Part I. Income and Deductions — 2025 Inst 5227 (PDF)

Section A—Ordinary Income Report the trust's ordinary income on lines 1 through 7.

from (a) a domestic corporation, or (b) a qualified foreign corporation. A qualified dividend does not include any dividend from a corporation if the corporation is (or was) exempt from income tax under section 501 or 521 for the corporation's current or preceding tax year during which the distribution was made.

Generally, these dividends are reported to the trust in box 1b of Form(s) 1099-DIV, Dividends and Distributions.

Qualified dividends are treated as a separate class of ordinary income for purposes of ordering distributions. See Ordering Rules for Ordinary Income, later, for more information on distributions. See Pub. 550 for additional information on qualified dividends, including holding period requirements.

Line 3. Business income or (loss). If the trust operated a business, report the income and expenses on Schedule C (Form 1040), Profit or Loss From Business. Enter the net profit or loss from Schedule C on line 3. (Section 664 trusts, see Part VIII, Line 7, later).

Line 4. Rents, royalties, partnerships, other estates and trusts, etc. Use Schedule E (Form 1040), Supplemental Income and Loss, to report the trust's income or losses from rents, royalties, partnerships, S corporations, other estates and trusts, and REMICs. Enter the net profit or loss from Schedule E on line 4. See the Instructions for Schedule E (Form 1040) for reporting requirements. If the trust received a Schedule K-1 from a partnership, S corporation, or other flow-through entity, use the corresponding lines on Form 5227 to report the interest, dividends, capital gains, etc., from the flow-through entity. (Section 664 trusts, see Part VIII, Line 7, later).

Line 5. Farm income or (loss). If the trust operated a farm, use Schedule F (Form 1040), Profit or Loss From Farming, to report farm income and expenses. Enter the net profit or loss from Schedule F on line 5. (Section 664 trusts, see Part VIII, Line 7, later).

Note: If the trust has farm rental income and expenses based on crops or livestock produced by a tenant, report the income and expenses on Schedule E (Form 1040) and include it on line 4. Don't use Form 4835, Farm Rental Income and Expenses, or Schedule F (Form 1040) to report such income and expenses and don't include the net profit or (loss) from such income and expenses on line 5.

Line 6. Ordinary gain or (loss). Enter from Form 4797, Sales of Business Property, the gain or loss from the sale or exchange of property (other than capital assets) and also from involuntary conversions (other than casualty or theft). For more information, see the Instructions for Form 4797.

Line 7. Other income. List any other item and its amount that is includible in gross income but not included on lines 1 through 6 (or Section B), on the dashed line to the left of the entry space. If more space is needed, attach a statement. Enter the total of these items in the entry space to the right.

Section B—Capital Gains (Losses) Use Schedule D (Form 1041), Capital Gains and Losses, as directed below. You may also need to complete Form 8949, Sales and Other Dispositions of Capital Assets. Lines 15 and 16 of Schedule D (Form 1041) apply only to a CRT (section 664 trust).

Line 9. Total short-term capital gain or (loss). Complete lines 1a through 5 and line 7 of the 2025 Schedule D (Form

Line 1. Interest income. Report all taxable interest income that was received by the trust. Examples of taxable interest include interest from:

Accounts (including certificates of deposit and money market accounts) with banks, credit unions, and thrifts;
Notes, loans, and mortgages;
U.S. Treasury bills, notes, and bonds;
U.S. savings bonds;
Original issue discount; and
Income received as a regular interest holder of a real estate mortgage investment conduit (REMIC).

For taxable bonds acquired after December 31, 1987, amortizable bond premium is treated as an offset to the interest income instead of as a separate interest deduction. See Pub. 550, Investment Income and Expenses.

Line 2a. Ordinary dividends. Enter on line 2a the total of all ordinary dividends, including the qualified dividends reported on line 2b.

Line 2b. Qualified dividends. Report on this line all qualified dividends received by the trust. In general, a qualified dividend is a dividend received during the tax year

Instructions for Form 5227 5

1041). Don't make an entry on line 6 of Schedule D (Form 1041). Enter the amount from line 7 of the Schedule D (Form 1041) on line 9.

Line 10. Total long-term capital gain or (loss). Complete lines 8a through 14 and line 16 of the 2025 Schedule D (Form 1041). Don't make an entry on line 15 of Schedule D (Form 1041). Enter the amount from line 16 of Schedule D (Form 1041) on line 10. For section 664 trusts only. Line 10 is the total of all classes (described below) of long-term capital gain. The following is a summary of the classes.

28% long-term capital gain class. This class consists of collectibles gains and losses and the taxable gain (but not more than the section 1202 exclusion) on the sale or exchange of qualified small business stock. Enter these gains or losses on line 12.
Section 1250 long-term capital gain class. This class consists of unrecaptured section 1250 gain (generally the part of real estate capital gain attributable to depreciation) on sales, exchanges, etc., of assets held more than 1 year. Undistributed, unrecaptured section 1250 gain on sales, exchanges, etc., after May 6, 1997, is included in this class. Enter this gain on line 11.
All other long-term capital gain class. This class consists of all other gains or losses from sales, exchanges, and conversions (including installment payments received) of assets held more than 12 months.

Section C—Nontaxable Income In this section, include other income that isn't included in Section A or B. This section includes income excluded under subtitle A, chapter 1, subchapter B, part III, of the Internal Revenue Code, such as interest on state and municipal bonds.

Section D—Deductions

For Section 664 Trusts

Include all allowable deductions and any expense that would be allowable but for the fact that it must be allocated to tax-exempt income. No deduction is ever allowed for:

The personal exemption under section 151 (see section 642(b)),
Charitable contributions under section 170(a) (see section 642(c)),
Net operating losses (NOLs)under section 642(d),
Income distribution deductions under section 661,
Capital loss carryforwards under section 1212,
Federal income taxes, or
Federal excise taxes under chapter 42.

Any expense that isn't deductible in determining taxable income (or not otherwise deductible but for the fact that it must be allocated to nontaxable income) must be allocated to corpus.

For Split-Interest Trusts Other Than Section 664 Trusts

Include all expenses attributable to gross income that are deductible for the tax year.

Line 21. Attached statement. List any other deductible expense that is attributable to the gross income of the trust and isn't included on lines 17 through 20 and line 23 and

show the amount of the deduction. Total the amounts listed and enter the total on line 21.

Line 23. Charitable deduction. Enter the amount of any charitable deduction or other deduction taken under section 642(c) for the tax year.

Section E—Deductions Allocable to Income Categories (Section 664 Trust Only) Deductions are allocated as follows.

Allowable deductions directly attributable to one or more classes of income items (that is, interest, dividends, or rents) or corpus are allocated to such income classes or corpus.
Allowable deductions not allocated under (1) above are allocated on the basis of gross income after directly attributable deductions, to the extent of such income.
Deductions not allocated under either (1) or (2) above may be allocated in any manner.

Add the deductions that were allocated to all the classes of income items within each category and enter the amount on the appropriate line. ( Note: Any deduction allocated to corpus isn't shown on any line in Section E.)

For a discussion of the allocation of deductions to tax-exempt income, see Allocation of Deductions for Tax-Exempt Income in the Instructions for Form 1041.