CT-1041 booklet, Connecticut Income Tax Return for Trusts and ...

3. Interest or dividend income on obligations or securities ofany authority, commission, or instrumentality of the UnitedStates which federal law exempts from federal income taxbut does not exempt from state income taxes;4. Interest expenses on indebtedness incurred or continued topurchase or carry obligations or securities, the income fromwhich is exempt from Connecticut income tax, to the extentdeductible in determining federal taxable income prior todeductions relating to distributions to beneficiaries; or5. Domestic production activity deduction (I.R.C. §199).This modification is allowed to the extent the amount isdeductible in determining federal taxable income prior todeductions relating to distributions to beneficiaries.Line 6 - Total AdditionsAdd Lines 1 through 5.Subtractions From Federal Taxable IncomeEnter all amounts as positive numbers.Line 7 - Interest on U.S. Government ObligationsEnter the total of any interest income (to the extent includablein federal taxable income) derived from U.S. governmentobligations which federal law prohibits states from taxing (forexample, U.S. government bonds such as Savings Bonds SeriesEE and Series HH or U.S. Treasury bills and notes).Do not enter the amount of interest earned on Federal NationalMortgage Association (Fannie Mae) bonds, GovernmentNational Mortgage Association (Ginnie Mae) bonds, andFederal Home Loan Mortgage Corporation (Freddie Mac)securities. Federal law does not prohibit states from taxinginterest income derived from these obligations and this interestincome is taxable for Connecticut income tax purposes. Donot enter the amount of interest paid to you on any federalincome tax refund.Line 8 - Exempt Dividends From Certain MutualFunds Derived From U.S. Government ObligationsEnter the total amount of exempt dividends received froma qualifying mutual fund derived from U.S. governmentobligations. A mutual fund is a qualifying fund if, at the closeof each quarter of its taxable year, at least 50% of the valueof its assets consists of U.S. government obligations. Thepercentage of dividends that are exempt dividends should bereported to you by the mutual fund. See Line 7 instructionsabove.Line 9 - Gain on Sale of Connecticut State and LocalGovernment BondsEnter the total amount of all gains from the sale or exchange ofnotes, bonds, or other obligations of the State of Connecticutor its municipalities.Line 10 - Refunds of Connecticut Income TaxEnter the amount of taxable refunds of Connecticut incometax reported on federal Form 1041, Line 8.Line 11 - OtherTo the extent not deductible in determining federal taxableincome prior to deductions relating to distributions tobeneficiaries, use Line 11 to subtract:• Any interest paid on indebtedness incurred to acquireinvestments that provide income taxable in Connecticutbut not taxable for federal purposes;• Expenses paid or incurred for the production (includingmanagement, conservation, and maintenance of propertyheld for production) or collection of income taxable inConnecticut but exempt from federal income tax;• Any amortizable bond premium on bonds that provideinterest income taxable in Connecticut but exempt fromfederal income tax; or• Any interest income from notes, bonds, or other obligationof the State of Connecticut included in federal adjustedgross income. This modification includes any BuildAmerica Bond tax credit amount if the Build AmericaBond, as described in Section 1531 of the AmericanRecovery and Reinvestment Act of 2009, was issued by theState of Connecticut or a Connecticut political subdivisionand only to the extent the credit amount is treated asinterest includible in gross income for federal income taxpurposes.Do not use Line 11 to subtract income subject to tax in anotherjurisdiction. See Worksheet for Credit for Income Taxes Paidto Qualifying Jurisdictions, Line 4, on Page 17.Line 12 - Total SubtractionsAdd Lines 7 through 11.Line 13 - Connecticut Fiduciary AdjustmentSubtract Line 12 from Line 6. Enter here and on ScheduleCT-1041B, Part 1, Line f, Column 5. This amount may bepositive or negative.If you have a Connecticut fiduciary adjustment, completeSchedule CT-1041B, Part 1, to calculate the trust or estate’sand each beneficiary’s share of the Connecticut fiduciaryadjustment.Schedule CT-1041B, Part 2, should only be completed byfull-year resident or part-year resident inter vivos trusts withany nonresident, noncontingent beneficiaries to calculate thepercentage of resident, noncontingent beneficiaries. The statusof the beneficiaries is determined as of year end.Form CT-1041, Questions A, B, and CThe fiduciary must complete Form CT-1041, QuestionsA, B, and C. All inter vivos trusts claiming a resident,noncontingent beneficiary percentage on ScheduleCT-1041B, Part 2, must complete Form 1041, Question A, orthis percentage could be disallowed.Page 19