State Codes and Statutes

Statutes > North-carolina > Chapter_37A > GS_37A-5-506

§ 37A‑5‑506. Adjustments between principal and income because of taxes.

(a)        A fiduciary maymake adjustments between principal and income to offset the shifting ofeconomic interests or tax benefits between income beneficiaries and remainderbeneficiaries that arise from:

(1)        Elections anddecisions, other than those described in subsection (b) of this section, thatthe fiduciary makes from time to time regarding tax matters;

(2)        An income tax or anyother tax that is imposed upon the fiduciary or a beneficiary as a result of atransaction involving or a distribution from the estate or trust; or

(3)        The ownership by anestate or trust of an interest in an entity whose taxable income, whether ornot distributed, is includable in the taxable income of the estate or trust ora beneficiary.

(b)        If the amount of anestate tax marital deduction or charitable contribution deduction is reducedbecause a fiduciary deducts an amount paid from principal for income taxpurposes instead of deducting it for estate tax purposes, and as a resultestate taxes paid from principal are increased and income taxes paid by anestate, trust, or beneficiary are decreased, each estate, trust, or beneficiarythat benefits from the decrease in income tax shall reimburse the principal fromwhich the increase in estate tax is paid. The total reimbursement shall equalthe increase in the estate tax to the extent that the principal used to pay theincrease would have qualified for a marital deduction or charitablecontribution deduction but for the payment. The proportionate share of thereimbursement for each estate, trust, or beneficiary whose income taxes arereduced shall be the same as its proportionate share of the total decrease inincome tax. An estate or trust shall reimburse principal from income. (2003‑232, s. 2.)

State Codes and Statutes

Statutes > North-carolina > Chapter_37A > GS_37A-5-506

§ 37A‑5‑506. Adjustments between principal and income because of taxes.

(a)        A fiduciary maymake adjustments between principal and income to offset the shifting ofeconomic interests or tax benefits between income beneficiaries and remainderbeneficiaries that arise from:

(1)        Elections anddecisions, other than those described in subsection (b) of this section, thatthe fiduciary makes from time to time regarding tax matters;

(2)        An income tax or anyother tax that is imposed upon the fiduciary or a beneficiary as a result of atransaction involving or a distribution from the estate or trust; or

(3)        The ownership by anestate or trust of an interest in an entity whose taxable income, whether ornot distributed, is includable in the taxable income of the estate or trust ora beneficiary.

(b)        If the amount of anestate tax marital deduction or charitable contribution deduction is reducedbecause a fiduciary deducts an amount paid from principal for income taxpurposes instead of deducting it for estate tax purposes, and as a resultestate taxes paid from principal are increased and income taxes paid by anestate, trust, or beneficiary are decreased, each estate, trust, or beneficiarythat benefits from the decrease in income tax shall reimburse the principal fromwhich the increase in estate tax is paid. The total reimbursement shall equalthe increase in the estate tax to the extent that the principal used to pay theincrease would have qualified for a marital deduction or charitablecontribution deduction but for the payment. The proportionate share of thereimbursement for each estate, trust, or beneficiary whose income taxes arereduced shall be the same as its proportionate share of the total decrease inincome tax. An estate or trust shall reimburse principal from income. (2003‑232, s. 2.)


State Codes and Statutes

State Codes and Statutes

Statutes > North-carolina > Chapter_37A > GS_37A-5-506

§ 37A‑5‑506. Adjustments between principal and income because of taxes.

(a)        A fiduciary maymake adjustments between principal and income to offset the shifting ofeconomic interests or tax benefits between income beneficiaries and remainderbeneficiaries that arise from:

(1)        Elections anddecisions, other than those described in subsection (b) of this section, thatthe fiduciary makes from time to time regarding tax matters;

(2)        An income tax or anyother tax that is imposed upon the fiduciary or a beneficiary as a result of atransaction involving or a distribution from the estate or trust; or

(3)        The ownership by anestate or trust of an interest in an entity whose taxable income, whether ornot distributed, is includable in the taxable income of the estate or trust ora beneficiary.

(b)        If the amount of anestate tax marital deduction or charitable contribution deduction is reducedbecause a fiduciary deducts an amount paid from principal for income taxpurposes instead of deducting it for estate tax purposes, and as a resultestate taxes paid from principal are increased and income taxes paid by anestate, trust, or beneficiary are decreased, each estate, trust, or beneficiarythat benefits from the decrease in income tax shall reimburse the principal fromwhich the increase in estate tax is paid. The total reimbursement shall equalthe increase in the estate tax to the extent that the principal used to pay theincrease would have qualified for a marital deduction or charitablecontribution deduction but for the payment. The proportionate share of thereimbursement for each estate, trust, or beneficiary whose income taxes arereduced shall be the same as its proportionate share of the total decrease inincome tax. An estate or trust shall reimburse principal from income. (2003‑232, s. 2.)

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