California Charitable Remainder and Pooled Income Trusts

Charitable Remainder and Pooled Income Trusts
2025 Instructions for Form 541-B, Charitable Remainder and Pooled Income Trusts
2025 Instructions for Form 541-B
Charitable Remainder and Pooled Income Trusts

References in these instructions are to the Internal Revenue Code (IRC) as of January 1, 2025, and to the C
­ alifornia Revenue and Taxation Code (R&TC).

General Information
In general, for taxable years beginning on or after January 1, 2025,
California law conforms to the Internal Revenue Code (IRC) as of
January 1, 2025. However, there are continuing differences between
California and federal law. When California conforms to federal tax
law changes, we do not always adopt all of the changes made at the
federal level. For more information, go to ftb.ca.gov and search for
conformity. Additional information can be found in FTB Pub. 1001,
Supplemental Guidelines to California Adjustments, the instructions for
California Schedule CA (540), California Adjustments — Residents, or
Schedule CA (540NR), California Adjustments — Nonresidents or
Part-Year Residents, and the Business Entity tax booklets.
The instructions provided with California tax forms are a summary of
California tax law and are only intended to aid taxpayers in preparing
their state income tax returns. We include information that is most
useful to the greatest number of taxpayers in the limited space available.
It is not possible to include all requirements of the California Revenue
and Taxation Code (R&TC) in the instructions. Taxpayers should not
consider the instructions as authoritative law.

A	Purpose
Use Form 541-B, Charitable Remainder and Pooled Income Trusts,
to report the financial activities of a charitable lead trust, charitable
remainder trust, or a pooled income fund. Use this form to provide
information regarding charitable deductions and distributions of or
from a split-interest trust, distributions to non-charitable beneficiaries,
information about donor and asset contributions and to report
accumulations of income for charitable remainder trusts.

B	 Who Must File
Do not file Form 541-B if there are no California fiduciaries, California
noncontingent beneficiaries, or California sourced income.
The fiduciary or fiduciaries for all charitable remainder trusts as
defined in IRC Section 664, pooled income funds as defined in
IRC Section 642(c)(5), or charitable lead trusts must file Form 541‑B
for each calendar year to report the information required in R&TC
­Section 18635, unless all net income is required to be currently
distributed.
Split-interest trusts do not have to file Form 541‑A, Trust Accumulation
of Charitable Amounts. A trust allowed a deduction under IRC
Section 642(c), must file Form 541-A. For more information, get
Form 541-A.

C	 When to File
Form 541-B is due on or before April 15, 2026. If you need additional
time to file, California grants an automatic six-month extension. The
automatic extension will apply if the fiduciary files the tax return by
the 15th day of the 10th month following the close of the taxable year
(fiscal year), or by October 15, 2026 (calendar year.)
If the due date falls on a weekend or holiday, the deadline to file is
extended to the next business day.
If the trust owes tax, see Specific Line Instructions, Part II, Unrelated
Business Taxable Income. If you are unable to file Form 541, California
Fiduciary Income Tax Return, by the tax return’s due date and a tax
is owed, get form FTB 3563, Payment for Automatic Extension for
Fiduciaries, for more information.

D	 Which Parts to Complete
Form 541-B has several parts. Parts that do not reference a specific
trust apply to all split-interest trusts. Charitable lead trusts, pooled
income funds, and charitable remainder trusts must supply additional
information as noted on the form and in the instructions.

E	

Where to File

Mail Form 541-B to:
FRANCHISE TAX BOARD
PO BOX 942840
SACRAMENTO CA 94240-0001

F	

Trust Instrument

If this is the first tax return for a charitable remainder annuity trust or a
charitable remainder unitrust, include a copy of the trust instrument and
a written declaration under penalties of perjury that the instrument is a
true and complete copy.

G	 California Tax Exemption
A charitable remainder annuity trust or a charitable remainder unitrust
is exempt from ­California income tax, except for years when it has
unrelated business taxable income (UBTI). Even though exempt from
­California income tax, such a trust must file Form 541-B for the calendar
year.

H	 Amended Tax Return
If the fiduciary is filing an amended Form 541-B, check the box labeled
“Amended Tax Return.” Complete the entire tax return and correct the
lines needing new information. On an attached sheet, explain the reason
for the amendments and identify the lines and amounts being changed
on the amended tax return. Include the fiduciary name and federal
employer identification number (FEIN) on each attachment.

I	

Final Tax Return

For the last taxable year of a charitable remainder annuity trust or a
charitable remainder unitrust, check the box labeled “Final Tax Return.”

J	Signature
The trustee or an authorized representative must sign Form 541‑B. Any
person preparing the trust’s tax return for compensation, who is not a
regular full-time employee of the trust, must also sign Form 541-B.

Paid Preparer’s Information
Anyone who is paid to prepare a tax return must sign the return and
complete the “Paid Preparer’s Use Only” area of the return.
The paid preparer must do all of the following:
•	 Complete the required preparer information. Tax preparers must
provide their preparer tax identification number (PTIN).
•	 Sign in the space provided for the preparer’s signature.
•	 Give you a copy of the return in addition to the copy to be filed with
the Franchise Tax Board (FTB).
If you, as trustee (or an employee or officer of the trust), complete
Form 541-B, leave the “Paid Preparer’s Use Only” area of the return blank.
If someone prepares this return and doesn’t charge you, that person
should not sign the return.

Form 541-B Instructions  2025  Page 1

Paid preparer authorization

If the trust wants to allow the FTB to discuss its 2025 tax return with the
paid preparer who signed it, check the “Yes” box in the signature area
of the tax return. This authorization applies only to the individual whose
signature appears in the “Paid Preparer’s Use Only” section of the tax
return. It does not apply to the firm, if any, shown in that section.
If the “Yes” box is checked, the trust is authorizing the FTB to call
the paid preparer to answer any questions that may arise during the
processing of its tax return. The trust is also authorizing the paid
preparer to:
•	 Give the FTB any information that is missing from the tax return.
•	 Call the FTB for information about the processing of the tax return or
the status of any related refund or payments.
•	 Respond to certain FTB notices about math errors, offsets, and tax
return preparation.
The trust is not authorizing the paid preparer to receive any refund
check, bind the trust to anything (including any additional tax liability),
or otherwise represent the trust before the FTB.
The authorization will automatically end no later than the due date
(without regard to extensions) for filing the trust’s 2026 tax return. If the
trust wants to revoke the authorization before it ends, notify the FTB in
writing or call 800.852.5711.
If the trust wants to expand or change the paid preparer’s authorization,
go to ftb.ca.gov/poa.

K	Attachments
Use the schedules on Form 541-B unless you need more space. If you
use attachments, they must include all of the following:
•	 Show the form number and the taxable year
•	 Show the trust’s name and FEIN
•	 Include the information required by the form
•	 Follow the format and line sequence of the form
•	 Be on the same size paper as the form

L	Internet
You can download, view, and print California tax forms and publications
at ftb.ca.gov/forms.

Specific Line Instructions
Entity information
Make sure entries have been made for the following:
•	 Name of the trust
•	 FEIN
•	 Name of trustee(s) (attach additional sheets if necessary)
•	 Address
•	 Date trust created
•	 Type of trust

Additional information
Use the Additional information field for “In-Care-Of” name and other
supplemental address information only.

Foreign address
If you have a foreign address, follow the country’s practice for entering
the city, county, province, state, country, and postal code, as applicable,
in the appropriate boxes. Do not abbreviate the country name.

Multiple trustees
If the trust has multiple trustees (fiduciaries), attach additional sheets
as necessary to list the names and addresses of all trustees of the trust
filing this form. If a trustee or fiduciary has a limited role, include a
description of the role of that trustee.

Page 2  Form 541-B Instructions  2025

Part I  Income and Deductions
Divide the trusts income (both current and cumulative) into three
categories:
•	 Ordinary income
•	 Capital gains and losses
•	 Nontaxable income

Section A – Ordinary Income
Line 2a – Ordinary dividends

Enter on line 2a the total dividends the trust received. Include the
qualified dividends reported on line 2b. California taxes dividends as
ordinary income.

Line 2b – Qualified dividends

Report the qualified dividends in box 1b of federal Form 1099-DIV,
Dividends and Distributions.

Section D – Deductions
•	 For IRC Section 664 Trust

Enter all allowable deductions and any expenses that would be
allowed except deductions allocable to tax-exempt income.
Allocate any expense that is not deductible in determining taxable
income and not allocated to nontaxable income to corpus. Allocate all
income and excise taxes to trust corpus.
The following deductions are not permitted in computing ordinary
income, capital gains, or nontaxable income: federal, state, and
local income and excise taxes; charitable contributions, IRC
Section 642(c); net operating losses, IRC Sections 172 and 642(d);
distributions to beneficiaries, IRC Section 661; and capital loss
carryovers, IRC Section 1212.

Line 20 – Other allowable deductions. Attach schedule.

List any other allowable deduction or any expense that would be
an allowable deduction (except deductions allocable to tax-exempt
income) that is not included on lines 16 through 19. Total the
amounts and enter the total on line 20.

•	 For Split-Interest Trusts Other than IRC Section 664 Trusts

Enter all expenses attributable to gross income that are deductible for
the taxable year.

Line 20 – Other allowable deductions. Attach schedule.

List any other deductible expense that is attributable to gross income
of the trust and that is not included on lines 16 through 19 and
line 22. Total the amounts and enter the total on line 20.

Section E – Deductions Allocable to Income Categories
(IRC Section 664 trust only)
Allocate deductions as follows:
1.	 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.
2.	 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.
3.	 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
within each category and enter the amount on the appropriate line.
(Note: Any deduction allocated to corpus is not shown on any line in
Section E.)

The following deductions are not permitted in computing ordinary
income, capital gains, or nontaxable income: federal, state, and local
income and excise taxes; charitable contributions, IRC Section 642(c);
net operating losses, IRC Sections 172 and 642(d); distributions
to beneficiaries, IRC Section 661; and capital loss carryovers, IRC
­Section  1212.

Line 1 – Cash

Part II  Unrelated Business Taxable Income

Enter the total amount of cash in savings or other interest-bearing
accounts and temporary cash investments, such as money market
funds, commercial paper, certificates of deposit, and U.S. Treasury bills,
or other governmental obligations that mature in less than one year.

California law conforms, as modified, to the federal provisions for
charitable remainder annuity trusts and charitable remainder unitrusts by
providing that the trust’s income shall be tax‑exempt, except for any UBTI.
The trust is taxable on UBTI, within the meaning of IRC Section 512 and
related regulations.
Complete Form 541 to report the UBTI and to compute the tax.
Complete Form 541-B to report non-UBTI income.

Part III  Schedule of Distributable Income

(IRC Section 664 trust only)
Enter the income of the trust (both current and cumulative undistributed
income) according to the character of distributions in three categories:
•	 Ordinary income
•	 Capital gains and losses
•	 Nontaxable income
If there is a loss in the current year in any one of the three categories,
the loss may not be used to reduce a gain in any other category. A loss
in any one category may be used to reduce undistributed gain from
an earlier year within the same category. Excess loss may be carried
forward to reduce gain in the future years within that same category.

Part IV
Section A – Distributions of Principal for Charitable Purposes
Attach a statement describing in detail the purpose for which charitable
disbursements were made from income set aside in prior taxable years
and amounts which were paid out of principal for charitable purposes.
Examples of appropriate descriptions are:
•	 Payments for nursing service
•	 Laboratory construction
•	 Fellowships
•	 Assistance to indigent families (not simply charitable, educational,
religious, or scientific)
Section B – Accumulated Income Set Aside and Income Distributions
for Charitable Purposes
Complete Part IV, Section B if any of the following apply:
•	 The trust claimed a deduction in a prior year under IRC
Section 642(c) for an amount permanently set aside and at the
beginning of the year the set aside amount was not fully distributed.
•	 The trust claimed a deduction during the year under IRC
Section 642(c) whether the amount was set aside or paid.
•	 The trust made payment for charitable purposes during the year but
claimed the IRC Section 642(c) deduction in the prior year.
Attach a statement describing in detail the purpose for which charitable
disbursements were made from income set aside in prior taxable years
and amounts which were paid out of principal for charitable purposes.

Part V  Balance Sheet
Complete the balance sheet using the accounting method the trust uses
to keep its books and records. All filers must complete columns (a)
and (b). All unitrusts must also complete column (c).
In completing column (c) for unitrusts, if an average value is used for
more than one valuation date, enter “average” for the valuation date at
the top of the column and report each valuation date in the attached
explanation for Part VII, line 10. Also, for purposes of this column, fair
market value (FMV) includes both accrued income and accrued liabilities.

Enter the total amount of cash, including cash held in checking
­accounts, deposits in transit, change funds, petty cash funds, or
any other non-interest bearing accounts. Do not include advances to
employees or officers or refundable deposits paid to suppliers or others.

Line 2 – Savings and temporary cash investments

Line 3 – Accounts receivable

Enter the total accounts receivable and trade notes that arose from the
sale of goods and/or the performance of services on line 3a. Enter the
allowance for doubtful accounts on line 3b. Any receivables due from
officers, directors, trustees, foundation managers, or other disqualified
persons must be reported on line 4. Claims against vendors or
refundable deposits with suppliers or others may be reported here if not
significant in amount. If the amount is significant, report it on line 12,
Other assets. Receivables due from other employees (including loans
and advances) should be reported on line 12.

Line 4 – Receivables due from officers, directors, trustees, and
other disqualified persons
Enter the total amount of all receivables and loans (including advances)
due from officers, directors, trustees, and other disqualified persons.
Attach a schedule providing information as follows:
•	 Report each loan separately, even if more than one loan was made
to the same person or the same terms apply to all loans made.
Salary advances and other advances for personal use and benefit
and receivables subject to special terms or arising from transactions
not functionally related to the trust’s charitable purposes must be
reported as separate loans for each officer, director, etc.
•	 Receivables that are subject to the same terms and conditions
(including credit limits and rate of interest) as receivables due from
the general public and that arose in connection with an activity
functionally related to the trust’s charitable purposes may be reported
as a single total for all the officers, directors, etc. Travel advances
made in connection with official business of the trust may also be
reported as a single total.
For each outstanding loan or other receivable that must be reported
separately, the schedule should show all of the following information:
•	 Borrower’s name and title
•	 Original amount
•	 Balance due
•	 Date of note
•	 Maturity date
•	 Repayment terms
•	 Interest rate
•	 Security provided by the borrower
•	 Purpose of the loan
•	 Description and the FMV of the consideration furnished by the lender
The above detail is not required for receivables or travel advances that
may be reported as a single total. However, report and identify those
totals separately in the attached schedule.

Line 5 through Line 11 – See the instructions for federal Form 5227,
Split-Interest Trust Information Return, Part IV, Balance Sheet, lines 5
through 11.

Line 12 – Other assets

Attach a schedule listing the value of all other assets not reported on
previous lines.

Form 541-B Instructions  2025  Page 3

Line 16 – Loans from officers, directors, trustees, and other
disqualified persons

Enter the total unpaid balance of loans received from officers, directors,
trustees, and other disqualified persons. For each loan outstanding at
the end of the year, attach a schedule that provides the name and title of
the lender and the information specified in the instructions for line 4.

Line 18 – Other liabilities

Both annuity trusts and unitrusts should include any advances from
trustees on line 18. Unitrusts should also include any unitrust amounts
applicable to prior years that are unpaid as of the valuation date since
such amounts reduce the net FMV of the trust’s assets.

Line 21 – Undistributed income, undistributed capital gains,
and undistributed nontaxable income
Enter the total amount of undistributed income, undistributed capital
gains, and undistributed nontaxable income.

Part VI  Charitable Remainder Annuity Trust (CRAT)
Information
Complete this section only if an IRC Section 664 CRAT.

Part VII  Charitable Remainder Unitrust (CRUT)
Information
Complete this section only if an IRC Section 664 CRUT.

Line 4a – Enter the unitrust fixed percentage (which may not be less

than 5%). The unitrust’s fixed percentage is the percentage (not less
than 5% and not more than 50%) of net FMV of the assets in the trust
that must be paid annually.

Line 6a – Enter the total accrued distribution deficiencies from previous
years on line 6a. To determine the deficiencies:
1.	 Aggregate the unitrust’s net asset FMV for each previous year.
2.	 Multiply 1 above by the unitrust’s fixed percentage.
3.	 Subtract the aggregate trust income that was distributed for previous
years from 2 above.

Line 7 – Enter the total 2025 unitrust distributions reported in

Part IV‑B, Accumulated Income Set Aside and Income Distributions for
Charitable Purposes.

Part VIII  Questionnaire for Charitable Lead Trusts,
Pooled Income Funds and Charitable Remainder
Trusts
Section A – All Trusts
These questions are applicable to all trusts.

Section B – Charitable Lead Trusts
Line 3 – Enter the amount for payments described in IRC
Section 170(f)(2)(B).

Section C – Pooled Income Funds
On termination of the income interest the trustee must sever from
the fund an amount equal to the value of the remainder interest in
the property on which the income interest is based. The trustee must
contribute the amount or retain the amount for the use of the public
charity designated in the governing instrument. See IRC Regulations
Section 1.642(c)-5(b)(8) and R&TC Section 17731.

Section D – Charitable Remainder Trusts
Follow the instructions for federal Form 5227, Part IX, Section D,
Charitable Remainder Trusts, when completing questions 8 through 14.

Page 4  Form 541-B Instructions  2025

Schedule A – Distributions, Assets, and Donor
Information
Part I  Accumulation Schedule

(IRC Section 664 trust only)
See the instructions for Form 541-B, Part III, Schedule of Distributable
Income, when completing Schedule A, Part I, Accumulation Schedule.

Part II  Current Distributions Schedule

(IRC Section 664 trust only)
Annuity and unitrust amounts required to be distributed have the
following characteristics to the recipients:
•	 First, as ordinary income to the extent of the trust’s ordinary income
for the current year and undistributed ordinary income for prior
years.
•	 Second, as capital gain to the extent of the trust’s undistributed
capital gains.
•	 Third, as nontaxable income to the extent of the trust’s nontaxable
income using California law for the current year and undistributed
nontaxable income using California law for prior years.
•	 Fourth, as trust corpus. The accumulation distribution provisions do
not apply.
Furnish each recipient (beneficiary) with a Schedule K‑1 (541),
Beneficiary’s Share of Income, Deductions, Credits, etc., that reflects
their respective current distribution.

Franchise Tax Board Privacy Notice on Collection
Our privacy notice can be found in annual tax booklets or online. Go
to ftb.ca.gov/privacy to learn about our privacy policy statement, or
go to ftb.ca.gov/forms and search for 1131 to locate FTB 1131 EN-SP,
Franchise Tax Board Privacy Notice on Collection – Aviso de Privacidad
del Franchise Tax Board sobre la Recaudación. To request this notice by
mail, call 800.338.0505 and enter form code 948 when instructed.