§235-4.5  Taxation of trusts, beneficiaries;credit.  (a)  There shall be excluded from gross income any intangibleincome, such as dividends and interest, earned by a trust sited in this Stateto the extent that, during the taxable year of the trust, the beneficialinterest in the trust shall be held by a beneficiary or beneficiaries residingoutside this State.  This exclusion shall not apply to income received fromreal property held in a land trust formed under chapter 558.

(b)  If a trust sited in this State owns onehundred per cent of the stock of a foreign corporation which does not engage inan active trade or business but acts solely as a holding company receivingintangible income, such as dividends and interest, the intangible income of theforeign corporation shall be excluded from gross income for Hawaii income taxpurposes but only to the extent that the income of the trust beneficiaries isexcluded from taxation under subsection (a).  As used in this section, foreigncorporation means a corporation not created or organized in the United Statesor under the laws of the United States, Hawaii, or any other state.

(c)  Any resident beneficiary of a trust with asitus in another state may claim a credit for income taxes paid by the trust tothe other state on any income received which is attributable to assets otherthan intangibles. [L 1985, c 283, §1; am L 1988, c 33, §1]