2019 Tennessee Code
Title 35 - Fiduciaries and Trust Estates
Chapter 6 - Uniform Principal and Income Act
Part 5 - Allocation of Disbursements During Administration of Trust
§ 35-6-505. Income taxes.

Universal Citation: TN Code § 35-6-505 (2019)
  • (a) A tax required to be paid by a trustee based on receipts allocated to income must be paid from income.

  • (b) 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.

  • (c) A tax required to be paid by a trustee on the trust's share of an entity's taxable income must be paid:

    • (1) From income to the extent that receipts from the entity are allocated only to income;

    • (2) From principal to the extent that receipts from the entity are allocated only to principal;

    • (3) Proportionately from principal and income to the extent that receipts from the entity are allocated to both income and principal; and

    • (4) From principal to the extent that the tax exceeds the total receipts from the entity.

  • (d) After applying subsections (a)-(c), 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.

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