1. Prepare the 2013 fiduciary income tax return (Form 1041) for the Blue Trust.In addition, determine the amount and character of the income and expense items that each beneficiary must report for the year, and prepare a Schedule K?1 for Betty Blue. Omit all alternative minimum tax computations. The year?s activities of the trust include the following.

Dividend incomeall U.S. stocks ,$50,000

Taxable interest income 10,000

Tax-exempt interest income15,000

Fiduciary?s fees4,000

The trust and Betty both use the calendar tax year. Under the terms of the trust instru- ment, fiduciary?s fees are allocated to income. The trustee must distribute all of the entity?s accounting income to Betty Blue by February 15 of the following year. The trustee followed this charge and made no other distributions during the year. Fiduciary?s fees properly were assigned as an offset to taxable interest income.

The trust was created on July 8, 1990. There are no tax credits for the year, and none of the entity?s income was derived from a personal services contract. The trust has no economic interest in any foreign trust. Its Federal identification number is 11-1111111.

The trustee, Hoover State Federal Bank, is located at 4959 Cold Harbor Boulevard, Mountain Brook, AL 35223. Its employer identification number is 98-7654321. Betty lives at 67671 Crestline Road, Birmingham, AL 35212. Her Social Security number is 123-45-6789.

Form 1041 Department of the TreasuryInternal Revenue Service U.S. Income Tax Return for Estates and Trusts 2013 OMB No. 1545-0092 Information about Form 1041 and its separate instructions is at www.irs.gov/form1041. For calendar year 2013 or fiscal year beginning , 2013, and ending A Check all that apply: Decedent's estate , 20 Name of estate or trust (If a grantor type trust, see the instructions.) C Employer identification number Name and title of fiduciary D Date entity created Number, street, and room or suite no. (If a P.O. box, see the instructions.) E Nonexempt charitable and splitinterest trusts, check applicable box(es), see instructions. City or town, state or province, country, and ZIP or foreign postal code if not a private foundation Simple trust Complex trust Qualified disability trust ESBT (S portion only) Grantor type trust Bankruptcy estate-Ch. 7 Bankruptcy estate-Ch. 11 Pooled income fund B Number of Schedules K-1 attached (see instructions) Described in sec. 4947(a)(1). Check here F Check applicable boxes: Initial return Final return Amended return Income Deductions Tax and Payments Sign Here . Net operating loss carryback Change in fiduciary Change in fiduciary's name Change in fiduciary's address . Trust EIN . . . . Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . Total ordinary dividends . . . . . . . . . . . . . . . . . . . . . . . Qualified dividends allocable to: (1) Beneficiaries (2) Estate or trust Business income or (loss). Attach Schedule C or C-EZ (Form 1040) . . . . . . . . Capital gain or (loss). Attach Schedule D (Form 1041) . . . . . . . . . . . . . Rents, royalties, partnerships, other estates and trusts, etc. Attach Schedule E (Form 1040) Farm income or (loss). Attach Schedule F (Form 1040) . . . . . . . . . . . . . Ordinary gain or (loss). Attach Form 4797 . . . . . . . . . . . . . . . . . Other income. List type and amount Total income. Combine lines 1, 2a, and 3 through 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest. Check if Form 4952 is attached Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fiduciary fees . . . . . . . . . . . . . . . . . . . . . . . . . . Charitable deduction (from Schedule A, line 7) . . . . . . . . . . . . . . . Attorney, accountant, and return preparer fees . . . . . . . . . . . . . . . Other deductions not subject to the 2% floor (attach schedule) . . . . . . . . . . Net operating loss deduction (see instructions) . . . . . . . . . . . . . . . Allowable miscellaneous itemized deductions subject to the 2% floor . . . . . . . . Add lines 10 through 15c . . . . . . . . . . . . . . . . . . . . . . Adjusted total income or (loss). Subtract line 16 from line 9 . . . 17 Income distribution deduction (from Schedule B, line 15). Attach Schedules K-1 (Form 1041) Estate tax deduction including certain generation-skipping taxes (attach computation) . . Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . Add lines 18 through 20 . . . . . . . . . . . . . . . . . . . . . . . Taxable income. Subtract line 21 from line 17. If a loss, see instructions . . . . . . . Total tax (from Schedule G, line 7) . . . . . . . . . . . . . . . . . . . Payments: a 2013 estimated tax payments and amount applied from 2012 return . . . Estimated tax payments allocated to beneficiaries (from Form 1041-T) . . . . . . . Subtract line 24b from line 24a . . . . . . . . . . . . . . . . . . . . Tax paid with Form 7004 (see instructions) . . . . . . . . . . . . . . . . . . . . . . . Federal income tax withheld. If any is from Form(s) 1099, check Other payments: f Form 2439 25 26 27 28 29 . Change in trust's name G Check here if the estate or filing trust made a section 645 election . 1 2a b 3 4 5 6 7 8 9 10 11 12 13 14 15a b c 16 17 18 19 20 21 22 23 24 b c d e . Described in sec. 4947(a)(2) ; g Form 4136 . . 1 2a . . . . . 3 4 5 6 7 8 9 10 11 12 13 14 15a 15b 15c 16 . . . . . . . . . . . . . . . . . ; Total Total payments. Add lines 24c through 24e, and 24h . . . . . . . . . . . . . Estimated tax penalty (see instructions) . . . . . . . . . . . . . . . . . . . Tax due. If line 25 is smaller than the total of lines 23 and 26, enter amount owed . . . . . Overpayment. If line 25 is larger than the total of lines 23 and 26, enter amount overpaid . . Amount of line 28 to be: a Credited to 2014 estimated tax ; b Refunded 18 19 20 21 22 23 24a 24b 24c 24d 24e 24h 25 26 27 28 29 Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge. Signature of fiduciary or officer representing fiduciary Paid Preparer Use Only Print/Type preparer's name Date Preparer's signature EIN of fiduciary if a financial institution Date Firm's name Check if self-employed PTIN Firm's EIN Firm's address For Paperwork Reduction Act Notice, see the separate instructions. May the IRS discuss this return with the preparer shown below (see instr.)? Yes No Phone no. Cat. No. 11370H Form 1041 (2013) Page 2 Form 1041 (2013) Schedule A 1 2 3 4 5 6 7 Amounts paid or permanently set aside for charitable purposes from gross income (see instructions) . Tax-exempt income allocable to charitable contributions (see instructions) . . . . . . . . Subtract line 2 from line 1 . . . . . . . . . . . . . . . . . . . . . . . . Capital gains for the tax year allocated to corpus and paid or permanently set aside for charitable purposes Add lines 3 and 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1202 exclusion allocable to capital gains paid or permanently set aside for charitable purposes (see instructions) . Charitable deduction. Subtract line 6 from line 5. Enter here and on page 1, line 13 . . . . . Schedule B 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 2a b c d e 3 4 5 6 7 1 2 3 4 5 6 7 Income Distribution Deduction Adjusted total income (see instructions) . . . . . . . . . . . . . . . . . . . Adjusted tax-exempt interest . . . . . . . . . . . . . . . . . . . . . . Total net gain from Schedule D (Form 1041), line 19, column (1) (see instructions) . . . . . Enter amount from Schedule A, line 4 (minus any allocable section 1202 exclusion) . . . . Capital gains for the tax year included on Schedule A, line 1 (see instructions) . . . . . . Enter any gain from page 1, line 4, as a negative number. If page 1, line 4, is a loss, enter the loss as a positive number Distributable net income. Combine lines 1 through 6. If zero or less, enter -0- . . . . . . If a complex trust, enter accounting income for the tax year as determined under the governing instrument and applicable local law . 8 Income required to be distributed currently . . . . . . . . . . . . . . . . . . Other amounts paid, credited, or otherwise required to be distributed . . . . . . . . . Total distributions. Add lines 9 and 10. If greater than line 8, see instructions . . . . . . Enter the amount of tax-exempt income included on line 11 . . . . . . . . . . . . Tentative income distribution deduction. Subtract line 12 from line 11 . . . . . . . . . Tentative income distribution deduction. Subtract line 2 from line 7. If zero or less, enter -0- . Income distribution deduction. Enter the smaller of line 13 or line 14 here and on page 1, line 18 Schedule G 1 Charitable Deduction. Do not complete for a simple trust or a pooled income fund. . . . . . . . 1 2 3 4 5 6 7 . . . . . . 9 10 11 12 13 14 15 Tax Computation (see instructions) Tax: a Tax on taxable income (see instructions) . . . . . . . b Tax on lump-sum distributions. Attach Form 4972 . . . . c Alternative minimum tax (from Schedule I (Form 1041), line 56) d Total. Add lines 1a through 1c . . . . . . . . . . Foreign tax credit. Attach Form 1116 . . . . . . . . . . . General business credit. Attach Form 3800 . . . . . . . . . Credit for prior year minimum tax. Attach Form 8801 . . . . . Bond credits. Attach Form 8912 . . . . . . . . . . . . Total credits. Add lines 2a through 2d . . . . . . . . . . Subtract line 2e from line 1d. If zero or less, enter -0- . . . . . Net investment income tax from Form 8960, line 21 . . . . . . Form 4255 Form 8611 . Recapture taxes. Check if from: Household employment taxes. Attach Schedule H (Form 1040) . . Total tax. Add lines 3 through 6. Enter here and on page 1, line 23 . . . . . . . . . . . . . . . . . . . 1a 1b 1c . 2a 2b 2c 2d . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1d . . . . . 2e 3 4 5 6 7 Yes No Other Information 1 2 3 4 5 6 7 8 9 Did the estate or trust receive tax-exempt income? If \"Yes,\" attach a computation of the allocation of expenses. Enter the amount of tax-exempt interest income and exempt-interest dividends $ Did the estate or trust receive all or any part of the earnings (salary, wages, and other compensation) of any individual by reason of a contract assignment or similar arrangement? . . . . . . . . . . . . . . . At any time during calendar year 2013, did the estate or trust have an interest in or a signature or other authority over a bank, securities, or other financial account in a foreign country? . . . . . . . . . . . . . . See the instructions for exceptions and filing requirements for FinCEN Form 114. If \"Yes,\" enter the name of the foreign country During the tax year, did the estate or trust receive a distribution from, or was it the grantor of, or transferor to, a foreign trust? If \"Yes,\" the estate or trust may have to file Form 3520. See instructions . . . . . . . . . Did the estate or trust receive, or pay, any qualified residence interest on seller-provided financing? If \"Yes,\" see the instructions for required attachment . . . . . . . . . . . . . . . . . . . . . . . . . If this is an estate or a complex trust making the section 663(b) election, check here (see instructions) . . To make a section 643(e)(3) election, attach Schedule D (Form 1041), and check here (see instructions) . . If the decedent's estate has been open for more than 2 years, attach an explanation for the delay in closing the estate, and check here Are any present or future trust beneficiaries skip persons? See instructions . . . . . . . . . . . . . Form 1041 (2013) Final K-1 Schedule K-1 (Form 1041) Department of the Treasury Internal Revenue Service 2013 Part III Amended K-1 661113 OMB No. 1545-0092 Beneficiary's Share of Current Year Income, Deductions, Credits, and Other Items 12 2a Other information Qualified dividends , 2013, , 20 Beneficiary's Share of Income, Deductions, See back of form and instructions. Credits, etc. 3 Net short-term capital gain 4a Net long-term capital gain 4b 28% rate gain 4c Unrecaptured section 1250 gain 5 Other portfolio and nonbusiness income 6 Ordinary business income 7 Net rental real estate income 8 Other rental income 9 Part I Credits and credit recapture Ordinary dividends 2b Alternative minimum tax adjustment 14 and ending Interest income Final year deductions 13 or tax year beginning 11 1 For calendar year 2013, Directly apportioned deductions Information About the Estate or Trust A Estate's or trust's employer identification number B Estate's or trust's name C D Fiduciary's name, address, city, state, and ZIP code Check if Form 1041-T was filed and enter the date it was filed E Check if this is the final Form 1041 for the estate or trust 10 Part II Estate tax deduction Information About the Beneficiary F Beneficiary's identifying number G Beneficiary's name, address, city, state, and ZIP code H Domestic beneficiary Foreign beneficiary For Paperwork Reduction Act Notice, see the Instructions for Form 1041. For IRS Use Only *See attached statement for additional information. Note. A statement must be attached showing the beneficiary's share of income and directly apportioned deductions from each business, rental real estate, and other rental activity. IRS.gov/form1041 Cat. No. 11380D Schedule K-1 (Form 1041) 2013