Form 1041 Schedule I – AMT Guide for Estates and Trusts

It was a Thursday in March, and a partner called me at 10:30 p.m. A clean 1041 under regular tax had suddenly turned into a surprise AMT bill after we added private activity bond interest and refigured investment interest. Nothing was “wrong.” Schedule I was doing exactly what it should. The problem was time.

You have probably lived that moment, where reviews pile up, deadlines creep closer, and your team is juggling AMT worksheets, K‑1 footnotes, and carryforward ledgers. In busy season, delivery becomes the ceiling, not demand.

This guide keeps your Schedule I work fast, clear, and right the first time. You will see where AMT really bites, how to move through Parts I–IV with fewer review notes, and how to keep clean records for next year’s minimum tax credit.

Schedule I converts a trust or estate’s regular taxable income to AMTI, then applies the AMT rules so you can compute the tentative minimum tax and any final AMT due.

Key takeaways

• Schedule I turns Form 1041 taxable income into AMTI by adding preference items and refiguring deductions that are limited under AMT.
• File Schedule I if AMTI on line 27 exceeds the 2024 exemption of $29,900, if the return claims general business credits, or if the estate or trust must complete Schedule B.
• 2024 AMT mechanics for estates and trusts use a 26% rate up to the breakpoint and 28% above it, with the 28% bracket starting over $232,600 of taxable excess. Capital gains for trusts keep the favorable 0% or 15% or 20% brackets with 2024 thresholds of $3,150, $15,450, and above $15,450.
• ESBTs must bifurcate AMT. Prepare a separate Schedule I for the S portion and for the non‑S portion, and track carryovers separately.
• AMT Form 4952 often drives the biggest adjustment. You must complete a separate AMT version, then transfer the difference to Schedule I line 2.

2025 update for planning: the AMT exemption for estates and trusts increases to $30,700, with phaseout beginning at $102,500 and ending at $225,300. The 28% rate begins over $239,100. Keep these in mind for projections and carryforwards.

What Schedule I (Form 1041) actually does

Schedule I exists to reconcile your regular tax result with AMT. You start from adjusted total income, add in preference items, refigure deductions that are treated differently under AMT, and arrive at alternative minimum taxable income. You then compute the income distribution deduction on a minimum tax basis, apply the AMT exemption and phaseout, and calculate tentative minimum tax. If tentative minimum tax exceeds regular tax after credits, the difference is AMT.

Put simply, you convert taxable income to AMTI, apply the exemption and 26% or 28% AMT rates, then compare to regular tax.

Where this matters for you during peak season is review speed. Most time is lost in three places: missing or inconsistent workpapers for AMT-only items, misaligned beneficiary reporting of depreciation or depletion on K‑1 box 12, and incomplete AMT carryforward ledgers that break next year’s Form 8801.

Who must complete Schedule I

You must complete and attach Schedule I if any of the following apply:

• The estate or trust must complete Schedule B.
• AMTI on line 27 is above the 2024 exemption of $29,900.
• The return claims a general business credit and Form 3800 shows an amount on Part I line 6 or Part III line 3.
• The trust is an ESBT with positive S‑portion AMTI or it claims a general business credit.

Practical note: even if no AMT is due, you may still need Schedule I for credit interactions, distribution computations on a minimum tax basis, and to maintain AMT carryforward records that feed 2025’s Form 8801.

The 2024 numbers you cannot get wrong

• AMT exemption for estates and trusts: $29,900.
• Exemption phaseout begins at $99,700 and ends at $219,300.
• 28% AMT bracket begins over $232,600.
• Capital gains and qualified dividends brackets for estates and trusts in 2024
  • 0% up to $3,150
  • 15% over $3,150 to $15,450
  • 20% over $15,450

2025 planning heads‑up: estates and trusts long‑term capital gain thresholds adjust to $3,250 and $15,900 for the 0% and 15% cutoffs. Build this into winter projections and distribution planning.

Accuracy tip: If your client’s AMTI is near the phaseout band, even small preference items or an AMT Form 4952 change can erase the exemption. Model phaseout before you finalize distributions or elections.

How Schedule I fits together, Parts I through IV

Part I, arrive at AMTI the right way

Start with adjusted total income, then layer in AMT adjustments and preferences. Common items include private activity bond interest, depreciation differences, depletion, and investment interest after recomputing on an AMT Form 4952. Part I ends at line 27, your AMTI pivot for the rest of the schedule.

Part II, income distribution deduction on a minimum tax basis

Here you determine distributable net AMTI. Depreciation, depletion, and amortization that are allocable to beneficiaries are not part of DNAMTI, and must instead be reported separately on K‑1 box 12 with codes G (depreciation), H (depletion), and I (amortization).

Part III, exemption and tentative minimum tax

Apply the 2024 exemption and its phaseout, then calculate tentative minimum tax using 26% up to the breakpoint and 28% above.

Part IV, capital gains coordination

Use the AMT capital gain worksheets and compare the capital gain tax computation to the tentative minimum tax. Carry the lower result. Keep copies of any worksheets because they support both AMT foreign tax credit work and next year’s records.

Keep a separate AMT binder or digital folder for each trust, including AMT‑only versions of forms and all transfer notes. It will save you hours at extension time.

2025 update, in one glance

• Estates and trusts AMT exemption rises to $30,700.
• Phaseout begins at $102,500, ends at $225,300.
• 28% rate begins over $239,100.
• Long‑term capital gain thresholds for estates and trusts shift to $3,250 and $15,900 for 0% and 15% cutoffs.

Use these for tax year 2025 planning and carryforward modeling. If your 2024 AMT creates a minimum tax credit, set a reminder to review Form 8801 at 2025 year‑end.

Part I, the AMTI builder you review first

Part I is where most AMT surprises start. You pull adjusted total income, then work through adjustments and preference items that convert regular taxable income to AMTI. If you keep clean workpapers for each adjustment, your review notes shrink, your final runs faster, and next year’s Form 8801 is much easier to prep.

Private activity bond interest, the quick add‑back

Interest from tax‑exempt private activity bonds issued after August 7, 1986 is a classic AMT add‑back. Many trusts hold muni funds, and the AMT footnotes can be easy to miss when you are under time pressure.

• Capture the AMT portion directly from broker 1099 footnotes or fund statements.
• Tie out the percentage to the dollar amount in your workpaper, keep the source PDF in your AMT binder.
• If there are related investment expenses, include them in the AMT calculation set, not just in regular tax.

Speed tip, create a short template that asks, does this position have any AMT‑affected interest, yes or no, and where is the support saved. It prevents the late‑night scramble.

Depreciation differences, why the fixed asset roll matters

AMT often uses a slower recovery method or a different convention. If you track a single fixed asset roll that tags each asset’s regular and AMT method, you avoid re‑creating schedules at review time.

• Tag new assets at the start with both regular and AMT method and life.
• Reconcile current year differences in one place, then reference that one table in the return file.
• For passthroughs, attach the AMT depreciation detail behind the K‑1 workpaper so beneficiary reporting is accurate.

Depletion and amortization, pass‑through cleanly

Resource trusts and certain operating passthroughs throw depletion and amortization adjustments that change AMTI. Treat these the same way you treat depreciation, with a clear line that shows the AMT difference, the source K‑1 box, and the support.

• Break out depletion under section 611 and the applicable limits.
• Keep a separate amortization schedule for startup, organizational, and any section 59(e) costs if elected.
• Document which amounts are allocable to beneficiaries and which remain at the trust level.

Investment interest, always do the AMT Form 4952 version

If investment interest is in play, you must complete a separate AMT version of Form 4952. You will include post‑1986 private activity bond interest in investment income and then work through the Part II changes. After the AMT form is complete, you compare the AMT deduction to the regular deduction. The difference moves to Schedule I line 2, positive or negative. We will walk the workflow in detail in the next section.

Part II, distributable net AMTI and K‑1 accuracy

Part II calculates the income distribution deduction on a minimum tax basis and arrives at distributable net AMTI. This is where sloppy allocation can lead to confused beneficiaries and amended K‑1s, so treat it like a checklist.

• Start with DNI workpapers, then layer AMT‑only changes to arrive at DNAMTI.
• Remove depreciation, depletion, and amortization that are reportable to beneficiaries outside DNAMTI.
• Allocate tax‑exempt interest and capital gains on the AMT basis, just like you would under regular tax, but using the AMT numbers.

K‑1 reporting for AMT, the three codes that stop rework

Do not bury AMT items inside distributable net AMTI if they belong on K‑1 box 12 with specific codes. Clear reporting here reduces questions from beneficiary preparers and prevents rework.

• Code G, depreciation adjustment
• Code H, depletion adjustment
• Code I, amortization adjustment

Keep a one‑page roll that shows, by beneficiary, the exact amounts and the line reference back to your Part I schedule. If you are using scan‑and‑organize tools, make sure the output names on the PDF match the K‑1 box names, not internal file codes.

Mini case, seeing the AMT path end to end

Say a complex trust holds a muni fund with AMT‑affected interest of 4,200, a portfolio with margin interest that requires Form 4952, and a rental activity with bonus depreciation for regular tax. In Part I you add back 4,200 for the private activity bond interest, you compute the AMT depreciation difference for the rental, and you finish the AMT Form 4952 to find that AMT allows 1,000 less investment interest than regular. You move the 1,000 difference to Schedule I line 2. In Part II you remove AMT depreciation and amortization from DNAMTI and instead put those amounts on K‑1 box 12 with codes G and I. You then finish Parts III and IV to apply the exemption and rates and compare to the capital gain computation. The biggest time saver is that every number in the return ties to a labeled workpaper with a short note that explains the why, not only the what.

Why disciplined delivery prevents AMT rework

If your firm loses time in review loops, it usually comes from missing standards, not missing talent. AMT is a great stress test. When your team has a clean SOP for private activity bond checks, a standard fixed asset roll with AMT columns, and a dedicated AMT Form 4952 workflow, partner review time drops and deadlines stop feeling fragile.

Build one repeatable path for AMT across all trusts, and the team will keep quality high, even when the calendar gets loud.

On the operational side, Accountably helps firms implement that kind of structure inside your own systems. We work with your templates, your workflow tools, and your review standards so AMT workpapers are consistent, versioned, and easy to follow. Use us where it is truly needed, and keep the rest of your process in house and under your name.

Table, K‑1 AMT adjustments at a glance

Item type	Report inside DNAMTI	Report to beneficiary separately	K‑1 box and code	Notes
Depreciation difference	No	Yes	Box 12, Code G	Attach schedule that ties to Part I
Depletion difference	No	Yes	Box 12, Code H	Show section 611 and limits
Amortization difference	No	Yes	Box 12, Code I	Include section 59(e) if elected
Private activity bond interest	Yes, affects AMTI	N/A unless explicitly allocated	N/A	Keep fund footnotes with return
Investment interest adjustment	Yes, line 2	N/A	N/A	Comes from AMT Form 4952 comparison

AMT Form 4952, the clean workflow that keeps line 2 correct

Investment interest can flip an otherwise simple trust into AMT, so treat Form 4952 like its own mini project. I use a fixed five‑step path. It keeps your numbers clean and your review notes short.

Step‑by‑step AMT 4952 path

1. Build two copies

• One regular Form 4952 using the return’s investment income and expenses.
• One AMT Form 4952 that includes AMT‑only items, such as post‑8/7/86 private activity bond interest and any AMT differences that change investment income. Save both PDFs in an “AMT” subfolder with clear file names.

2. Refigure investment income for AMT

• Start in Part II. Pick up AMT‑included interest and dividends.
• Adjust for capital gain and qualified dividend rules exactly as you would for regular tax, but using the AMT set.

3. Apply the line 4g “lesser of” rule

• On the AMT version, line 4g is the smaller of regular line 4g or AMT lines 4b plus 4e. This step alone prevents most transfer errors later.
• Note it in the margin or on your workpaper with a short sentence, not just a number.

4. Finish both forms through line 8

• Line 8 equals the allowed investment interest deduction.
• If the AMT deduction is lower, you will have a positive add‑back on Schedule I line 2. If the AMT deduction is higher, you will transfer a negative amount.

5. Transfer the difference to Schedule I line 2

• Compute Difference = AMT line 8 minus Regular line 8.
• Enter that signed difference on Schedule I line 2.
• Update your carryforward log for any disallowed interest, and keep a note for Form 8801 support next year.

Mini table, the transfer in one glance

Step	What you do	Where it goes
Compute AMT line 8	Finish AMT Form 4952	AMT binder, PDF saved
Compute Regular line 8	Finish regular Form 4952	Main workpapers, PDF saved
Compare	AMT 8 minus Regular 8	Schedule I, line 2, signed
Record CF	Disallowed interest by regime	Carryforward ledger and notes

Put a short, human note next to the line 2 entry. Something like, “AMT 4952 allows 1,000 less than regular, see AMT‑4952.pdf p.2.” Your reviewer will thank you.

Section 59(e) elections, a simple way to prevent add‑backs

A timely section 59(e) election converts certain currently deductible costs into ratable amortization, which removes the related AMT add‑back from Schedule I. Common candidates include circulation expenses, research and experimental costs, intangible drilling costs, and specified mining exploration or development costs.

When a 59(e) election helps

• You are near the AMT exemption phaseout and a current deduction would spike AMTI.
• The project’s horizon is long enough that straight‑line amortization is acceptable from a cash tax standpoint.
• Beneficiary allocations would be cleaner with stable annual amounts instead of a large year‑one deduction and an AMT add‑back.

How to document and track it

• Make the election in the year paid or incurred. It is generally irrevocable without IRS consent.
• Create a one‑page schedule that shows original cost, code section, amortization period, current year deduction for regular and AMT, and the remaining balance.
• For passthrough activity flowing to a trust, confirm whether the election was made at the entity level and mirror it in the trust workpapers.

ESBT note

If you have an ESBT, apply section 59(e) separately to the S portion and the non‑S portion. Keep two amortization rolls and only attribute costs to the portion that incurred them.

ESBT rules and K‑1 reporting, no guesswork

Although an ESBT is a single trust for regular income tax, AMT requires you to bifurcate it. That means two Schedule I computations and two sets of carryforwards, one for the S portion and one for the non‑S portion.

ESBT bifurcation checklist

• Maintain separate workpapers labeled S Portion and Non‑S Portion.
• Build separate AMTI, DNAMTI, and exemption computations.
• Test whether the S portion alone has positive AMTI or credit activity.
• Report depreciation, depletion, and amortization differences to beneficiaries outside DNAMTI using K‑1 box 12 codes G, H, and I.
• Track AMT credits and carryforwards by portion for next year’s Form 8801.

Common ESBT mistakes that cause rework

• Mixing S‑portion AMT adjustments into the non‑S computation.
• Reporting depreciation or depletion inside DNAMTI instead of on K‑1 box 12.
• Forgetting to replicate a section 59(e) choice by portion.
• Dropping one portion’s AMT carryforward when a trustee changes software.

Quick fix, put a “Portion” column on every ESBT AMT schedule. If a line is blank, it does not belong in that portion.

Planning moves that save hours at review

• Build a standard fixed asset roll with regular and AMT columns on day one. Do not retrofit it at review time.
• Require a one‑page AMT reconciliation for every trust, even when no AMT is due. It becomes next year’s roadmap.
• Create a private activity bond checklist that ties to brokerage statements and fund footnotes.
• Enforce a naming convention for PDFs that matches your Schedule I line numbers and K‑1 box codes.
• If you hit recurring bottlenecks, elevate delivery, not just staffing. Tight SOPs around Schedule I will cut partner review hours and reduce last‑mile risk. Accountably can help teams codify those SOPs inside your own tools without changing your firm’s client experience.

Filing triggers, attachments, and recordkeeping that stand up in review

You will attach Schedule I when AMTI exceeds the year’s exemption, when the return claims certain credits, or when completing Schedule B triggers the minimum tax computation. Even if no AMT is due, attach the schedule when required and keep the AMT binder complete.

Your must‑have records

• The final Schedule I with Parts I–IV completed and signed off.
• Regular and AMT versions of any forms that affect AMT, especially Form 4952.
• Worksheets that show private activity bond interest and where it came from.
• Fixed asset roll with regular and AMT methods and current year differences.
• Beneficiary allocation page for K‑1 box 12, codes G, H, I.
• Carryforward ledger for AMT items and a tickler for next year’s Form 8801.

Add one short paragraph to your workpaper index that explains the story, in plain language. If you can read it in 30 seconds and understand the return, your reviewer and your future self will move faster.

TaxAct tip, how to force Schedule I to print or e‑file

If you need Schedule I attached even when AMT is not triggered by the interview, you can force it in TaxAct.

• Open Federal, then Taxes in the Federal Quick Q&A Topics.
• Choose Alternative minimum tax, then Form 1041 AMT.
• Select Alternative Minimum Tax, Force Schedule I, and check the box.
• Click Continue so Schedule I is included for both print and e‑file.
• On mobile, follow Menu, Federal, Taxes, Alternative minimum tax.

Keep a screenshot of that setting in the return’s AMT folder so anyone on the team can confirm it later.

Quality control checklist for AMT

Use this short QC list before you finalize:

• Did you include post‑1986 private activity bond interest and save support?
• Did you run an AMT Form 4952 and document the line 4g “lesser of” rule?
• Is the Schedule I line 2 transfer signed correctly as positive or negative?
• Are depreciation, depletion, and amortization reported to beneficiaries on K‑1 box 12 with codes G, H, I, and not buried in DNAMTI?
• Did you test the exemption phaseout and keep the worksheet?
• For ESBTs, did you bifurcate, test S‑portion AMTI, and update both carryforward ledgers?
• Do your PDFs use a naming convention that matches Schedule I and K‑1 line references?

FAQs

What is Schedule I for Form 1041, in plain terms?

It is the AMT worksheet for estates and trusts. You rebuild taxable income under AMT rules, apply the exemption and 26 percent or 28 percent rates, and then compare to regular tax to see if AMT is due. You also produce AMT‑basis amounts for beneficiaries and keep carryforwards for next year’s minimum tax credit.

Who must complete it?

You complete Schedule I when AMTI exceeds the year’s estate and trust exemption, when your return requires Schedule B, or when you claim certain credits. ESBTs must prepare separate S and non‑S computations and file the S portion if it has positive AMTI or the return claims a general business credit.

What income belongs on Schedule I?

You do not move income to Schedule I. Instead, you adjust the return’s income and deductions to an AMT basis. Typical adjustments include private activity bond interest, depreciation differences, depletion, amortization, and the investment interest deduction as recomputed on an AMT Form 4952.

How do I keep beneficiary reporting clean?

Keep DNAMTI separate from K‑1 box 12 adjustments. Report depreciation with code G, depletion with code H, and amortization with code I, and tie each line back to a labeled Part I workpaper.

Can a 59(e) election reduce AMT?

Yes. Electing to amortize certain costs prevents the related AMT add‑back. Make the election in the year you incur the cost and keep a separate amortization roll for AMT and regular tax.

Closing, deliver AMT with control, not guesswork

You do not need more late nights to get AMT right. You need a path your team can run every time. Build a single SOP for private activity bond checks, a permanent fixed asset roll with AMT columns, and a standard AMT 4952 workflow. That structure will cut review loops and protect deadlines. If you want help installing that discipline inside your current systems and templates, our team at Accountably can integrate trained offshore professionals into your workflow so Schedule I workpapers are standardized, easy to review, and ready for next year’s Form 8801.

Disclaimer, this guide summarizes 2024 rules and common workflows for estates and trusts. For specific facts, thresholds, and elections, review the current year instructions and your firm’s compliance policies.