California Form 5870A - Tax on Accumulation Distribution of Trusts
Form FTB 5870A is used to calculate the additional tax on an accumulation distribution from a foreign trust or certain domestic trusts in California. This form applies when a trust distributes income that was accumulated over prior years and is now being distributed to a beneficiary. The tax is based on California Revenue and Taxation Code (R&TC) Sections 17745(b) and (d), and may also relate to Internal Revenue Code (IRC) Section 667.
Purpose of Form 5870A
- Compute additional tax on accumulation distributions from foreign trusts or certain domestic trusts.
- Apply California tax rules for distributions accumulated over less than five years (Section B) or five years or more (Section A).
- Ensure proper reporting of undistributed net income (UNI) that is now being distributed.
Who Must File Form 5870A?
- Individuals: Beneficiaries receiving an accumulation distribution from a trust. Enter the amount from line 14 or 16 on Form 540 or Form 540NR, and check the “FTB 5870A” box.
- Estates and Trusts: Enter the amount from line 14 or 16 on Form 541, line 21b, and write “FTB 5870A” on that line.
- Other Filers: Add the amount from line 14 or 16 to the total tax liability before credits and attach Form FTB 5870A to the return.
How to Complete Form 5870A
- Section A: For distributions accumulated over five years or more. Enter the amount of the accumulation distribution on line 1. Include California taxes paid in prior years on line 2. Check residency status for each year in column (a) through (e).
- Section B: For distributions accumulated over less than five years. Complete only the columns corresponding to the number of years (e.g., column (a) for 1 year, columns (a) and (b) for 2 years).
- Line 1: Enter the amount distributed in the current year representing undistributed net income (UNI) from earlier years.
- Line 2: Enter California taxes paid in prior years on trust income attributable to the UNI reported on line 1.
Reporting Requirements
- If you were a California resident at the trust’s year-end, include the amount from Part I, line 10, in California adjusted gross income on Form 540, line 17.
- If you were a nonresident, include the California source income amount from Part I, line 10, in California adjusted gross income on Form 540NR, line 32.
- Attach Form FTB 5870A to the back of your tax return.
Special Notes
- Do not use Form FTB 5870A if you were a non-contingent beneficiary and received an accumulation distribution without receiving Schedule J (541). In such cases, report the income on Schedule CA (540) or Schedule CA (540NR).
- If both IRC Section 667 and R&TC Section 17745(b) apply, use R&TC Section 17745 and Part II only.
- California does not conform to federal information return requirements for foreign trusts under IRC, but may still apply R&TC Section 17745(b).
Source:
Form FTB 5870A Instructions
Disclaimer: Always verify with official Federal or State Department of Revenue Forms and Instructions for the most accurate and up-to-date tax guidance.