Updated October 18, 2026. Quick answer: Part III is where a beneficiary of an estate or trust reports their part of its income or loss, taken from Schedule K-1 (Form 1041). Line 33 lists each estate or trust, lines 34a and 34b total the columns, and line 37 combines lines 35 and 36.
What Part III is for
The instructions say “If you are a beneficiary of an estate or trust, use Part III to report your part of the income (even if not received) or loss.” The form heads the part “Income or Loss From Estates and Trusts”. You “should receive a Schedule K-1 (Form 1041) from the fiduciary.” The boxes on that form are explained in the Schedule K-1 (Form 1041) boxes 1 to 5 guide. For the rest of the schedule see Schedule E (Form 1040).
Line 33: the columns
Line 33 has a row for each estate or trust. The form’s captions are “(a) Name” and “(b) Employer identification number”, followed by “Passive Income and Loss” and “Nonpassive Income and Loss” columns: “(c) Passive deduction or loss allowed (attach Form 8582 if required)”, “(d) Passive income from Schedule K-1”, “(e) Deduction or loss from Schedule K-1” and “(f) Other income from Schedule K-1”.
If a passive deduction or loss applies, the caption points to Form 8582. The Schedule K-1 copy you receive carries the amounts: the instructions say “copy of Schedule K-1 and its instructions will tell you where on” your return to report the items from Schedule K-1.
Where the number comes from: lines 34a to 37
The totals come straight from the columns. The form says “Add columns (d) and (f) of line 34a” for line 35, “Add columns (c) and (e) of line 34b” for line 36 (shown as a loss), and “Total estate and trust income or (loss). Combine lines 35 and 36.” for line 37.
If you list more entities than fit, the instructions say to “attach a continuation sheet using the same format as shown in Part II or III.” “However, be sure to complete the” Totals columns for lines 34a and 34b.
Computed illustration, not an IRS example: if line 35 is $5,000 and line 36 is a loss of $1,200 then line 37 is $5,000 minus $1,200 which is $3,800.
Special entries and notes
The instructions give an entry for estimated tax credited from a trust: “If you have estimated taxes credited to you from a trust (Schedule K-1 (Form 1041), box 13, code A), enter” “ES payment claimed” and the amount next to line 37. “Do not include this amount in the total on line 37.” “Instead, enter the amount on Form 1040, 1040-SR, or 1040-NR, line 26.”
If you treat an item differently from the estate or trust’s return, “you may have to file Form 8082.” Under tax preference items, if you are a beneficiary of an estate or trust, “you must take into account your share of preferences and adjustments from these entities for the alternative minimum tax on Form 6251 or Schedule I (Form 1041).” Loss limits may also apply: “If you report a loss on line 26, 32, 37, or 39 of your Schedule E (Form 1040), you may be subject to a business loss limitation.”
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Where it goes next
Line 37 is one of the amounts combined on line 41. The form says “Total income or (loss). Combine lines 26, 32, 37, 39, and 40.” It then goes to Schedule 1 and on to Form 1040. The line 41 step is on the Schedule E Parts IV and V page, and the Part I and Part II totals are on the Schedule E lines 23a to 26 and Schedule E Part II pages.
Edition and line numbers
This page reads the 2025 Schedule E (Form 1040) and its 2025 instructions, the current files irs.gov served on 2026-10-18 (byte-identical to the archived copies). They are the files for the tax year 2025 return, filed in 2026. The schedule says “Attach to Form 1040, 1040-SR, 1040-NR, or 1041.” Check the tax year printed on the schedule you are filling in and use the line numbers on that year’s schedule, because a different year’s schedule can number or word its lines differently.
Common mistakes
- Attaching the Schedule K-1 to the return. The instructions say “Do not attach Schedule K-1 to your return. Keep it for your records.”
- Including claimed estimated tax in line 37. The instructions say “Do not include this amount in the total on line 37.”
- Adding the wrong columns on line 35. The form says “Add columns (d) and (f) of line 34a”.
Related: Schedule E (Form 1040), Schedule K-1 (Form 1041) boxes 1 to 5, Form 8582, and Form 1040.
Sources
- Instructions for Schedule E (Form 1040), Supplemental Income and Loss (2025): https://www.irs.gov/pub/irs-pdf/i1040se.pdf
- Schedule E (Form 1040), Supplemental Income and Loss (2025): https://www.irs.gov/pub/irs-pdf/f1040se.pdf
Read from the IRS documents linked above on October 18, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.