Qualified Mortgage Insurance Premiums Deduction Worksheet

Page 20 of 37

Instructions for Form 1041 and Schedules A, B, G, J, and K-1

12:20 - 25-SEP-2009

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Investment interest. Generally,
investment interest is interest (including
amortizable bond premium on taxable
bonds acquired after October 22, 1986,
but before January 1, 1988) that is paid
or incurred on indebtedness that is
properly allocable to property held for
investment. Investment interest does
not include any qualified residence
interest, or interest that is taken into
account under section 469 in figuring
income or loss from a passive activity.
Generally, net investment income is
the excess of investment income over
investment expenses. Investment
expenses are those expenses (other
than interest) allowable after application
of the 2% floor on miscellaneous
itemized deductions.
The amount of the investment
interest deduction may be limited. Use
Form 4952, Investment Interest
Expense Deduction, to figure the
allowable investment interest
deduction.
If you must complete Form 4952,
check the box on line 10 of Form 1041
and attach Form 4952. Then, add the
deductible investment interest to the
other types of deductible interest and
enter the total on line 10.
Qualified residence interest. Interest
paid or incurred by an estate or trust on
indebtedness secured by a qualified
residence of a beneficiary of an estate
or trust is treated as qualified residence
interest if the residence would be a
qualified residence (that is, the principal
residence or the secondary residence
selected by the beneficiary) if owned by
the beneficiary. The beneficiary must
have a present interest in the estate or
trust or an interest in the residuary of
the estate or trust. See Pub. 936, Home
Mortgage Interest Deduction, for an
explanation of the general rules for
deducting home mortgage interest.

See section 163(h)(3) for a definition
of qualified residence interest and for
limitations on indebtedness.
Qualified mortgage insurance
premiums. Enter (on the worksheet
below) the qualified mortgage
insurance premiums paid under a
mortgage insurance contract issued
after December 31, 2006, in connection
with qualified residence acquisition debt
that was secured by a principal or
secondary residence. See Prepaid
mortgage insurance below if the estate
or trust paid any premiums allocable
after 2009. If at least one other person
was liable for and paid the premiums in
connection with the loan, and the
premiums were reported on Form 1098,
include the estate’s or trust’s share of
the 2009 premiums on the worksheet
below.

The premiums are treated as paid in
the year to which they are allocated. If
the mortgage is satisfied before its
term, no deduction is allowed for the
unamortized balance. See Pub. 936 for
details. These allocation rules do not
apply to qualified mortgage insurance
provided by the Department of
Veterans Affairs or the Rural Housing
Service.
Limit on the amount that is
deductible. The estate or trust cannot
deduct mortgage insurance premiums if
the estate’s or trust’s AGI is more than
$109,000. If the estate’s or trust’s AGI
is more than $100,000, its deduction is
limited and you must use the worksheet
below to figure the deduction. See How
to figure AGI for estates and trusts on
page 21 for information on figuring AGI.

Line 11—Taxes

Qualified mortgage insurance is
mortgage insurance provided by the
Department of Veterans Affairs, the
Federal Housing Administration, or the
Rural Housing Service, and private
mortgage insurance (as defined in
section 2 of the Homeowners
Protection Act of 1998 as in effect on
December 20, 2006).

Enter any deductible taxes paid or
incurred during the tax year that are not
deductible elsewhere on Form 1041.
Deductible taxes include the following.
• State and local income taxes. You
can deduct state and local income
taxes unless you elect to deduct state
and local general sales taxes. You
cannot deduct both.
• State and local general sales taxes.
You can elect to deduct state and local
general sales taxes instead of state and
local income taxes. Generally, you can
elect to deduct the actual state and
local general sales taxes (including
compensating use taxes) you paid in
2009 if the tax rate was the same as
the general sales tax rate. However,
sales taxes on food, clothing, medical
supplies, and motor vehicles are
deductible as a general sales tax even
if the tax rate was less than the general
sales tax rate. Sales taxes on motor
vehicles are also deductible as a
general sales tax if the tax rate was
more than the general sales tax rate,
but the tax is deductible only up to the

Mortgage insurance provided by the
Department of Veterans Affairs and the
Rural Housing Service is commonly
known as a funding fee and guarantee
fee, respectively. These fees can be
deducted fully in 2009 if the mortgage
insurance contract was issued in 2009.
Contact the mortgage insurance issuer
to determine the deductible amount if it
is not included in box 4 of Form 1098.
Prepaid mortgage insurance. If
the estate or trust paid mortgage
insurance premiums allocable to
periods after 2009, such premiums
must be allocated over the shorter of:
• The stated term of the mortgage, or
• 84 months, beginning with the month
the insurance was obtained.

the end of its tax year

Qualified Mortgage Insurance Premiums Deduction Worksheet

Keep for Your Records

1. Enter the total premiums the estate or trust paid in 2009 for qualified mortgage insurance for a contract issued
after December 31, 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2. Enter the estate’s or trust’s AGI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.
3. Enter $100,000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.
4. Is the amount on line 2 more than the amount on line 3?
The deduction is not limited. Include the amount from line 1 above on Form
No.
1041, line 10. Do not complete the rest of this worksheet.
Yes. Subtract line 3 from line 2. If the result is not a multiple of $1,000, increase it to
the next multiple of $1,000. For example, increase $425 to $1,000, increase
$2,025 to $3,000, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.
5. Divide line 4 by $10,000. Enter the result as a decimal. If the result is 1.0 or more, enter 1.0 . . . . . . . . . . . . .
6. Multiply line 1 by line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7. Qualified mortgage insurance premiums deduction. Subtract line 6 from line 1. Enter the result here and
include the amount on Form 1041, line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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