2005 Idaho Code - 68-10-506 — ADJUSTMENTS BETWEEN PRINCIPAL AND INCOME BECAUSE OF TAXES

                                  TITLE  68
                            TRUSTS AND FIDUCIARIES
                                  CHAPTER 10
                       UNIFORM PRINCIPAL AND INCOME ACT
                                   PART 5.
          ALLOCATION OF DISBURSEMENTS DURING ADMINISTRATION OF TRUST
    68-10-506.  ADJUSTMENTS BETWEEN PRINCIPAL AND INCOME BECAUSE OF TAXES. (a)
A fiduciary may 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:
    (1)  Elections and decisions, other than those described in subsection (b)
    of this section, that the fiduciary makes from time to time regarding tax
    matters;
    (2)  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
    (3)  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 beneficiary.
    (b)  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 must 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 must be the same as its
proportionate share of the total decrease in income tax. An estate or trust
shall reimburse principal from income.