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Changes to 2008 Forms

Updates to the 541 Booklet on 09/09/2011 –– Fiduciary Income Tax Booklet

We added and/or revised text on the 541 Booklet instructions on:

  1. Page 9
  2. Page 10

Previous Version

  1. Page 9: Line 21b Other Taxes, Tax on Electing Small Business Trust:

    Do not apportion to the beneficiaries any of the S corporation items of income, loss, deductions, or credit. Attach the tax computation to the return.

  2. Page 10: Line 27 - Mental Health Services Tax

    If the estate's or trust's taxable income is more than $1,000,000 compute the Mental Health Services tax below:

    1. Taxable income from Form 541, line 20…. ___________
    2. Less........…………….... ($1,000,000)
    3. Subtotal...…………………............ ___________
    4. Multiply line C by 1%.............. _____x.01__
    5. Mental Health Services Tax – Enter this amount on line 27 of the (applicable) Form 541, Side 1... ___________

Revised Version

  1. Page 9: Line 21b Other Taxes, Tax on Electing Small Business Trust:

    Do not apportion to the beneficiaries any of the S corporation items of income, loss, deductions, or credit. Attach the tax computation to the return.

    Income from an ESBT is also subject to the Mental Health Services Tax. See instructions for Line 27.

  2. Page 10: Line 27 - Mental Health Services Tax

    If the estate's or trust's taxable income is more than $1,000,000 compute the Mental Health Services Tax. Income from an Electing Small Business Trust (ESBT) is also subject to the Mental Health Services Tax.

    1. Taxable income from Form 541, line 20…...___________
    2. ESBT Taxable Income........…. ___________
    3. Add line A and line B...........…… ___________
    4. Less........…………….... ($1,000,000)
    5. Subtotal...…………………............ ___________
    6. Multiply line E by 1%.............. _____x.01__
    7. Mental Health Services Tax – Enter this amount on line 27 of the (applicable) Form 541, Side 1... ___________

Reason for the changes

The instructions for Form 541 for tax years 2007, 2008, and 2009 were silent on whether Electing Small Business Trusts (ESBT) is subject to the Mental Health Services Tax (MHST).

The revision is made to show that the MHST computation should include income from an ESBT.

Impact

This change affects only taxpayers with ESBT income. For these taxpayers, the Mental Health Services Tax could increase, or stay the same depending upon the ESBT taxable income.

 

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Updates to the 541 Booklet on 03/05/2009 -- Fiduciary Income Tax Booklet

We replaced text on the 541-ES Instructions on:

  • 541 Booklet, page 35, column 1, What’s New section, Paragraph 2
  • 541 Booklet, page 35, column1, Limit on Prior Years Tax section, Paragraph 1

Previous Version

1. Estates and trusts with adjusted gross income over $1,000,000 may no longer compute estimated tax payments based on 100% of the tax shown on the return of the preceding year.

2. Estates or trusts with an adjusted gross income over $1,000,000 must figure the estimated tax payments based on the estate or trust’s 2009 tax liability.

Revised Version

1. Estates and trusts with a 2009 adjusted gross income equal to or greater than $1,000,000 may no longer compute estimated tax payments based on 100% of the tax shown on the return of the preceding year.

2. Estates or trusts with a 2009 adjusted gross income equal to or greater than $1,000,000 must figure the estimated tax payments based on the estate or trust’s 2009 tax liability.

Reason for the changes

The specific language in SBX1 28 states adjusted gross income of "equal to or greater than" rather than "over" $1,000,000. This revision conforms with the exact language in SBX1 28.

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