1041 Schedule I Alternative Minimum Tax
Estates and Trusts

Introduction

Schedule I (Form 1041) is a supplemental form used by estates and trusts when filing their annual income tax returns (Form 1041). It calculates the alternative minimum tax (AMT) that may apply to the estate or trust.

Schedule I is often used in conjunction with Form 990-T, which is filed by tax-exempt organizations. If an estate or trust is also tax-exempt, it may need to file both 1041 tax form and form 990 t

In this resource guide, we will learn about the key aspects of Schedule I (Form 1041), from its purpose to filing requirements and commonly asked questions.

What is Schedule I (Form 1041)?

Schedule I (Form 1041) is a supplemental form used to calculate the alternative minimum tax (AMT) for estates and trusts. The form adjusts taxable income by adding back items that are treated differently under the AMT rules, such as depreciation or passive activity losses. This ensures that the estate or trust pays at least the minimum amount of tax required by law.

It includes several lines for entering various types of income, adjustments, preferences, and exemptions that are used to determine the AMT.

Who must file Schedule I (Form 1041)?

Schedule I (Form 1041) must be filed by estates and trusts that have certain types of income or deductions that could trigger the Alternative Minimum Tax (AMT).

Specifically, if the estate or trust has an income that exceeds the exemption amount or claims significant deductions that reduce its regular tax liability, filing Schedule I is mandatory. The exemption amount varies depending on the filing status of the estate or trust.

Schedule I (Form 1041) filing requirements

This Schedule I (Form 1041) is used to calculate the Alternative Minimum Tax (AMT) for estates and trusts to determine if any additional tax is owed.

Name of estate or trust

Enter the name of the estate or trust filing the return.

Employer Identification Number

Provide the EIN assigned to the estate or trust for tax identification.

Below, we have provided Schedule I (Form 1041) filing requirements for each part.

Part I-Estate’s or Trust’s share of Alternative Minimum Taxable Income

Line 1

Enter the estate’s or trust’s adjusted total income or loss taken from Form 1041, line 17. This amount serves as the base figure that will later be adjusted to determine the Alternative Minimum Tax income.

Line 2

Enter any interest-related adjustments that must be recalculated under AMT rules. Some interest expenses that are allowed for regular tax may need to be treated differently when figuring AMT.

Line 3

Enter the state, local, or foreign taxes that were included on Form 1041. These can include property taxes, sales taxes, or income taxes paid to state or local authorities.

Line 4

If the estate or trust received a refund of taxes in the current year that were previously deducted, enter that amount here. It usually reduces the earlier tax adjustment.

Line 5

If the estate or trust claimed depletion for natural resources (like oil, gas, or minerals), it must be recalculated using AMT rules. Enter the difference between the regular tax deduction and the AMT deduction.

Line 6

If the estate or trust used a net operating loss to lower its regular taxes, the IRS requires you to add that amount back here as a positive number. Essentially, the AMT rules don't let you use this deduction the same way regular tax rules do.

Line 7

Usually, interest from municipal bonds is tax-free. However, private activity bonds are an exception for the AMT. If you earned interest here, you have to count it as taxable income for this section.

Line 8

If you sold small business stock and took a tax break on the profit, the AMT wants a small piece of it back. You’ll need to add 7% of that excluded gain back into your totals here.

Line 9

In the regular tax world, you aren't taxed just for buying an ISO. But for the AMT, the IRS looks at the "bargain element" the difference between what you paid and what the stock is actually worth and treats that discount as taxable income.

Line 10

If this estate is a beneficiary of another trust, check the Schedule K-1 you received from them. Look at Box 12 (Code A); if there’s a number there, it’s an AMT adjustment that you need to carry over to this line.

Line 11

If the estate or trust sold or disposed of property, the gain or loss may be calculated differently under AMT rules. Enter the difference between the regular tax result and the AMT result.

Line 12

Some assets use different depreciation methods for AMT purposes. Recalculate depreciation using the AMT rules and enter the difference between the regular tax depreciation and AMT depreciation.

Line 13

If the estate or trust has passive income or losses, such as from certain investments or partnerships, they must be recalculated using AMT rules. Enter the difference between the regular tax amount and the AMT amount.

Line 14

Losses from activities where the estate or trust is not fully at risk, or from certain partnerships or S corporations, may be limited. Recalculate the allowable loss using AMT rules and enter the difference.

Line 15

For businesses like publishing, circulation expenses deducted immediately for regular tax must instead be spread over three years for AMT purposes. Enter the difference between the regular deduction and the AMT deduction.

Line 16

If the estate or trust has income from long-term contracts, the income may be calculated differently under AMT rules. Enter the difference between the income reported for regular tax and the amount calculated for AMT.

Line 17

If there are expenses related to mining activities, these costs may be treated differently for AMT. Enter the difference between the deduction allowed for regular tax and the deduction allowed under AMT rules.

Line 18

Costs spent on research or experimental activities may have different deduction rules for AMT. Record the difference between the regular tax deduction and the AMT deduction.

Line 19

If the estate or trust still receives income from installment sales made before January 1, 1987, this income may need an adjustment for AMT. Enter the amount that must be included for AMT purposes.

Line 20

For oil and gas drilling activities, some intangible drilling costs that were deducted for regular tax may be treated as a tax preference for AMT. Enter the portion that must be added back when calculating AMT income.

Line 21

Enter any additional adjustments that affect income for AMT purposes. This may include items that must be added or changed when calculating income under AMT rules.

Line 22

Enter the Alternative Tax Net Operating Loss Deduction (ATNOLD) allowed under AMT rules if the estate or trust has a net operating loss that can be used for AMT, following the applicable AMT limitation rules.

Line 23

Add together all the amounts from lines 1 through 22. The result is the estate or trust’s adjusted income calculated under AMT rules.

Line 24

Enter the income distribution deduction amount calculated in Part II, line 42. This represents the portion of income distributed to beneficiaries that reduces AMT income.

Line 25

Write the estate tax deduction taken on Form 1041, line 19. This amount is allowed as a deduction when calculating AMT income.

Line 26

Add the amounts from lines 24 and 25. This shows the total deductions that will be subtracted from AMT income.

Line 27

Subtract line 26 from line 23. The result is the estates or trust’s alternative minimum taxable income.

Part II-Income Distribution Deduction on a Minimum Tax Basis

Line 28

Start with the amount from line 23 and add back any Section 199A deduction, because this deduction is not allowed when calculating AMT distribution income. This adjusted figure is used to determine the income distribution deduction under AMT rules.

Line 29

Calculate the tax-exempt interest after making AMT adjustments. Subtract any related expenses that were used to earn that tax-exempt interest to find the adjusted amount.

Line 30

Combine the adjusted income and adjusted tax-exempt interest amounts. This gives the total income available for distribution to beneficiaries under AMT rules.

Line 31

Enter the capital gains included in the income but reduce the amount by any Section 1202 qualified small business stock exclusion that applies under AMT rules.

Line 32

Enter any capital gains from the current year that were paid or permanently set aside for charitable purposes. Reduce this amount if any Section 1202 exclusion applies to it.

Line 33

Report your investment profits or losses here but use the AMT-specific values for the assets you sold. Because the "cost" of an item can be different for AMT than for regular taxes, your gain or loss might be different too.

Line 34

Use this line to fix the cost of your property. If you made an adjustment on Line 11 earlier, you must include it here to ensure you aren't being taxed on the same amount twice when calculating your final profit.

Line 35

Combine the totals from Lines 28 through 34. If the math ends up in the negatives, just enter 0.

Line 36

Enter the amount of money that the trust must pay out to beneficiaries this year, according to the legal paperwork. These are the no-choice distributions.

Line 37

This is for any other money actually paid out or credited to beneficiaries that wasn't legally required but happened anyway.

Line 38

Add Lines 36 and 37 together. This represents the total amount of money that left the estate or trust and went into the hands of the beneficiaries this year.

Line 39

Enter the tax-exempt income included in the total distributions on line 38 (except the amount from line 7). This step separates income that isn’t taxable under AMT.

Line 40

Subtract line 39 from line 38. This gives the portion of the distributions that may qualify for the deduction under AMT rules.

Line 41

Subtract line 29 from line 35. This helps determine the maximum deduction allowed under AMT. If the result is zero or less, enter 0.

Line 42

Compare line 40 and line 41 and enter the smaller amount here. Record the same amount again on line 24. 

Part III-Alternative Minimum Tax

Line 43

Start with the AMT exemption amount of $30,700. This is the portion of income that is not subject to alternative minimum tax.

Line 44

Enter the amount from line 27, which represents the estates or trust’s alternative minimum taxable income.

Line 45

The phase-out threshold is $102,500. If income goes above this level, the exemption amount may start to decrease.

Line 46

Subtract $102,500 (line 45) from the amount on line 44. If the result is zero or negative, enter 0.

Line 47

Multiply the amount on line 46 by 25%. This figure is used to reduce AMT exemption if income exceeds the limit.

Line 48

Subtract line 47 from line 43 to determine the remaining AMT exemption after any reduction. If the result is zero or less, enter 0.

Line 49

Subtract line 48 from line 44. The result shows the income that will actually be subject to alternative minimum tax.

Line 50

If the estate or trust has qualified dividends or certain capital gains, you must go to Part IV to compute this line.

Otherwise:

• If line 49 is $239,100 or less, multiply it by 26%.
• If line 49 is more than $239,100, multiply it by 28% and then subtract $4,782.

This gives the tentative alternative minimum tax amount.

Line 51

Enter any foreign tax credit allowed under AMT rules. This credit reduces the tentative AMT if the estate or trust paid taxes to a foreign country.

Line 52

Subtract line 51 from line 50. The result is the tentative minimum tax after considering the foreign tax credit.

Line 53

Enter the regular tax from Form 1041, Schedule G, line 1a, but do not include any foreign tax credit already claimed on Schedule G at line 2a.

Line 54

Subtract line 53 from line 52.

• If the result is zero or less, enter 0.
• If it is positive, this is the Alternative Minimum Tax (AMT) that must be reported on Form 1041, Schedule G, line 1c.

Part IV-Line 50 Computation using Maximum Capital Gains Rates

Line 55

Simply enter the amount from line 49 here. This amount represents the estates or trust’s Alternative Minimum Tax (AMT) taxable income that was calculated in the earlier part of the schedule.

Line 56

Enter the amount from Schedule D (Form 1041) line 26, Schedule D Tax Worksheet line 13, or the Qualified Dividends Tax Worksheet line 4, depending on which one applies. If AMT adjustments change the capital gain amounts, use the recalculated AMT figures instead.

Line 57

• Enter the amount from Schedule D (Form 1041), line 18b column (2) after adjusting it for AMT if necessary.
• If Schedule D wasn’t completed for regular tax or AMT, enter 0.

Line 58

If you didn’t use the Schedule D Tax Worksheet, simply enter the amount from line 56. If you did use the worksheet, add lines 56 and 57, then enter the smaller amount between that total or line 10 of the Schedule D Tax Worksheet.

Line 59

• Enter the smaller amount between line 55 and line 58.
• This identifies the portion of income that may qualify for lower capital gain or qualified dividend tax rates.

Line 60

• Subtract line 59 from line 55.
• This gives the remaining AMT taxable income that will be taxed at regular AMT rates.

Line 61

Calculate the AMT tax on the amount from line 60. If line 60 is $239,100 or less, multiply it by 26%. If it is more than $239,100, multiply it by 28% and then subtract $4,782 from the result.

Line 62

Enter the maximum amount of income that can be taxed at the 0% capital gain rate.

Line 63

Enter the amount from Schedule D line 27, Schedule D Tax Worksheet line 14, or Qualified Dividends Tax Worksheet line 5, depending on which one applies for the regular tax calculation. If none of these were completed, enter the amount from Form 1041 line 23. If that amount is zero or negative, enter 0.

Line 64

Subtract line 63 from line 62. If the result is zero or negative, enter 0.

Line 65

Enter the smaller amount between line 55 and line 56.

Line 66

Enter the smaller amount between line 64 and line 65. This portion of income will be taxed at the 0% rate.

Line 67

Subtract line 66 from line 65. This shows the remaining amount of income that will be taxed at higher capital gain rates.

Line 68

Enter the maximum amount that can be taxed at rates lower than 20%. This is the maximum amount of income that can be taxed at capital gain rates.

Line 69

Enter the amount from line 64.

Line 70

Enter the amount from Schedule D line 27, Schedule D Tax Worksheet line 18, or the Qualified Dividends Tax Worksheet line 5, depending on which was used for the regular tax. If none of these were completed, enter the amount from Form 1041 line 23. If that amount is zero or negative, enter 0.

Line 71

Add the amounts from line 69 and line 70.

Line 72

Subtract line 71 from line 68. If the result is zero or less, enter 0.

Line 73

Compare line 67 and line 72 and enter the smaller amount.

Line 74

Multiply the amount on line 73 by 15%. This calculates the tax on that portion of income.

Line 75

Add line 66 and line 73.

Line 76

Subtract line 75 from line 65. This shows the remaining amount of income that hasn’t yet been taxed at lower capital gain rates.

Line 77

Multiply the amount on line 76 by 20%. This calculates the tax for the portion of income taxed at the 20% capital gain rate.

Line 78

Add the amounts from lines 60, 75, and 76.

Line 79

Subtract line 78 from line 55. This shows the remaining income that hasn’t been included in earlier calculations.

Line 80

Multiply the amount on line 79 by 25% to calculate the tax for that portion.

Line 81

Add together the amounts from lines 61, 74, 77, and 80. This gives the total AMT tax based on the capital gain rate calculations.

Line 82

Calculate the AMT tax using a flat rate method on the amount from line 55. If line 55 is $239,100 or less, multiply it by 26%. If it is more than $239,100, multiply it by 28% and then subtract $4,782.

Line 83

Compare line 81 and line 82 and enter the smaller amount. This is the final AMT tax amount, and it should also be entered on line 50.