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State of California Franchise Tax Board

Changes to 2009 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.

 

Back to Tax Form Changes for 2009

 


 

Updates to the 541 Booklet on 04/02/2010 -- Fiduciary Income Tax Booklet

We replaced text on the 541 Booklet on page 2, column 1, What's New, first paragraph

Previous Version

N/A (added a new paragraph)

Revised Version

Charitable Contributions for 2010 Haiti Disaster - California law conforms to the federal law which allows a 2009 charitable contribution deduction for cash contributions made after January 11, 2010, and before March 1, 2010, for the relief of victims in areas affected by the earthquake in Haiti on January 12, 2010. Estates and trusts may claim the deduction on the 2009 or 2010 California tax return. Estates and trusts may choose to claim the deduction in different taxable years for federal and California purposes.

Reason for the changes

Existing federal law allows taxpayers to deduct certain 2010 cash contributions for Haiti earthquake relief on the 2009 or 2010 tax return. California conforms.

Impact

Taxpayers may choose to claim the deduction on the 2009 or 2010 tax return. This selection may reduce the tax liability on whichever year taxpayers choose to claim the deduction.

 

Back to Tax Form Changes for 2009

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