Illinois Instructions for Trusts and Estates Completing Schedule K-1-T and Schedule K-1-T-3)

Instructions for Trusts and Estates Completing Schedule K-1-T and Schedule K-1-T-3)
Schedule K-1-T(1), Instructions for Trusts and Estates Completing Schedule K-1-T and Schedule K-1-T(3)
	

Illinois Department of Revenue

	
Schedule
		

K-1-T(1)

Instructions for Trusts and Estates
Completing Schedule K-1-T and Schedule K-1-T(3)

General Information
What is the purpose of Schedule K-1-T and Schedule K-1-T(3)?
Schedule K-1-T —
The purpose of Schedule K-1-T, Beneficiary’s Share of Income and Deductions, is for you to supply each individual or entity who was a
beneficiary at any time during your tax year with that individual’s or entity’s share of the amounts you reported on your federal income tax
return and your Illinois income tax return.
For Illinois Income Tax purposes, you must give a completed Schedule K-1-T and a copy of the Schedule K-1-T(2), Beneficiary’s Instructions,
to each beneficiary if any part of your income is paid, credited, distributed, or deemed to have been paid, credited, or distributed by you to that
beneficiary. This must be done by the due date, including any extended due date, of your Form IL-1041.

Schedule K-1-T(3) —
The purpose of Schedule K-1-T(3), Pass-through Withholding Calculation for Nonresident Members, is to calculate the required tax you must
report and pay on behalf of your nonresident beneficiaries that receive business or nonbusiness income from your fiduciary.

Note: Estates are not required to report and pay tax on behalf of their nonresident members.
You are required to report and pay tax on behalf of your members if
•	 you are a trust with an Illinois filing obligation, and
•	 you have business or nonbusiness income distributable to Illinois nonresident beneficiaries who have not provided you with
Form IL-1000-E, Certificate of Exemption for Pass-through Withholding.
	

Do not accept Form IL-1000-E from an individual member. Individuals may not make the pass-through withholding exemption election.
You are required to report and pay tax on behalf of your nonresident individual members.

You must complete a Schedule K-1-T(3) for each such member. The pass-through withholding amount calculated on Schedule K-1-T(3) will
be reported to each applicable member on the Schedule K-1-T you issue to them. Each member’s amounts from each Schedule K-1-T(3) you
complete must also be reported to the Illinois Department of Revenue (IDOR) on your Schedule D.
For Illinois Income Tax purposes, you must complete Schedule K-1-T(3) to calculate the amount of pass-through withholding for each of your
applicable members and keep the schedule with your income tax records. Do not submit Schedule K-1-T(3) with your income tax return.
You must send us your Schedules K-1-T(3) if we request them.
Do not attach any Schedule K-1-T that you complete and issue to your beneficiaries or any Schedule K-1-T(3) you complete to your
Form IL-1041. However, you must
•	 keep a copy of each Schedule K-1-T and Schedule K-1-T(3) available for inspection by our authorized agents and employees, and
•	 attach to your Form IL-1041 any Schedule K-1-T issued to you by another trust or estate, as described in Schedule K-1-T(2).

What is a resident?
A resident is

•	 an individual who is present in Illinois for other than a temporary or transitory purpose;
•	 an individual who is absent from Illinois for a temporary or transitory purpose but who is domiciled in Illinois;
•	 the estate of a decedent who at his or her death was domiciled in Illinois;
•	 a trust created by a will of a decedent who at his or her death was domiciled in Illinois; or
•	 an irrevocable trust, whose grantor was domiciled in Illinois at the time the trust became irrevocable. For purposes of this definition, a
trust is irrevocable to the extent that the grantor is not treated as the owner of the trust under Internal Revenue Code (IRC) Sections 671
through 678.

What is a nonresident?
A nonresident is a person who is not a resident, as previously defined. Corporations, S corporations, partnerships, and exempt organizations
are considered nonresidents for purposes of Schedule K-1-T and Schedule K-1-T(3).

What is business income?
Business income means all income, other than employee compensation, that may be apportioned by formula among the states in which you
are doing business without violating the Constitution of the United States. All income of a trust or estate is business income unless it is clearly
attributable to only one state and is earned or received through activities totally unrelated to any business you are conducting in more than
one state. Business income is net of all deductions attributable to that income.

Schedule K-1-T(1) (R-12/23)

Printed by the authority of the state of Illinois - electronic only - one copy.

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When is business income allocable to Illinois?
For a resident of Illinois, all income received, regardless of the source, is allocable to Illinois.
For a nonresident of Illinois whose business income is derived
•	 wholly inside Illinois, the entire amount of business income is allocable to Illinois.
•	 wholly outside Illinois, none of the business income is allocable to Illinois.
•	 inside and outside Illinois, a portion of your business income is allocable to Illinois on your Schedule NR (Form IL-1041), Nonresident
Computation of Fiduciary Income, Step 6. See Schedule NR instructions.
•	 from partnerships, S corporations, and other fiduciaries, the business income paid to this fiduciary may be allocable to Illinois. See the
Illinois Schedule K-1-P, Partner’s or Shareholder’s Share of Income, Deductions, Credits, and Recapture, furnished by the partnership or
S corporation, or the Illinois Schedule K-1-T furnished by the other fiduciary to determine what income is allocable to Illinois.

What is nonbusiness income?
Nonbusiness income is all income other than business income or employee compensation. It is income you can clearly classify as having no
connection to your business.

When is nonbusiness income allocable to Illinois?
For a resident of Illinois, all nonbusiness income is allocable to Illinois.
For a nonresident of Illinois, items of income and deduction that constitute nonbusiness income are allocable to Illinois according to the
following rules:
•	 Interest and dividend income received by a nonresident individual, trust, or estate is not allocable to Illinois. Interest and dividend income
of partnerships or corporations is allocable to Illinois if the entity’s commercial domicile was in Illinois at the time the interest or dividend
was paid or accrued.
•	 Net rents and royalties:
	

Real property - Rents and royalties from real property are allocable to Illinois only if the property is located in Illinois.

	

Tangible personal property - Rents and royalties from tangible personal property are allocable to Illinois to the extent that the property is
used in Illinois. The extent of use of tangible personal property in a state is determined by multiplying the rents and royalties derived from
the property by a fraction. The numerator is the number of days of physical location of the property in Illinois during the rental and royalty
period in the tax year, and the denominator is the number of days of physical location of the property everywhere during all rental or royalty
periods in the tax year.

•	 Patent and copyright royalties are allocable to Illinois to the extent that the patent or copyright is used in Illinois.
	A patent is used in Illinois to the extent that it is employed in production, fabrication, manufacturing, or other processing in Illinois or to the
extent that a patented product is produced in Illinois.
	A copyright is used in Illinois to the extent that printing or other publication originates in Illinois.
•	 Gains and losses from sales or exchanges of real or tangible personal property are in Illinois if the property is located in Illinois at the time
of the sale or exchange. Gains or losses from the sale or exchange of intangible personal property are allocable to the state of residence
or commercial domicile of the beneficiary.
•	 Illinois State Lottery winnings, proceeds from sales or other transfers of rights to lottery winnings, and winnings from gambling
and sports wagering conducted in Illinois are allocable to Illinois.
•	 Income from S corporations, partnerships, and other fiduciaries paid to this fiduciary is allocable to Illinois as if your beneficiary
received it directly. See the Illinois Schedule K-1-P furnished by the partnership or S corporation or the Illinois Schedule K-1-T furnished by
the other fiduciary to determine what income is allocable to Illinois.
•	 Other unspecified items of income or deduction of a nonresident individual or fiduciary are not allocable to Illinois. Unspecified items of
income or deduction for partnerships or corporations, including S corporations, are allocable to Illinois if the entity’s commercial domicile
was in Illinois at the time the item was paid or accrued.

What is Pass-through entity (PTE) tax and PTE tax credit?

PTE tax is an amount equal to 4.95 percent (.0495) of the taxpayer’s calculated net income for the taxable year paid by a partnership (other
than a publicly traded partnership under Section 7704 of the Internal Revenue Code) or subchapter S corporation who elects to pay the tax
for taxable years ending on or after December 31, 2021, and beginning prior to January 1, 2026.
PTE tax credit is the distributive share of the credit allowed as a result of a partnership or S corporation having elected to pay the PTE tax.
PTE tax credit is
•	 reported to you on Schedule(s) K-1-P and K-1-T, and
•	 reported by you
•	 to IDOR on Form IL-1041, Schedule D, Line H and
•	 to your beneficiaries on Schedule K-1-T, Line 50.

Should I round?
	

You must round the dollar amounts on Schedules K-1-T(1) and Schedules K-1-T(3) to whole-dollar amounts. To do this, you should drop
any amount less than 50 cents and increase any amount of 50 cents or more to the next higher dollar.

Schedule K-1-T(1) (R-12/23)

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What if I need additional assistance or forms?
•	
•	
	
	
	

For assistance, forms, or schedules, visit our website at tax.illinois.gov or scan the QR code provided.
Write us at:
ILLINOIS DEPARTMENT OF REVENUE
PO BOX 19001
SPRINGFIELD IL 62794-9001

•	 Call 1 800 732‑8866 or 217 782-3336 (TTY at 1 800 544-5304).
•	 Visit a taxpayer assistance office - 8:00 a.m. to 5:00 p.m. (Springfield office) and 8:30 a.m. to 5:00 p.m.
(all other offices), Monday through Friday.

K-1-T Step-by-Step Instructions
Important: To avoid a common error, before completing any step of Schedule K-1-T, you must enter your tax year ending in the space
provided on the front of the Schedule K-1-T. Failure to provide this information will result in processing delays for your beneficiary. In addition,
they may be advised by IDOR to contact you for a corrected Schedule K-1-T that includes a completed tax year ending.

Step 1 — Identify your trust or estate
Line 1 - Check the appropriate box to identify yourself as a trust or an estate.
Line 2 - Enter the name of your trust or estate as shown on your Form IL-1041.
Line 3 - Enter your entire federal employer identification number (FEIN). If you are a foreign entity and do not have a FEIN, you must receive
approval from IDOR to leave this line blank or to provide partial information. Send your request to:
BUSINESS PROCESSING
ILLINOIS DEPARTMENT OF REVENUE
PO BOX 19004
SPRINGFIELD, IL 62794-9004
Line 4 - Enter the apportionment factor from Schedule NR (Form IL-1041), Step 6, Line 3. If you were not required to complete a Schedule NR,
enter “1” on this line.

Step 2 — Identify your beneficiary
Line 5 - Enter the name of the beneficiary to whom you will issue the Illinois Schedule K-1-T.
Line 6 - Enter the mailing address of the beneficiary.
Line 7 - Enter the entire Social Security number or FEIN of the beneficiary here and in the space provided at the top of Page 2.
Line 8a - Check the appropriate box to identify this beneficiary as an individual, a partnership, a corporation, an S corporation, a trust, or an
estate.
If this beneficiary is
•	 an exempt organization and is taxed as a corporation, check the corporation box on this Schedule K-1-T.
•	 an exempt organization and is taxed as a trust, check the trust box on this Schedule K-1-T.
•	 a grantor trust or other disregarded entity, check the box on this Schedule K-1-T that corresponds to the tax type of the grantor or owner.
Line 8b - Do not check the grantor trust or disregarded entity checkbox, or enter a name or identification number on this line. These are
available for your beneficiary to complete, as applicable.

Steps 3 through 6 —
Note: If you are a beneficiary of another trust or estate, a partner in a partnership, or a shareholder in an S corporation, you need to

complete a pro forma Schedule K-1-T that identifies each beneficiary’s share of your share of items received from that entity. Write across
the top of the pro forma Schedule K-1-T “the following information is included in the Schedule K-1-T from _______” (the name of your trust or
estate). Send this pro forma Schedule K-1-T along with the Schedule K-1-T you issue to your beneficiary.
Column A — Beneficiary’s share — If any part of your income was paid, credited, or distributed, or deemed to have been paid, credited, or
distributed by you to this beneficiary, you must complete Column A of Steps 3 through 6.
Column B — Illinois share — If this beneficiary was a nonresident of Illinois on the last day of your tax year, you must complete Column B
of Steps 3 through 6.

Step 3 — Figure your beneficiary’s share of your nonbusiness income or loss
Do not complete Step 3 if you made the election on your Illinois Schedule NR (Form IL-1041) to treat all of your income as business
income. All items of income and expense from your federal Schedule K-1 should be reported in Step 4, Figure your beneficiary’s share of
your business income or loss.

Column A - Beneficiary’s share
Lines 9 through 18 - Enter the beneficiary’s share of items of income, net of deductions, that constitutes nonbusiness income.
Schedule K-1-T(1) (R-12/23)

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Column B - Illinois share
Lines 9, 10, and 17 - If the beneficiary is a partnership, a corporation, or an S corporation with an Illinois address, enter its share of
nonbusiness income from Column A. Otherwise, enter “0.”
Lines 11 through 16, and Line 18 - Enter the beneficiary’s share of nonbusiness income allocable to Illinois. Identify any amount reported on
Line 18 and, if needed, attach a breakdown of that amount. Income reported on these lines which you allocated to Illinois as reported on your
Schedule NB, Column B, or which would have been reported on your Schedule NB if included in your base income, is also allocable to Illinois
by your beneficiaries.

Step 4 — Figure your beneficiary’s share of your business income or loss
Note: When completing Lines 19 through 29, exclude from these amounts any nonbusiness income reported in Step 3.

Column A - Beneficiary’s share
Lines 19 through 29 - Enter the beneficiary’s share of business income identified on these lines. See the information on the beneficiary’s
federal Schedule K-1 and the amounts entered on the lines in Step 3, Column A.

Column B - Illinois share
Lines 19 through 29 - Enter the beneficiary’s share of business income apportioned to Illinois. If the business income is from this fiduciary,
multiply the amount in Column A by the apportionment factor on Step 1, Line 4. If you received business income from any other trust, estate,
partnership, or S corporation, see the Illinois Schedule K-1-T or Illinois Schedule K-1-P from that entity. Enter the total in Column B. Identify
any amount reported on Line 29 and, if needed, attach a breakdown of that amount.
Do not apportion any amounts from Column A, Lines 23, 24, 26, and 27 to Column B. Apportion only the net amounts on Lines 25
and 28.

Step 5 — Figure your beneficiary’s share of your Illinois additions and subtractions
Column A - Beneficiary’s share
Line 30 - Enter the beneficiary’s share of the federally tax-exempt interest income excluded from federal taxable income as reported on your
Form IL-1041, Step 2, Column A, Line 6. This includes state, municipal or other federally tax exempt interest and all distributions of exempt
interest received from regulated investment companies.
Line 31 - Enter the beneficiary’s share of Illinois income and replacement tax, surcharge, and PTE tax deducted in arriving at federal taxable
income and reported on your Form IL-1041, Step 2, Column A, Line 5.
Line 32 - Enter the beneficiary’s share of Illinois Special Depreciation that must be added to the federal taxable income, as reported on your
Form IL-1041, Step 2, Column A, Line 7.
Line 33 - Enter the beneficiary’s share of Related-Party Expenses that must be added to the federal taxable income, as reported on your
Form IL-1041, Step 2, Column A, Line 8.
Line 34 - Enter the beneficiary’s share of additions from any partnership, S corporation, trust, or estate from which you received income, as
reported on your Form IL-1041, Step 2, Column A, Line 9.
Line 35 - Enter the beneficiary’s share of each of the “other additions” figured on Illinois Schedule M, Other Additions and Subtractions (for
businesses), and reported on your Form IL-1041, Step 2, Column A, Line 10.
Line 36a - Enter the beneficiary’s share of the interest from U.S. government obligations that is included as business income on your
Form IL-1041, Step 3, Column A, Line 15.
Line 36b - Enter the beneficiary’s share of the interest from U.S. government obligations that is included as nonbusiness income on your
Form IL-1041, Step 3, Column A, Line 15.
Line 37 - Enter the beneficiary’s share of payments from certain retirement plans reported on your Form IL-1041, Step 3, Column A, Line 14.
Line 38 - Enter the beneficiary’s share of retirement payments to retired partners reported on your Form IL-1041, Step 3, Column A, Line 16.
Line 39 - Enter the beneficiary’s share of River Edge Redevelopment Zone Dividend Subtraction, included in the total amount of your
Form IL-1041, Step 3, Column A, Line 17.
Line 40 - Enter the beneficiary’s share of High Impact Business within a Foreign Trade Zone (or sub-zone) Dividend Subtraction, from your
Form IL-1041, Step 3, Column A, Line 18.
Line 41 - Enter the beneficiary’s share of contributions to certain job training projects from your Form IL-1041, Step 3, Column A, Line 19.
Line 42 - Enter the beneficiary’s share of any Illinois Special Depreciation subtraction allowed for property placed in service after
September 11, 2001, from your Form IL-1041, Step 3, Column A, Line 20.
Line 43 - Enter the beneficiary’s share of any Related-Party Expenses subtraction allowed from your Form IL-1041, Step 3, Column A,
Line 21.
Line 44 - Enter the beneficiary’s share of subtractions from any partnership, S corporation, trust, or estate from which you received income
reported on your Form IL-1041, Step 3, Column A, Line 22. Do not include any August 1, 1969, appreciation amounts included in the share.
Those subtractions are passed through to the beneficiary in Step 6.
Schedule K-1-T(1) (R-12/23)

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Line 45 - Enter the beneficiary’s share of each of the “other subtractions” figured on Illinois Schedule M (for businesses), and reported on
your Form IL-1041, Step 3, Column A, Line 24.
Do not include any August 1, 1969, appreciation amounts included in the share.

Column B - Illinois share
Lines 30 through 35 - Enter the beneficiary’s share of additions apportioned to Illinois. If the amount is business income, multiply the amount
of business income in Column A by the apportionment factor on Step 1, Line 4. Allocate the amount of nonbusiness income in Column A
according to the allocation rules. See “When is nonbusiness income allocable to Illinois?” in General Information for the rules governing the
allocation of nonbusiness income. If you received amounts from any other trust, estate, partnership, or S corporation, see the Schedule K-1-T
or Schedule K-1-P from that entity. Enter the total in Column B.

Note: If you reported recaptured business expenses on Line 35, multiply those expenses in Column A by the fraction on Line f of the
Apportionment Factor Worksheet in the Illinois Schedule NR (Form IL-1041) Instructions.

Do not include any amount in Column B of Lines 36a, 36b, 39, or 40, unless the item was included in Column B in Step 3 or 4 of this
Schedule K-1-T. This same rule applies to certain items from Illinois Schedule M (for businesses), including any income exempt from taxation
by Illinois by reasons of its statutes or Constitution, or the Constitution, treaties, or statutes of the United States.
Lines 36a, and 37 through 45 - Enter the beneficiary’s share of subtractions apportioned to Illinois. If the amount is business income,
multiply the amount of business income in Column A by the apportionment factor on Step 1, Line 4. Allocate the amount of nonbusiness
income in Column A according to the allocation rules. See “When is nonbusiness income allocable to Illinois?” in General Information for the
rules governing the allocation of nonbusiness income. If you received amounts from any other trust, estate, partnership, or S corporation, see
the Schedule K-1-T or Schedule K-1-P from that entity. Enter the total in Column B.
Line 36b - If the beneficiary is a partnership, a corporation, or an S corporation with an Illinois address, enter the amount from
Column A. Otherwise, enter “0.”

Step 6:	 Figure your beneficiary’s (except a corporate beneficiary) share of your Illinois
August 1, 1969, appreciation amounts
If you reported a gain on the disposition of property acquired before August 1, 1969, this gain may be reduced by the August 1, 1969,
appreciation amount. See Schedule F, Gains from Sales or Exchanges of Property Acquired Before August 1, 1969, (Form IL-1041) for
detailed instructions and information necessary to complete Lines 46 through 48.

Note: Corporations are not allowed to subtract the August 1, 1969, appreciation amount. However, S corporations may pass the subtraction
through to their shareholders.

Column A - Beneficiary’s share
Line 46 - Enter the beneficiary’s share of the August 1, 1969, appreciation amount for IRC Sections 1245 and 1250 gains reported on your
Form IL-1041, Schedule F, Column 2, Line 7.
Line 47 - Enter the beneficiary’s share of the August 1, 1969, appreciation amount for IRC Section 1231 gain reported on your Form IL-1041,
Schedule F, Column 2, Line 8.
Line 48 - Enter the beneficiary’s share of the August 1, 1969, appreciation amount for capital gain reported on your Form IL-1041, Schedule F,
Column 2, Line 9.

Column B - Illinois Share
Lines 46 through 48 - Enter the beneficiary’s share of the August 1, 1969, appreciation amounts that are allocated or apportioned to
Illinois.

If the appreciation amounts result from a gain on the disposition of nonbusiness property located in Illinois, allocate them to Illinois. See
“When is nonbusiness income allocable to Illinois” in General Information for the rules governing the allocation of nonbusiness income.
If the appreciation amounts result from gain on the disposition of business property, apportion them to Illinois by multiplying the amount
on Lines 46 through 48, Column A, by the apportionment factor on Step 1, Line 4. If you received amounts from any other trust, estate,
partnership, or S corporation, see the Illinois Schedule K-1-T or Illinois Schedule K-1-P from that entity. Enter the total in Column B.

Step 7:	 Figure your beneficiary’s share of pass-through withholding, pass-through entity tax
credit, and federal income subject to surcharge
Line 49 - If you are a trust, this member is a nonresident, and this member has not submitted a Form IL-1000-E to you, complete

Schedule K-1-T(3) for this member before completing this line. After you have completed Schedule K-1-T(3) for this member, enter on
Line 49 the beneficiary’s share of pass-through withholding from Schedule K-1-T(3), Step 3, Line 13. You must also report specific amounts
from Schedule K-1-T(3) on Schedule D of your Form IL-1041. See the instructions for Schedule K-1-T(3) on Page 7 and the Schedule D
instructions for more information.
You must complete Schedule K-1-T, Step 1, Line 3, or your member may not be able to claim this pass-through withholding.

Line 50 - Enter the beneficiary’s distributive share of PTE tax credit passed through to you from Schedule(s) K-1-P and K-1-T. The PTE tax
credit on Line 50 is allowed against the tax imposed on the beneficiary under the Illinois Income Tax Act (IITA) subsections 201(a) and (b).
Do not include on this line any PTE tax credit amount retained by the fiduciary and reported on Form IL-1041, Line 55d.
Schedule K-1-T(1) (R-12/23)

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Line 51 - Enter the beneficiary’s share of any taxable gains attributable to transactions subject to the Compassionate Use of Medical
Cannabis Program Act surcharge. Attach a breakdown of any items reported on this line.

Definitions related to the surcharge —
Organization registrant means a corporation, partnership, trust, limited liability company (LLC), or other organization that holds either a
medical cannabis cultivation center registration issued by the Illinois Department of Agriculture or a medical cannabis dispensary registration
issued by the Illinois Department of Financial and Professional Regulation.
Transactions subject to the surcharge means sales and exchanges of
•	 capital assets;
•	 depreciable business property;
•	 real property used in the trade or business; and
•	 Section 197 intangibles of an organization registrant.

What is the surcharge?
For each taxable year beginning or ending during the Compassionate Use of Medical Cannabis Program, a surcharge is imposed on all
taxpayers on income arising from the transactions subject to the surcharge of an organization registrant under the Compassionate Use of
Medical Cannabis Program Act.
The amount of the surcharge is equal to the amount of federal income tax liability for the taxable year attributable to the transactions subject
to the surcharge.

To whom does the surcharge apply?
The surcharge is imposed on any taxpayer who incurs a federal income tax liability on the income realized on a “transaction subject to the
surcharge,” including individuals and other taxpayers who are not themselves the “organization registrant” that engaged in the transaction.
A beneficiary who incurs a federal income tax liability on income from a transaction subject to surcharge distributed by a trust or estate will
incur a surcharge.

Note: Although a unitary business group filing combined Illinois returns is treated as a single taxpayer and its members are jointly and

severally liable for any surcharge imposed on the group, the group itself is not an organization registrant and transactions of any member that
is not itself an organization registrant are not subject to the surcharge.

What do I report to my beneficiaries?
Enter the beneficiary’s share of any federal income attributable to transactions subject to the surcharge on Line 51. In order to enable your
beneficiary to correctly figure their surcharge, attach a report itemizing any amount reported on Line 51 and provide it to your beneficiary
along with this schedule.

Note: Report federal income attributable to transactions subject to the surcharge on Line 51. Do not report your federal income tax liability
for the taxable year attributable to the transactions subject to the surcharge on this line.
For more information, see 86 Ill. Adm. Code Section 100.2060.

Line 52 - Enter the beneficiary’s share of any taxable gains attributable to transactions subject to the surcharge on sale of assets by gaming
licensee. Attach a breakdown of any items reported on this line.

Definitions related to the surcharge —
Gaming licensee is an organization licensee under the Illinois Horse Racing Act of 1975 and/or an organization gaming licensee under the
Illinois Gambling Act.
Transactions subject to the surcharge means sales and exchanges of
•	
•	
•	
•	

capital assets;
depreciable business property;
real property used in the trade or business; and
Section 197 intangibles of a gaming licensee.

What is the surcharge?
For each taxable year 2019 through 2027, a surcharge is imposed on all taxpayers on income arising from the transactions subject to the
surcharge on the sale of assets by gaming licensee.
The amount of the surcharge is equal to the amount of federal income tax liability for the taxable year attributable to the transactions subject
to the surcharge.

To whom does the surcharge apply?
The surcharge is imposed on any taxpayer who incurs a federal income tax liability on the income realized on a “transaction subject to the
surcharge,” including individuals and other taxpayers who are not themselves the “gaming licensee” that engaged in the transaction.
A beneficiary who incurs a federal income tax liability on income from a transaction subject to surcharge distributed by a trust or estate will
incur a surcharge.

Schedule K-1-T(1) (R-12/23)

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Note: Although a unitary business group filing combined Illinois returns is treated as a single taxpayer and its members are jointly and

severally liable for any surcharge imposed on the group, the group itself is not a gaming licensee and transactions of any member that is not
itself a gaming licensee are not subject to the surcharge.

What do I report to my beneficiaries?
Enter the beneficiary’s share of any federal income attributable to transactions subject to the surcharge on Line 52. In order to enable your
beneficiary to correctly figure their surcharge, attach a report itemizing any amount reported on Line 52 and provide it to your beneficiary
along with this schedule.

Note: Report federal income attributable to transactions subject to the surcharge on Line 52. Do not report your federal income tax liability
for the taxable year attributable to the transactions subject to the surcharge on this line.

K-1-T(3) Step-by-Step Instructions
Read this information first:
The following instructions apply to trusts only. Estates are not required to make pass-through withholding on behalf of their nonresident
members.
•	 You must complete Schedule K-1-T(3) for each of your nonresident beneficiaries who have not submitted a Form IL-1000-E to you.
•	 Do not complete Schedule K-1-T(3) for any member who is a resident or who has submitted Form IL-1000-E to you.
•	 You must keep Schedule K-1-T(3) with your income tax records.
•	 Do not send Schedule K-1-T(3) to your beneficiaries or submit it to the Illinois Department of Revenue (IDOR) unless we request it from
you.

Note: See “What is a resident?” and “What is a nonresident?” in the General Information section of these instructions for help determining if
your member is a resident or nonresident.

Completion of Schedule K-1-T(3) for each of your applicable members is required and will aid in the completion of your Form IL-1041,
Schedule D.
Complete all lines of Schedule K-1-T except Step 7, Line 49 before completing this schedule.

Step 1 — Identify your trust
Line 1 - Enter the name of your trust as shown on your Form IL-1041.
Line 2 - Enter your entire federal employer identification number (FEIN). If you are a foreign entity and do not have a FEIN, leave Line 2

blank. If you leave this line blank or provide partial information and we request that you submit this schedule, you may be contacted for further
information.

Step 2 — Identify your nonresident beneficiary
Line 3 - Enter the name of the nonresident beneficiary for whom you are reporting pass-through withholding.
Line 4 - Enter the entire Social Security number or FEIN of the nonresident beneficiary.
Line 5 - Check the appropriate box to identify this nonresident beneficiary as an individual, a partnership, a corporation, an S corporation, a
trust, or an estate.

If this nonresident beneficiary is
•	 an exempt organization and is taxed as a corporation, check the corporation box on this schedule and treat it as a corporation for the
purposes of completing this schedule.
•	 an exempt organization and is taxed as a trust, check the trust box on this schedule and treat it as a trust for the purposes of completing
this schedule.
•	 a grantor trust or other disregarded entity, check the box on this schedule that corresponds to the tax type of the grantor or owner and treat
it as that type of taxpayer for the purposes of completing this schedule.

Step 3 — Figure your nonresident beneficiary’s pass-through withholding
Note: If this member is a resident or has submitted Form IL-1000-E to you, do not complete Schedule K-1-T(3) for this member. Do not

accept Form IL-1000-E from an individual member. See “What is the purpose of Schedule K-1-T and Schedule K-1-T(3)?” in the General
Information section.

Line 6 and Line 7 - If this member is an individual beneficiary, do not include itemized deductions such as charitable contributions,

investment expenses, or portfolio expenses because individuals are not allowed to take these deductions in computing Illinois net income.

Line 8 through Line 10 - Follow the instructions on the schedule.
Line 11 - Add the amounts from this member’s Schedule K-1-T, Column B, Lines 36a through 45 and enter the total here. This is your
member’s share of subtractions allocable to Illinois.

Note: If this member is an individual, partnership, trust, or estate and received Illinois August 1, 1969, appreciation amounts from you,

include the amounts from their Schedule K-1-T, Column B, Lines 46 through 48 in the total you enter on their Schedule K-1-T(3), Line 11.
Schedule K-1-T(1) (R-12/23)

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If this member is a corporation (including S corporations) do not include any amounts shown on their Schedule K-1-T, Column B, Lines 46
through 48, in the total you enter on their Schedule K-1-T(3), Line 11.

Line 12 - Follow the instructions on the schedule. Enter this amount here and on your Form IL-1041, Schedule D, Section B, Line F, in the
column which reports this member’s amounts.

Line 13 - Determine your member’s tax type, multiply the amount on Line 12 by the applicable percentage listed below. Then subtract the
member’s share of any PTE tax credit received and enter the result on this line.
If your member is a
•	

nonresident individual or estate, multiply Line 12 by 4.95% (.0495).		

•	

partnership or S corporation, multiply Line 12 by 1.5% (.015).

•	

nonresident trust, multiply Line 12 by 6.45% (.0645).

•	

corporation, multiply Line 12 by 9.5% (.095) .

This is your member’s total pass-through withholding. Enter the result on this line and on this member’s Schedule K-1-T, Step 7, Line 49. The
member’s share of PTE tax credit is reported on Schedule K-1-T, Step 7, Line 50.
You must also enter this member’s amounts of
•	

the pass-through withholding on your Form IL-1041, Schedule D, Section B, Line G, and

•	

the PTE tax credit on your Form IL-1041, Schedule D, Section B, Line H.

Note: Complete a separate Schedule K-1-T(3) for each of your nonresident members who have not submitted a Form IL-1000-E to you. Do
not submit Schedule K-1-T(3) to IDOR unless we specifically request it from you.

Schedule K-1-T(1) (R-12/23)

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