How can we help?
search-icon
Popular Topics:     Import Options  •   Refund Status  •   Amend Return  •   File Extension
Help Center>
Form 1041 - Depreciation, Depletion, and Amortization
1

Depreciation, depletion, and amortization are directly apportioned deductions. Meaning the beneficiaries' portion of depreciation, depletion and amortization is reported directly to Schedule K-1 (Form 1041) Beneficiary’s Share of Income, Deductions, Credits, etc. (Box 9, codes "A" through "C") and the estate or trust's portion is reported on the appropriate lines of Schedules C, E, or F.

To modify the amounts of depreciation, depletion, and amortization being apportioned to the beneficiaries and the estate or trust, you will need to review the Form 1041 Total Allocation of Depreciation Worksheet.

Online Navigation Instructions
  1. From within your TaxAct return (Online or Desktop), click Federal. On smaller devices, click in the upper left-hand corner, then click Federal.
  2. Click Distributions to Beneficiaries in the Federal Quick Q&A Topics menu to expand, then click Total Allocations.
  3. Click Review Total Allocations, enter the information directly on the Quick Entry form (only the green fields), then click Save & Close.
Desktop Navigation Instructions
  1. Start your TaxAct Desktop program, then click the Forms icon in the toolbar.
  2. Click to expand the Federal folder, then click to expand the Worksheets folder.
  3. Scroll down and double-click Form 1041 - Total Allocation of Depreciation Worksheet.
  4. Enter the information directly on the form.

Per IRS Instructions for Form 1041 and Schedules A, B, G, J, and K-1, on page 21:

Depreciation, Depletion, and Amortization

A trust or decedent's estate is allowed a deduction for depreciation, depletion, and amortization only to the extent the deductions aren't apportioned to the beneficiaries. An estate or trust isn't allowed to make an election under section 179 to expense depreciable business assets.

The estate's or trust's share of depreciation, depletion, and amortization is generally reported on the appropriate lines of Schedule C, E, or F (Form 1040), the net income or loss from which is shown on lines 3, 5, or 6 of Form 1041. If the deduction isn't related to a specific business or activity, then report it on line 15a.

Depreciation. For a decedent's estate, the depreciation deduction is apportioned between the estate and the heirs, legatees, and devisees on the basis of the estate's income allocable to each.

For a trust, the depreciation deduction is apportioned between the income beneficiaries and the trust on the basis of the trust income allocable to each, unless the governing instrument (or local law) requires or permits the trustee to maintain a depreciation reserve. If the trustee is required to maintain a reserve, the deduction is first allocated to the trust, up to the amount of the reserve. Any excess is allocated among the income beneficiaries and the trust in the same manner as the trust's accounting income. See Regulations section 1.167(h)-1(b).

Depletion. For mineral or timber property held by a decedent's estate, the depletion deduction is apportioned between the estate and the heirs, legatees, and devisees on the basis of the estate's income from such property allocable to each.

For mineral or timber property held in trust, the depletion deduction is apportioned between the income beneficiaries and the trust based on the trust income from such property allocable to each, unless the governing instrument (or local law) requires or permits the trustee to maintain a reserve for depletion. If the trustee is required to maintain a reserve, the deduction is first allocated to the trust, up to the amount of the reserve. Any excess is allocated among the beneficiaries and the trust in the same manner as the trust's accounting income. See Regulations section 1.611-1(c)(4).

Amortization. The deduction for amortization is apportioned between an estate or trust and its beneficiaries under the same principles used to apportion the deductions for depreciation and depletion.

The deduction for the amortization of reforestation expenditures under section 194 is allowed only to an estate.

Allocable share from a pass-through entity. Depreciation, depletion, and amortization received from a pass-through entity on a Schedule K-1 is apportioned and reported in the same manner as discussed above. A section 179 expense received from a pass-through entity on a Schedule K-1 isn't deductible by the estate or trust.

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.