In general, an electing ANST's taxable income is computed in the same manner as a trust that is taxable under Subchapter J (which generally is computed in the same manner as an individual). However, the electing ANST is not allowed to take an income distribution deduction. It can claim an exemption deduction, the amount of which depends on the terms of the trust.

See the Schedule K instructions for information on the beneficiaries' tax treatment of distributions received from the ANST.

An electing ANST pays tax on its taxable income, other than its net capital gain, at the lowest rate specified for single individuals (10%). Net capital gain (and qualified dividends) is taxed at the capital gains rate that applies to a taxpayer subject to the lowest taxable income rate for a single individual (5%).

If, at any time, a beneficial interest in an ANST may be disposed of to a person in a manner that is not permitted by section 7(h) of ANCSA (if the interest were settlement common stock), then:

If stock in the sponsoring ANC may be disposed of to a person in a manner that is not allowed by section 7(h) of ANCSA (if the stock were settlement common stock) and at any time after such disposition of stock is first allowed, the corporation transfers assets to an ANST, then items 1, 2, and 3 above will apply to the ANST in the same manner as if the ANST allowed dispositions of beneficial interests in the ANST in a manner not allowed by section 7(h) of ANCSA.

The surrender of an interest in an ANC or an ANST by the beneficiary or stockholder for a whole or partial redemption or for the whole or partial liquidation of the trust or corporation will be considered a transfer allowed by section 7(h) of the ANCSA.

You can use certain private delivery services designated by the IRS to meet the "timely mailing as timely filing/paying" rule for tax returns and payments. These private delivery services include only the following.

The private delivery service can tell you how to get written proof of the mailing date.

Any changes to this list will be published in the Internal Revenue Bulletin.

If the trustee wants to allow the IRS to discuss the ANST's tax return with the paid preparer who signed it, check the “Yes” box in the signature area of the return. This authorization applies only to the individual whose signature appears in the “Paid Preparer's Use Only” section of the ANST's return. It does not apply to the firm, if any, shown in that section.

If the “Yes” box is checked, the trustee is authorizing the IRS to call the paid preparer to answer any questions that may arise during the processing of the ANST's return. The trustee is also authorizing the paid preparer to:

The trustee is not authorizing the paid preparer to receive any refund check, bind the ANST to anything (including any additional tax liability), or otherwise represent the ANST before the IRS. If the trustee wants to expand the paid preparer's authorization, see Pub. 947, Practice Before the IRS and Power of Attorney.

The authorization cannot be revoked. However, the authorization will automatically end no later than the due date (without regard to extensions) for filing the ANST's next tax return.

Interest is charged on taxes not paid by the due date, even if an extension of time to file is granted. Interest is also charged on the failure-to-file penalty, the accuracy-related penalty, and the fraud penalty. The interest charge is figured at a rate determined under section 6621.

The law provides a penalty of 5% of the tax due for each month, or part of a month, the return is not filed up to a maximum of 25% of the tax due. If the return is more than 60 days late, the minimum penalty is the smaller of $100 or the tax due. The penalty will not be imposed if you can show that the failure to file on time is due to reasonable cause. If the failure is due to reasonable cause, attach an explanation to the return.

Generally, the penalty for not paying the tax when due is 1/2 of 1% of the unpaid amount for each month or part of a month it remains unpaid. The maximum penalty is 25% of the unpaid amount. The penalty is imposed on the net amount due. Any penalty is in addition to interest charges on late payments.

If you include interest or either of these penalties with your payment, identify and enter these amounts in the bottom margin of Form 1041-N. Do not include the interest or penalty amount in the balance of tax due on line 18.

If the trustee underpaid estimated tax, use Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts, to figure any penalty. Enter the amount of any penalty in the bottom margin of Form 1041-N. Do not include it in the balance of tax due on line 18.

Other penalties can be imposed for negligence, substantial understatement of tax, and fraud. See Pub. 17, Your Federal Income Tax, for details on these penalties.