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Example for Completing Schedule 3
For this example, the fiduciary has reported $5,000 on MI-1041 Schedule 1, line 40.
A B C
Federal Distributable Net Income
Allocation of Net
Michigan Adjustment
Beneficiary Type of Income (Multiply amount on
Identification from (Dividend, Interest, Location Percentage of Amount line 40 by percentage
Schedule 2 Rent, etc.) (City, State) Amount in Column A in Column B)
a. Lansing, MI $2,420 9.4642% $473
Interest and Rent
b. Lansing, MI 20,550 80.3676% 4,018
Interest and Rent
c. Lansing, MI 600 2.3465% 117
Interest and Rent
2,000 7.8217% 391
41. Fiduciary’s Share ..................................................................................
$25,570 100% $5,000
42. Total. Include amounts from Form 5680 (if applicable) ........................
• Federal gain from MI-4797, line 17 federal distributable net income bears to the total federal
• Michigan loss from MI-4797, line 17 distributable net income with the remaining portion going to
the fiduciary.
• Income from MI-461, line 9, column F If the estate or trust has no distributable net income for the
• Michigan NOL taxable year, the net Michigan adjustment will be allocated in
• If you are a direct or indirect member of a flow-through the proportion that each beneficiary’s share of the distributed
entity that elected to pay the Michigan flow-through estate or trust income for the year bears to the total estate
entity tax, subtract your share of a refund of that tax or trust income with the remaining portion going to the
received by that flow-through entity and included in your fiduciary. (Distributed income includes amounts required to be
distributive share. If you apportioned this flow-through distributed currently under local law theor terms theof estate
income using an MI-1040H, the apportionment percentage or
trust instrument, and any other amounts distributed.)
from line 8 should be applied to the refund reported by the Use Schedule 3 to compute this allocation. See Example for
flow-through entity. Include a copy of the Schedule K-1 with Completing
Schedule 3 above. These percentages may not be
the Schedule K-1 notes, or other supporting documentation the instrument.
same as the distribution percentages listed in the estate or
trust
received from the flow-through entity, on which the
flow-through entity reported your allocated share of the Complete C. If you have more than 4 beneficiaries, continue those
column A for all beneficiaries before completing B,
then
refund. on the 2021 Michigan Fiduciary Income Tax Information
entries
An electing flow-through entity that files a composite Continuation Schedule (Form 5680).
return on your behalf should report your subtraction on that Identify each beneficiary using the lower-case beneficiary
composite return (Form 807). Do not report the subtraction identification letter from Schedule 2.
here. Column A: Enter the distributions reported to each
Note: Retirement or pension benefits may not be subtracted. beneficiary on his or her U.S. Schedule K-1 in the columns
Line 40: Subtract line 39 from line 34. If no income provided. Indicate the type of income such as dividends,
was distributed, enter the amount from line 40 on line 10. interest, rents, etc. and include the location of the activity and
Otherwise, complete Schedules 2 and 3. amount for each. If the income has multiple activity locations
enter “various” as the location and provide support detailing the
SCHEDULE 2: Beneficiary Identification type, locations, and amount, for each. For assistance, you may
Note: Schedule 2 must be completed if any income is refer to the “Michigan Business, Rental & Royalty Activity
distributed. Worksheet.” Enter the fiduciary’s share on line 42. The total on
Enter in the appropriate column the name, residency status, line
43 should equal the distributable net income reported on
address, and Social Security number or Federal Employer U.S. 1041, Schedule B.
Form
Identification Number (FEIN) of each beneficiary of the estate Column B: Divide each amount in column A by the total
or trust for both residents and nonresidents. Identify residents amount on line 43 and enter the percent in column B.
with an “R” and nonresidents with “NR.” When completing Column C: Multiply the amount on Schedule 1, line 40, by
the rest of this form, use the lower-case letter (a, b, c, etc.) the percentage in column B. Enter the result in column C for
to the left of each name to refer to a beneficiary listed in each beneficiary and the fiduciary. Carry the fiduciary’s share
Schedule 2. If you have more than 4 beneficiaries, continue (line 42) to Part 2, line 10. The total on line 43C must equal the
those entries on the 2021 Michigan Fiduciary Income Tax amount on Schedule 1, line 40.
Information Continuation Schedule (Form 5680). SCHEDULE 4 - Capital Gain or (Loss) Distributed
SCHEDULE 3: Allocation of Net Michigan to Beneficiaries When Form MI-1041D Is Filed
Adjustment for Resident Estates or Trusts Complete Schedule 4 if capital gains or losses have been
If income is distributed, the net Michigan adjustment for distributed beneficiariesto and MI-1041D was completed.
resident estates or trusts from MI-1041, line 40, must be Identify each beneficiary using the lower-case beneficiary
allocated in the proportion that each beneficiary’s share of letter from Schedule 2.
identification
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