Section 7-465 - Income taxes1.Tax based on receipts allocated to income. A tax required to be paid by a trustee based on receipts allocated to income must be paid from income. [2017, c. 402, Pt. A, §2(NEW); 2019, c. 417, Pt. B, §14(AFF).]
2.Tax based on receipts allocated to principal. A tax required to be paid by a trustee based on receipts allocated to principal must be paid from principal, even if the tax is called an income tax by the taxing authority. [2017, c. 402, Pt. A, §2(NEW); 2019, c. 417, Pt. B, §14(AFF).]
3.Tax on trust's share of entity's taxable income. A tax required to be paid by a trustee on the trust's share of an entity's taxable income must be paid:A. From income to the extent that receipts from the entity are allocated only to income; [2017, c. 402, Pt. A, §2(NEW); 2019, c. 417, Pt. B, §14(AFF).]B. From principal to the extent that receipts from the entity are allocated only to principal; [2017, c. 402, Pt. A, §2(NEW); 2019, c. 417, Pt. B, §14(AFF).]C. Proportionately from principal and income to the extent that receipts from the entity are allocated to both income and principal; and [2017, c. 402, Pt. A, §2(NEW); 2019, c. 417, Pt. B, §14(AFF).]D. From principal to the extent that the tax exceeds the total receipts from the entity. [2017, c. 402, Pt. A, §2(NEW); 2019, c. 417, Pt. B, §14(AFF).] [2017, c. 402, Pt. A, §2(NEW); 2019, c. 417, Pt. B, §14(AFF).]
4.Adjustments because of deduction for payments to beneficiary. After applying subsections 1 to 3, the trustee shall adjust income or principal receipts to the extent that the trust's taxes are reduced because the trust receives a deduction for payments made to a beneficiary. [2017, c. 402, Pt. A, §2(NEW); 2019, c. 417, Pt. B, §14(AFF).]
Amended by 2019, c. 417,§ B-14, eff. 6/20/2019.Added by 2018, c. 402,§ A-2, eff. 7/1/2019.