2011 Kentucky Revised Statutes CHAPTER 386 ADMINISTRATION OF TRUSTS -- LEGAL INVESTMENTS -- UNIFORM PRINCIPAL AND INCOME ACT 386.500 Adjustments between principal and income because of taxes.
KY Rev Stat § 386.500 (1996 through Reg Sess) What's This?
386.500 Adjustments between principal and income because of taxes.
(1)
(2)
A fiduciary may, with District Court approval, make adjustments between principal
and income to offset the shifting of economic interests or tax benefits between
income beneficiaries and remainder beneficiaries which arise from:
(a) Elections and decisions, other than those described in subsection (2) of this
section, that the fiduciary makes from time to time regarding tax matters;
(b) An income tax or any other tax that is imposed upon the fiduciary or a
beneficiary as a result of a transaction involving, or a distribution from, the
estate or trust; or
(c) The ownership by an estate or trust of an interest in an entity whose taxable
income, whether or not distributed, is includable in the taxable income of the
estate, trust, or a beneficiary.
If the amount of an estate tax marital deduction or charitable contribution deduction
is reduced because a fiduciary deducts an amount paid from principal for income
tax purposes instead of deducting it for estate tax purposes and, as a result, estate
taxes paid from principal are increased and income taxes paid by an estate, trust, or
beneficiary are decreased, each estate, trust, or beneficiary that benefits from the
decrease in income tax shall reimburse the principal from which the increase in
estate tax is paid. The total reimbursement shall equal the increase in the estate tax
to the extent that the principal used to pay the increase would have qualified for a
marital deduction or charitable contribution deduction but for the payment. The
proportionate share of the reimbursement for each estate, trust, or beneficiary whose
income taxes are reduced shall be the same as its proportionate share of the total
decrease in income tax. An estate or trust shall reimburse principal from income.
Effective: January 1, 2005
History: Created 2004 Ky. Acts ch. 158, sec. 26, effective January 1, 2005.
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