CT-1041 Instruction Booklet, 2016 Connecticut …

1 Connecticut 2016 Income Tax Return form . for Trusts and CT- 1041 . Estates This booklet contains Resident Trusts and Estates information and Nonresident Trusts and Estates instructions about the following forms: Part-Year Resident Trusts form CT- 1041 . Schedule CT-1041B. Schedule CT-1041C. Schedule CT-1041FA. form CT- 1041 EXT. form CT-1041ES. form CT- 1041 K-1T. Schedule CT- 1041 form CT- 1041 can be filed through the Connecticut Federal/State Electronic Filing Modernized e-file (MeF) Program. K-1. Schedule CT-1041WH Direct Deposit Choose direct deposit for your Tax information is Connecticut income tax refund. available on the DRS See Line 18 - Amount to Be Refunded, on Page 17. website at File form CT- 1041 , form CT- 1041 EXT, or form CT-1041ES using the TSC. More Department of Revenue Services (DRS) tax information is listed on the back cover. Table of Contents What's New .. 4 Extension Requests .. 11. Extension of Time to File .. 11. Other Taxes for Which the Trust or Estate Extension of Time to Pay.

2 12. May Be Liable .. 5. Payment Options .. 12. Connecticut Income Tax Withholding .. 5. Estimated Tax Payments .. 12. Controlling Interest Transfer Taxes .. 5. Exceptions .. 12. Definitions .. 6 2016 Estimated Tax Due Dates .. 12. Required Annual Payment .. 13. General Information .. 7. Guidelines for Banking Institutions .. 13. How to Get Help .. 7. Annualized Income Installment Method .. 13. Forms and Publications .. 7. Special Rules for Farmers and Fishermen .. 13. Where to File .. 7. Interest on Underpayment of Estimated Tax .. 13. Modernized e-file (MeF) .. 7. Filing form CT-2210 .. 13. Mailing Addresses for form CT- 1041 .. 7. Interest and Penalties .. 13. Who Must File form CT- 1041 .. 7. Waiver of Penalty .. 14. Connecticut Minimum Tax Credit .. 8. Refund Information .. 14. Connecticut Tax Returns for Individuals .. 8. Recordkeeping .. 14. Tax Returns for Decedents .. 8. Copies of Returns .. 14. Change of Residence of the Grantor of a Revocable Trust.

3 8 Order in Which to Complete form CT- 1041 . and Schedules .. 14. Connecticut Taxable Income for Certain Inter Vivos Trusts .. 8 Requirement to Attach Copies of Federal Forms .. 15. Fiduciary Adjustment for Lump Sum Distributions .. 8 instructions for form CT- 1041 .. 15. Sale or Disposition of an Interest in an Entity Filing Year .. 15. that Owns Property in Connecticut .. 8. Federal Employer Identification Number (FEIN) 15. How Part-Year Resident Trusts Are Taxed .. 9. Name, FEIN, and Address .. 15. Connecticut Income Taxation of Bankruptcy Estates .. 9 Type of Return .. 15. Connecticut Income Taxation of Resident Status .. 15. Debtors Who Are Individuals .. 9 Type of Entity .. 15. Qualified Funeral Trusts (QFT) .. 9 Rounding Off to Whole Dollars .. 15. Composite Return .. 10 Negative Numbers .. 15. Reporting for a Portion of a Resident Trust .. 10 form CT- 1041 Quick-File Requirements .. 16. Special Accruals .. 10 form CT- 1041 Quick-File Line instructions .

4 16. Surety Bond in Lieu of Special Accruals .. 11 form CT- 1041 Line instructions .. 16. Taxable Year and Method of Accounting .. 11 Who Must Sign the Return .. 18. When to File form CT- 1041 .. 11 Paid Preparers Signature .. 18. Using the 2016 form CT- 1041 for a Alternative Signature Methods .. 18. Taxable Year Beginning in 2017 .. 11 Mailing the Return .. 18. Credit for Income Taxes Paid to Qualifying Jurisdictions .. 18. Page 2. instructions for Worksheet A, Credit for Income instructions for Schedule CT-1041B .. 25. Taxes Paid to Qualifying Jurisdiction .. 19 Part 1 - Shares of Connecticut Worksheet A - Credit for Income Taxes Fiduciary Adjustment .. 25. Paid to Qualifying Jurisdictions .. 19 Part 2 - Percentage of Resident . Income Tax Credits .. 20 Noncontingent Beneficiaries .. 25. instructions for Worksheet B, Worksheet for instructions for Schedule CT-1041C .. 27. Schedule CT-IT Credit .. 21. Worksheet B - Worksheet for instructions for Schedule CT-1041FA.

5 28. Schedule CT-IT Credit .. 21 Part 1 - Computation of Connecticut Tax Connecticut Fiduciary Adjustment .. 22 of a Nonresident Estate or Trust and Amount Paid or Set Aside for Charitable Purposes .. 22 Part-Year Resident Trust .. 28. Member of a Pass-Through Entity .. 22 Schedule CT-1041FA - Line 4 Worksheet .. 28. Beneficiary of Another Trust or Estate .. 22 Part 2 - Trust or Estate's and Beneficiary's Entering Additions and Subtractions .. 22. Share of Income From Connecticut Sources .. 29. instructions for Schedule A .. 23 Part 3 - Details of Federal Distributable Net Additions to Federal Taxable Income .. 23 Income and Amounts of Income Derived From or Connected With Sources Within Subtractions From Federal Taxable Income .. 23. Connecticut .. 29. form CT- 1041 , Questions A, B, and C .. 24. Amended Return .. 32. Page 3. What's New Extension of Time to File form CT- 1041 Sales of intangible property and tangible personal property are excluded from the apportionment calculation Under a new federal law, the extension for the returns (numerator and denominator) if such property is not held of trusts filing form 1041 is a 5 -month period ending by the company primarily for sale to customers in the on September 30 for calendar year taxpayers.

6 DRS will ordinary course of the company's trade or business. If conform to the federal extended period and extended due receipts from the sale of tangible personal property are date applicable to filers of form CT- 1041 . excluded from the sales factor, the net gain from such sale should be allocated to the state where the property is Angel Investor Tax Credit located and is not subject to apportionment. Effective for taxable years beginning on or after January 1, Net income from the sale, rental, lease, or license of real 2016 , an angel investor may sell, assign, or transfer property is allocated to the location of the real property, all or part of the Angel Investor Tax Credit to another and the gross receipts from these transactions are excluded taxpayer once. The PE member or shareholder and the from the apportionment calculation. buyer assignee or transferee must obtain a new certificate DRS is preparing guidance regarding market-based from Connecticut Innovations, Inc.

7 Additionally, an angel sourcing and will post this guidance on its website as soon investor can continue to seek this tax credit through as it becomes available. Connecticut Innovations, Inc., until June 30, 2019. The Determination of nonresident partner's, shareholder's program was previously scheduled to sunset on June 30, or beneficiary's share of income within Connecticut : 2016 . Effective for taxable years beginning on or after You must complete form CT-AIT, Angel Investor Tax January 1, 2017, nonresident partners, shareholders, Credit, if you are selling, assigning, or transferring the or beneficiaries must determine their share of income credit. You must also complete this form if you have derived from or connected with sources within obtained the Angel Investor Tax Credit through a purchase, Connecticut according to the statutory apportionment assignment, or transfer. provisions of Conn. Gen. Stat. 12-711, as amended by May Spec. Sess. 16-3, section 200, rather than according to Conn.

8 Agencies Regs. 12-711(c)-3. Pass-through Entities and 12-711(c)-4 to the extent such regulations are Single Sales Factor Apportionment and Market- inconsistent with the revisions to Conn. Gen. Stat. Based Sourcing: Effective for taxable years beginning 12-711(c). on or after January 1, 2017, a business, trade, profession or occupation carried on in Connecticut and outside of Connecticut must apportion its income using a single Internal Revenue Code section 457A. factor gross income percentage. Reporting Requirements of Deferred These multistate businesses are required to utilize market- Compensation based sourcing for purposes of determining their gross The Tax Extenders and Alternative Minimum Tax Relief Act income percentage. Businesses must source receipts from of 2008 enacted Internal Revenue Code section 457A. the sales of services and intangible property on a market For federal income tax purposes, this section applies to basis. Receipts from the rental, lease, or license of tangible deferred compensation paid to any service provider under a personal property are sourced according to the location of nonqualified deferred compensation plan of a nonqualified the property.

9 Receipts from the sale of tangible personal entity that is attributable to services performed after property continue to be sourced based upon the location December 31, 2008. The compensation is includible in of the purchaser. Businesses that cannot reasonably gross income when there is no substantial risk of forfeiture determine where their receipts should be sourced under of the rights to such compensation. the statutory rules may petition the Commissioner to use Deferred compensation attributable to services performed an alternate method that reasonably approximates such before January 1, 2009 must be reported on or before sourcing rules. taxable year 2017, or, if the deferred compensation is Page 4. subject to a substantial risk of forfeiture beyond 2017, Pursuant to Conn. Gen. Stat. 12-711(a), compensation then it must be reported in the taxable year in which the from nonqualified deferred compensation plans compensation is no longer subject to a substantial risk of attributable to services performed within Connecticut , forfeiture.

10 Including compensation required to be included in federal Service providers includes an individual, corporation, gross income under section 457A of the Internal Revenue subchapter S corporation, partnership, personal service Code ( ), is subject to Connecticut income tax. Thus, corporation, and noncorporate entity that would be a if you are a service provider to whom 457A applies, personal service corporation if it were a corporation, you must report such income as Connecticut sourced. qualified service corporation, and noncorporate entity Consult your tax advisor to determine whether that would be a qualified service corporation if it were a 457A applies to you. corporation. Timely Filed Returns April 18, 2017. The 2016 Connecticut income tax return (and payments) will be considered timely if filed on Tuesday, April 18, 2017. In 2017, the due date for filing a Connecticut income tax return (April 15) falls on a Saturday. The next business day is Monday, April 17, which is a legal holiday in the District of Columbia (Emancipation Day).