South Carolina Code 62-7-929. Payment of taxes from income and principal
(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.
Terms Used In South Carolina Code 62-7-929
- Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
- Trustee: A person or institution holding and administering property in trust.
(C) A tax required to be paid by a trustee on the trust’s share of the taxable income of the entity must be paid:
(1) from income, to the extent that receipts from the entity are allocated 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) through (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.