2006 Delaware Code - Subchapter I — In General

§ 1601. Definitions.

Whenever used in this chapter, the following terms shall have the meanings ascribed to them in this section:

(1) "Beneficiary" has the meaning ascribed to it by common law, including, without limitation, any heir, devisee or legatee of an estate or beneficiary of a trust.

(2) "Distributive share" means, with respect to any member and with respect to any taxable year of such member:

In the case of a pass-through entity that is classified as a partnership under the Internal Revenue Code, the distributive share of such member for such taxable year of the pass-through entity's income, gain, loss or deduction, or items thereof, as appropriate, determined under § 704 of the Internal Revenue Code [26 U.S.C. § 704]; or

In the case of a pass-through entity that is an S corporation for federal income tax purposes, the pro rata share of such member for such taxable year of the pass-through entity's income, gain, loss or deduction, or items thereof, as appropriate, determined under § 1377(a) of the Internal Revenue Code [26 U.S.C. § 1377(a)].

(3) "Member of a pass-through entity" or "member" means a person treated for federal income tax purposes as either a partner in a partnership or a shareholder of an S corporation, but does not include a beneficiary of an estate or trust.

(4) "Nonresident estate" means an estate which is not a resident estate.

(5) "Nonresident trust" means a trust that is not a resident trust of this State.

(6) "Pass-through entity" means any person:

a. Which is classified as a partnership under the Internal Revenue Code [26 U.S.C. § 1, et seq.]; or

b. Which is classified as an "S corporation" for federal income tax purposes within the meaning of § 1361 of the Internal Revenue Code [26 U.S.C. § 1361].

(7) "Resident estate" means the estate of a decedent who at death was domiciled in this State.

(8) "Resident trust" means a trust:

a. Created by the will of a decedent who at death was domiciled in this State;

b. Created by, or consisting of property of, a person domiciled in this State; or

c. With respect to which the conditions of 1 of the following subparagraphs are met during more than one half of any taxable year:

1. The trust has only 1 trustee who or which is (i) a resident individual of this State, or (ii) a corporation, partnership or other entity having an office for the conduct of trust business in this State;

2. The trust has more than 1 trustee, and 1 of such trustees is a corporation, partnership or other entity having an office for the conduct of trust business in this State; or

3. The trust has more than 1 trustee, all of whom are individuals and one half or more of whom are resident individuals of this State.

(9) "Trust" means an entity classified as a trust for federal income tax purposes, other than a trust of which the grantor or another person is treated as the owner of the entire trust under §§ 672 through 679 of the Internal Revenue Code [26 U.S.C. §§ 672 -- 679]. (72 Del. Laws, c. 467, § 1.)

§ 1602. Taxable year.

The taxable year of a pass-through entity, estate or trust for purposes of this title shall be the same as its taxable year determined under the Internal Revenue Code. A change in the taxable year of a pass-through entity, estate or trust under the provisions of the Internal Revenue Code shall effect a change of its taxable year under this title. (72 Del. Laws, c. 467, § 1.)

§ 1603. Accounting method.

The accounting method of a pass-through entity, estate or trust for purposes of this title shall be the same as its accounting method determined under the Internal Revenue Code. A change in the accounting method of a pass-through entity, estate or trust under the provisions of the Internal Revenue Code shall effect a change of its accounting method under this title. (72 Del. Laws, c. 467, § 1.)

§ 1604. Adjustments.

An adjustment made to any item of income, gain, loss or deduction reported on the federal information or tax return of a pass-through entity shall effect an adjustment to such item of income, gain, loss or deduction under this title to the extent necessary to prevent such item from being duplicated or omitted. (72 Del. Laws, c. 467, § 1.)

§ 1605. Returns.

(a) Pass-through entities. --

(1) Returns. -- Every pass-through entity having any income from sources within this State shall make a return to this State for the taxable year setting forth the information required by § 6031 or § 6037 of the Internal Revenue Code [26 U.S.C. § 6031 or § 6037] and such other information as the Director may prescribe pursuant to § 513 of this title. Such return may, to the extent prescribed by the Director, require the separate statement of any item of the pass-through entity's income, gain, loss or deduction if the separate treatment of such item could affect the liability for tax under this title of any member.

(2) Copies to members. -- A pass-through entity required to file a return pursuant to paragraph (1) of this subsection shall provide to each member a copy of such information shown on such return as the Director may prescribe pursuant to § 513 of this title.

(3) Time to file return. -- A return required to be filed pursuant to paragraph (1) of this subsection shall be filed:

a. In the case of a pass-through entity classified as a partnership, on the 30th day of the 4th month following the end of such pass-through entity's taxable year; and

b. In the case of a pass-through entity classified as an S corporation, on the 30th day of the 3rd month following the end of such pass-through entity's taxable year.

(b) Estates and trusts. --

(1) An income tax return with respect to the tax imposed by Chapter 11 of this title shall be made to this State by:

a. Every resident estate or resident trust which (i) is required to file a federal income tax return for the taxable year or would be required to file a federal income tax return for the taxable year if the additions provided under § 1106 of this title were included in its federal gross income, and (ii) which has not distributed, or set aside for distribution, to nonresident beneficiaries its entire federal taxable income as modified by § 1106 of this title; and

b. Every nonresident estate or nonresident trust which (i) is required to file a federal income tax return for the taxable year or would be required to file a federal income tax return for the taxable year if the additions provided under § 1106 of this title were included in its federal gross income, and (ii) which has any income from sources within this State.

(2) Copies to members. -- An estate or trust required to file a return pursuant to paragraph (1) of this subsection shall provide to each beneficiary of such estate or trust a copy of such information shown on such return as the Director may prescribe pursuant to § 513 of this title.

(3) Time to file return. -- A return required to be filed pursuant to paragraph (1) of this subsection shall be filed on the 30th day of the 4th month following the end of the estate's or trust's taxable year. (72 Del. Laws, c. 467, § 1.)