2008 Form 1041-QFT
Form
1041-QFT
OMB No. 1545-1593
Department of the Treasury
Internal Revenue Service
Employer identification number
1a
2a
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For Privacy Act and Paperwork Reduction Act Notice, see page 4.
Form
1041-QFT
(2008)
Cat. No. 25368F
Part II
U.S. Income Tax Return for Qualified Funeral Trusts
For calendar year 2008 or short year beginning
General Information
Name of trust or other entity filing return
Name and title of trustee
Number, street, and room or suite no. (If a P.O. box, see the instructions.)
City or town, state, and ZIP code
Check applicable boxes:
Initial return
Amended return
Final return
Change in the fiduciary or fiduciary's name
Change in fiduciary's address
Tax Computation
Interest income
Total ordinary dividends
Capital gain or (loss) (attach Schedule D (Form 1041))
Other income. List type and amount
Total income. Combine lines 1a, 2a, 3, and 4
Taxes
Trustee fees
Attorney, accountant, and return preparer fees
Other deductions not subject to the 2% floor
Allowable miscellaneous itemized deductions subject to the 2% floor
Total deductions. Add lines 6 through 10
Taxable income. Subtract line 11 from line 5
Tax. (If this is a composite return, check here
)
Net tax. Subtract line 14 from line 13 (see instructions)
Payments (see instructions)
Tax due. If line 16 is smaller than line 15, enter amount owed
Overpayment. If line 16 is larger than line 15, enter amount overpaid
Amount of line 18 to be:
b
Preparer's SSN or PTIN
1
2
3a
3b
3c
5
Credits (see instructions). Specify the credits claimed
1a
2a
3
4
5
6
7
8
9
10
11
12
13
14
15
a
Credited to 2009 estimated tax
Refunded
17
Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge
and belief, it is true, correct, and complete. Declaration of preparer (other than trustee) is based on all information of which preparer has any knowledge.
Date
Signature of trustee or officer representing trustee
Sign
Here
Preparer's
signature
Firm's name (or
yours if self-employed),
address, and ZIP code
Date
Check if self-
employed
Phone no. (
)
Paid
Preparer's
Use Only
EIN
Number of QFTs included on this return
4
Income
Deductions
Tax and Payments
See instructions on pages 2 through 4.
May the IRS discuss this return
with the preparer shown below
(see page 3)?
Yes
No
Tax-exempt interest. Do not include on line 1a
b
1b
Qualified dividends
b
2b
, 2008, and ending
, 2008.
Part I
2008
Form 1041-QFT (2008)
Page
2
General Instructions
Purpose of Form
The trustee of a trust that has elected to be
taxed as a qualified funeral trust (QFT) files Form
1041-QFT to report the income, deductions,
gains, losses, etc., and income tax liability of the
QFT. The trustee can use the form to file for a
single QFT or for multiple QFTs having the same
trustee, following the rules discussed under
Composite Return on this page.
Pre-need funeral trusts that do not qualify
as QFTs should see the instructions for
Form 1041, U.S. Income Tax Return for
Estates and Trusts, for their filing
requirements.
Qualified Funeral Trust
A QFT is a domestic trust that meets all of
the following requirements:
It arose as a result of a contract with a
person engaged in the trade or business of
providing funeral or burial services or property
to provide such services.
The sole purpose of the trust is to hold, invest,
and reinvest funds in the trust and to use those
funds solely to pay for funeral or burial services
or property to provide such services for the
benefit of the beneficiaries of the trust.
The only beneficiaries are individuals for
whom such services or property are to be
provided at their death under the contracts
described above.
The aggregate contributions to the trust on
behalf of any single beneficiary do not exceed
the Contribution Limit and are made by or for
the beneficiaries' benefit.
The trustee makes or previously had made
the election to treat the trust as a QFT.
If a QFT has multiple beneficiaries, each
beneficiary's separate interest under a
contract is treated as a separate QFT for the
purpose of figuring the tax and filing this
return. Each beneficiary's share of the trust's
income is determined in accordance with the
beneficiary's interest in the trust. A
beneficiary's interest in a trust may be
determined under any reasonable method.
Whenever these instructions refer to a trust
or QFT, it includes such separate interests
that are treated as separate QFTs.
Contribution Limit
Making the Election
The trustee makes the election to treat a trust
as a QFT by filing Form 1041-QFT for the
trust by the due date (including extensions).
Composite Return
A trustee may file a single, composite
Form 1041-QFT for some or all QFTs of
which he or she is the trustee, including QFTs
that had a short tax year.
The name of the owner or the beneficiary.
If you list the name of the owner and that
trust has more than one beneficiary, you must
separate the trust into shares held by the
separate beneficiaries;
The type and gross amount of each type of
income earned by the QFT for the tax year.
For capital gains, identify separately the
amount of (a) net short-term capital gain,
(b) net long-term capital gain, (c) 28% rate
gain, and (d) unrecaptured section 1250 gain;
The type and amount of each deduction
and credit allocable to the QFT;
The tax and payments made for each QFT; and
The termination date for each QFT that was
terminated during the year.
When To File
File Form 1041-QFT on or before April 15, 2009.
The due date for a composite return is also April
15, 2009, even if the return includes QFTs that
terminated during the year. If you are filing for a
short year, file Form 1041-QFT by the 15th day of
the 4th month following the close of the short
year. If the due date falls on a Saturday, Sunday,
or a legal holiday, file by the next business day.
Private Delivery Services
You can use certain private delivery services
designated by the IRS to meet the "timely
mailing as timely filing/paying" rules for tax
returns and payments. These private delivery
services include only the following.
You may elect QFT status for a trust's first
eligible year or for any subsequent year. Once
made, the election may not be revoked
without the consent of the IRS.
You must attach a schedule to a composite
Form 1041-QFT that includes the following
information for each QFT (or separate interest
treated as a separate QFT):
Section references are to the Internal
Revenue Code.
The trust would have been treated as
owned by the purchasers of the contracts
under the grantor trust provisions of the Code
if the QFT election had not been made.
Note: A trust that is not treated as owned by the
purchaser solely because of the death of an
individual will be treated as meeting this
requirement during the 60-day period beginning
on the date of that individual's death.
How to determine your contribution limit.
The contribution limit is determined by the
year the purchaser entered into the contract
for funeral or burial goods and services and
does not change over the life of the trust. Use
the table below to determine the contribution
limit for each QFT.
For contracts
entered into in . . .
1998 and before
How to determine if a trust meets the
contribution limit. A trust meets the
contribution limit if:
Existing contributions do not exceed the
contribution limit, and
The trust, over its life, does not expect to
receive future contributions that exceed the
contribution limit.
Projections for future contributions are
based on:
Existing contributions,
Applicable state law trust contribution
requirements, and
Any expected contributions in excess of
state law requirements.
When to determine if the trust meets the
contribution limit. Make the determination at
the inception of the trust and again if the
projected amount for future contributions
changes.
Losing QFT status. A trust loses its QFT
status at the time it exceeds or is projected
to exceed its contribution limit.
Multiple beneficiaries. If a QFT has multiple
beneficiaries, the contribution limit applies
separately to each beneficiary. Each
beneficiary's share of the total contributions
to a trust is determined by the beneficiary's
interest in the trust. A beneficiary's interest in
a trust may be determined under any
reasonable method.
Related trustees and the contribution limit.
A beneficiary's share of contributions made to
all trusts that have trustees that are related
persons will be aggregated for purposes of
testing the contribution limit. Trustees will be
considered related if:
The relationship is described in section 267
or 707(b),
The persons are treated as a single
employer under subsection (a) or (b) of
section 52, or
The Secretary determines that treating the
persons as related is necessary to prevent
avoidance of this section.
The contribution limit
is . . .
$7,000
7,100
1999
2000
7,200
2001
7,500
DHL Express (DHL): DHL Same Day
Service, DHL Next Day 10:30 am, DHL Next
Day 12:00 pm, DHL Next Day 3:00 pm, and
DHL 2nd Day Service.
Federal Express (FedEx): FedEx Priority
Overnight, FedEx Standard Overnight, FedEx
2Day, FedEx International Priority, and FedEx
International First.
United Parcel Service (UPS): UPS Next Day
Air, UPS Next Day Air Saver, UPS 2nd Day
Air, UPS 2nd Day Air A.M., UPS Worldwide
Express Plus, and UPS Worldwide Express.
The private delivery service can tell you
how to get written proof of the mailing date.
2002
7,700
2003
7,800
2004
8,000
2006
8,500
2005
8,200
Where To File
If you are located in
Extension of Time To File
Use Form 7004, Application for Automatic
Extension of Time To File Certain Business Income
Tax, Information, and Other Returns to get a
6-month extension of time to file. An extension of
time to file a return does not extend the time to pay
the tax.
Then use the following
address
The United States
Department of the Treasury
Internal Revenue Service Center
Cincinnati, OH 45999
A foreign country or
a United States
possession
Internal Revenue Service Center
P.O. Box 409101
Ogden, UT 84409
2007
8,800
2008
9,000
Form 1041-QFT (2008)
Page
3
Paid Preparer
Generally, anyone who is paid to prepare a tax
return must sign the return and fill in the other
blanks in the Paid Preparer's Use Only area of the
return. The person required to sign the return must
complete the required preparer information and:
Sign it in the space provided for the
preparer's signature and
Generally, the QFT may change its accounting
method (for income as a whole or for any material
item) only by getting consent on Form 3115,
Application for Change in Accounting Method.
For more information, see Pub. 538, Accounting
Periods and Methods.
Accounting Period
All QFTs must use a calendar year as their
accounting period.
Rounding Off to Whole Dollars
You may round off cents to whole dollars on
your return and schedules. If you do round to
whole dollars, you must round all amounts.
To round, drop amounts under 50 cents and
increase amounts from 50 to 99 cents to the
next dollar. For example, $1.39 becomes $1
and $2.50 becomes $3. If you have to add
two or more amounts to figure the amount to
enter on a line, include cents when adding
the amounts and round off only the total.
Estimated Tax
Generally, a QFT must pay estimated income
tax for 2009 if it expects to owe, after
subtracting withholding and credits, at least
$1,000 in tax. Estimated tax liability is figured
for the individual QFT, and not for a
composite return taken as a whole. For
details and exceptions, see Form 1041-ES,
Estimated Income Tax for Estates and Trusts.
Interest and Penalties
Interest
Interest is charged on taxes not paid by the
due date, even if an extension of time to file
is granted. Interest is also charged on the
failure-to-pay penalty, failure-to-file penalty,
the accuracy-related penalty, and the fraud
penalty. The interest charge is figured at a
rate determined under section 6621.
Late Filing of Return
The law provides a penalty of 5% of the tax
due for each month, or part of a month, up to
a maximum of 25% of the tax due, for each
month the return is not filed. If the return is
more than 60 days late, the minimum penalty
is the smaller of $100 or the tax due. The
penalty will not be imposed if you can show
that the failure to file on time was due to
reasonable cause. If the failure was due to
reasonable cause, attach an explanation to the
return.
Late Payment of Tax
Generally, the penalty for not paying the tax
when due is
1
/
2
of 1% of the unpaid amount for
each month or part of a month that it remains
unpaid. The maximum penalty is 25% of the
unpaid amount. The penalty applies to any
unpaid tax on the return. Any penalty is in
addition to interest charges on late payments.
Underpaid Estimated Tax
If the trustee underpaid estimated tax, use
Form 2210, Underpayment of Estimated Tax
by Individuals, Estates, and Trusts, to figure
any penalty.
Other Penalties
Other penalties can be imposed for
negligence, substantial understatement of tax,
and fraud. See Pub. 17, Your Federal Income
Tax, for details on these penalties.
Final Form 1041
If you have an existing EIN(s) that you
previously used for filing Form 1041 and that
you will not use again (i.e., for QFTs included
in a composite return), you should file
Form 1041 and check the final return box.
Specific Instructions
Part I--General Information
Line 1--Name of Trust
Copy the exact name from the Form SS-4,
Application for Employer Identification
Number, used to apply for the employer
identification number you are using to file
Form 1041-QFT.
Line 2--Employer Identification
Number (EIN)
If the QFT has not received its EIN by the
time the return is due, write "Applied for" in
the space for the EIN.
Line 3--Address
Include the suite, room, or other unit number
after the street address. If the post office
does not deliver mail to the street address
and you have a P.O. box, show the box
number instead of the street address.
Give you a copy of the return in addition to
the copy to be filed with the IRS.
If the QFT is not filing as part of a composite
return, use the EIN of the QFT. If the QFT
does not have an EIN, it must apply for one.
Every trustee that elects to file a composite
return must apply for an EIN to be used only
for filing Form 1041-QFT. A trustee must use
a separate EIN for every Form 1041-QFT it
files.
Paid Preparer Authorization
If the trustee wants to allow the IRS to
discuss the QFT's 2008 tax return with the
paid preparer who signed it, check the "Yes"
box in the signature area of the return. This
authorization applies only to the individual
whose signature appears in the "Paid
Preparer's Use Only" section of the QFT's
return. It does not apply to the firm, if any,
shown in that section.
If the "Yes" box is checked, the trustee is
authorizing the IRS to call the paid preparer
to answer any questions that may arise
during the processing of the QFT's return.
The trustee is also authorizing the paid
preparer to:
Give the IRS any information that is missing
from the QFT's return,
Call the IRS for information about the
processing of the QFT's return or the status
of its refund or payment(s), and
Respond to certain IRS notices that the
trustee has shared with the preparer about
math errors, offsets, and return preparation.
The trustee is not authorizing the paid
preparer to receive any refund check, bind
the QFT to anything (including any additional
tax liability), or otherwise represent the QFT
before the IRS.
The authorization will automatically end no
later than the due date (without regard to
extensions) for filing the QFT's 2009 tax
return. If the trustee wants to expand the paid
preparer's authorization or revoke the
authorization before it ends, see Pub. 947,
Practice Before the IRS and Power of
Attorney.
If you want a third party (such as an
accountant or an attorney) to receive mail for
the QFT, enter on the street address line
"C/O" followed by the third party's name and
street address or P.O. box.
If you change your address (including a
new "in care of" name and address) after
filing Form 1041-QFT, use Form 8822,
Change of Address, to notify the IRS.
Accounting Methods
Figure taxable income using the method of
accounting regularly used in keeping the QFT's
books and records. Generally, permissible
methods include the cash method, the accrual
method, or any other method authorized by the
Internal Revenue Code. In all cases, the method
used must clearly reflect income.
If you include interest or any of
these penalties with your payment,
identify and enter these amounts
in the bottom margin of Form
1041-QFT. Do not include the interest or
penalty amount in the balance of tax due on
line 17.
CAUTION
Line 4--Number of QFTs
If this is a composite return, enter the total
number of QFTs (including separate interests
treated as separate QFTs) included on the
return.
Part II--Tax Computation
Composite Return
If this is a composite return, enter
in Part II the totals for all the QFTs
included on the return.
CAUTION
Who Must Sign
Trustee
The trustee, or an authorized representative,
must sign Form 1041-QFT.
A QFT without an EIN can apply for one.
Online--A QFT can receive an EIN by
Internet and use it immediately to file a return.
Go to the IRS website at
www.irs.gov/businesses/small and click on
Employer ID numbers.
By telephone--Call 1-800-829-4933.
By mail or fax--Send in a completed Form
SS-4. Form SS-4 can be obtained by calling
1-800-829-3676.
Form 1041-QFT (2008)
Page
4
Exception. State income taxes and business
expenses that are allocable to tax-exempt
interest are deductible.
Expenses that are directly allocable to
tax-exempt income are allocable only to
tax-exempt income. A reasonable proportion
of expenses indirectly allocable to both
tax-exempt income and other income must
be allocated to each class of income.
Limitations on Deductions
Generally, the amount a QFT has "at risk"
limits the loss it can deduct in any tax year.
Also, section 469 and its regulations generally
limit losses from passive activities to the
amount of income derived from all passive
activities. Similarly, credits from passive
activities are generally limited to the tax
attributable to such activities.
For details on these and other limitations
on deductions, see Deductions in the
Instructions for Form 1041.
Line 9--Other Deductions Not Subject to
the 2% Floor
Attach your own schedule, listing by type and
amount all allowable deductions that are not
deductible elsewhere on the form.
QFTs are not allowed a deduction
for a personal exemption.
Line 10--Allowable Miscellaneous Itemized
Deductions Subject to the 2% Floor
These deductions are deductible only to the
extent that the aggregate amount of such
deductions exceeds 2% of adjusted gross
income (AGI).
Among the miscellaneous itemized
deductions that must be included on line 10
are expenses for the production or collection
of income, such as investment advisory fees.
AGI is figured by subtracting from total
income on line 5 the total of the
administrative costs on lines 7 through 9 to
the extent they are costs incurred in the
administration of the QFTs that would not
have been incurred if the property were not
held by the QFTs.
If this is a composite return, you must
figure the AGI separately for each QFT using
each QFT's share of the amounts on the lines
referred to above.
Line 13--Tax
Tax rate schedule. Unless the instructions
below for Schedule D or Composite Return
apply, figure the tax using the Tax Rate
Schedule below. Enter the tax on line 13.
2008 Tax Rate Schedule
If
taxable
income
is:
Over--
But
not
over--
Its tax is:
Of the
amount
over--
$0
2,200
5,150
7,850
10,700
Schedule D. If the QFT had both a net
capital gain and any taxable income, or any
qualified dividends and any taxable income,
complete Part V of Schedule D (Form 1041),
and enter the tax from line 34 of Schedule D.
Composite return. If this is a composite
return, check this box and enter on line 13
the total of the tax computed separately for
each QFT using either the 2008 Tax Rate
Schedule above or Schedule D (Form 1041).
Line 14--Credits
Specify the type of credit being claimed and
attach any required credit forms. If you are
claiming more than one type of credit, attach
a schedule listing the type and amount of
each credit claimed. See the Instructions for
Form 1041 for details on the credits that may
be claimed.
Line 16--Payments
Include on line 16 any:
Estimated tax payments made for 2008.
Tax paid with a request for an extension of
time to file.
Federal income tax withheld (for example,
backup withholding).
Credit for tax paid on undistributed capital
gains. Also attach Copy B of Form 2439,
Notice to Shareholder of Undistributed
Long-Term Capital Gains.
Line 17--Tax Due
You must pay the tax in full when the return
is filed. Make the check or money order
payable to "United States Treasury." Write the
EIN from line 2 of the form and "2008 Form
1041-QFT" on the payment. Enclose, but do
not attach, the payment with Form 1041-QFT.
Privacy Act and Paperwork Reduction Act
Notice. We ask for the information on this
form to carry out the Internal Revenue laws of
the United States. You are required to give us
this information. We need it to ensure that
you are complying with these laws and to
allow us to figure and collect the right amount
of tax. Section 6109 requires return preparers
to provide their identifying numbers on the
return.
You are not required to provide the
information requested on a form that is
subject to the Paperwork Reduction Act
unless the form displays a valid OMB control
number. Books or records relating to a form
or its instructions must be retained as long as
their contents may become material in the
administration of any Internal Revenue law.
Generally, tax returns and return information
are confidential, as required by section 6103.
The time needed to complete and file this
form will vary depending on individual
circumstances. The estimated average time
is:
Recordkeeping
9 hr., 34 min.
Learning about the law
or the form
2 hr., 18 min.
Preparing the form
5 hr., 20 min.
Copying, assembling,
and sending the form
to the IRS
48 min.
If you have comments concerning the
accuracy of these time estimates or
suggestions for making this form simpler, we
would be happy to hear from you. You can
write to the Internal Revenue Service, Tax
Products Coordinating Committee,
SE:W:CAR:MP:T:T:SP, 1111 Constitution Ave.
NW, IR-6526, Washington, DC 20224. Do not
send the tax form to this address. Instead,
see Where To File on page 2.
$2,200
15%
$0
5,150
$330.00 + 25%
2,200
7,850
1,067.50 + 28%
5,150
10,700
1,823.50 + 33%
7,850
2,764.00 + 35%
10,700
Deductions
Allocation of Deductions for Tax-Exempt
Income
Generally, no deduction that would otherwise
be allowable is allowed for any expense that
is allocable to tax-exempt income, such as
interest on state or local bonds.
Line 4--Other Income
Enter all other types of income not included
on line 1a, 2a, or 3. List the type and amount
on an attached schedule if the QFT(s) has
more than one item.
- - -
Exception. Some dividends may be reported
to the trust as qualified dividends but are not
qualified dividends. See the instructions for
line 2b(2) in the 2008 Instructions for Form
1041 for more information.
CAUTION
Line 15--Net Tax
If the QFT owes any additional taxes (for
example, alternative minimum tax, recapture
taxes, etc.), include these taxes on line 15. To
the left of the entry space, write the type and
amount of the tax. Also attach to Form
1041-QFT any forms required to figure these
taxes (for example, Schedule I (Form 1041)).
See the Instructions for Form 1041 for more
details on additional taxes that may apply.
Income
Line 2a--Total Ordinary Dividends
Report all ordinary dividends received during
the tax year.
Report capital gain distributions on
Schedule D (Form 1041), line 9.
Line 2b--Qualified Dividends
Enter on line 2b the amount reported on line
2a that is a qualified dividend. A qualified
dividend is a dividend received during the tax
year from (a) a domestic corporation or (b) a
qualified foreign corporation. A qualified
dividend does not include: any dividend from
a corporation if the corporation is (or was)
exempt from income tax under section 501 or
521 for the corporation's current (or
preceding) tax year during which the
distribution was made; any amount allowed
as a deduction under section 591; or any
dividend described under section 404(k).