI for line 15b
on page 22, except use zero as the
amount of the trust’s exemption when
figuring AGI.
A qualified disability trust is any trust:
1. Described in 42 U.S.C.
1396p(c)(2)(B)(iv) and established
solely for the benefit of an individual
under 65 years of age who is disabled,
and
2. All of the beneficiaries of which
are determined by the Commissioner of
Social Security to have been disabled
for some part of the tax year within the
meaning of 42 U.S.C. 1382c(a)(3).

Line 20—Exemption

A trust will not fail to meet item 2
above just because the trust’s corpus
may revert to a person who is not
disabled after the trust ceases to have
any disabled beneficiaries.

Decedents’ estates. A decedent’s
estate is allowed a $600 exemption.

All other trusts. A trust not described
above is allowed a $100 exemption.

Tax and Payments
Line 22—Taxable Income
Minimum taxable income. Line 22
cannot be less than the larger of:
• The inversion gain of the estate or
trust, as figured under section 7874, if
the estate or trust is an expatriated
entity or a partner in an expatriated
entity, or
• The sum of the excess inclusions of
the estate or trust from Schedule Q
(Form 1066), line 2c.
NOL. If line 22 (figured without regard
to the minimum taxable income rule
stated above) is a loss, the estate or
trust may have an NOL. Do not include
the deductions claimed on lines 13, 18,
and 20 when figuring the amount of the
NOL.
Generally, an NOL may be carried
back to the prior 2 tax years. The
2-year carryback period does not apply
to the portion of an NOL attributable to
an eligible loss; a farming loss; a
qualified disaster, GO Zone, recovery
assistance, or disaster recovery
assistance loss; or a specified liability
loss. An estate or trust may also elect
to carry an NOL forward only, instead
of first carrying it back. For more
information, see the Instructions for
Form 1045, Application for Tentative
Refund.
Complete Schedule A of Form 1045
to figure the amount of the NOL that is
available for carryback or carryover.
Use Form 1045 or file an amended
return to apply for a refund based on an

Exemption Worksheet for Qualified Disability Trusts
Only—Line 20

Keep for Your Records

Note: If the trust’s modified AGI* is less than or equal to $166,800, enter $3,650 on Form 1041, line 20.
Otherwise, complete the worksheet below to figure the trust’s exemption.
1. Maximum exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.
2. Enter the trust’s modified AGI* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.
3. Threshold amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.

$166,800

4. Subtract line 3 from line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.
Note: If line 4 is more than $122,500, enter $2,433 on line 9 below. Do not complete lines 5
through 8.
5. Divide line 4 by $2,500. If the result is not a whole number, increase it to the next higher
whole number (for example, increase 0.0004 to 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.
6. Multiply line 5 by 2% (.02) and enter the result as a decimal . . . . . . . . . . . . . . . . . . . . . 6.
7. Multiply line 1 by line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.
8. Divide line 7 by 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.
9. Exemption. Subtract line 8 from line 1. Enter the result here and on Form 1041, line 20 . . . . . . . . . . . . . . . 9.
*Figure the trust’s modified AGI in the same manner as AGI is figured in the line 15b instructions on page 22,
except use zero when figuring the amount of the trust’s exemption.

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$3,650