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2020 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 (2020)
- A tax required to be paid by a trustee based on receipts allocated to income must be paid from income.
- 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.
- A tax required to be paid by a trustee on the trust's share of an entity's taxable income must be paid:
- From income to the extent that receipts from the entity are allocated only to income;
- From principal to the extent that receipts from the entity are allocated only to principal;
- Proportionately from principal and income to the extent that receipts from the entity are allocated to both income and principal; and
- From principal to the extent that the tax exceeds the total receipts from the entity.
- 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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