Arizona Laws 14-7429. Income taxes
A. A tax required to be paid by a trustee based on receipts allocated to income must be paid from income.
Terms Used In Arizona Laws 14-7429
- Income: means money or property that a fiduciary receives as current return from a principal asset and includes a portion of receipts from a sale, exchange or liquidation of a principal asset, to the extent provided in sections 14-7410 through 14-7424. See Arizona Laws 14-7401
- Principal: means property held in trust for distribution to a remainder beneficiary when the trust terminates. See Arizona Laws 14-7401
- Trust: includes an express trust, private or charitable, with any additions, wherever and however created. See Arizona Laws 14-1201
- Trustee: A person or institution holding and administering property in trust.
- Trustee: includes an original, additional or successor trustee, whether or not appointed or confirmed by a court. See Arizona Laws 14-7401
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 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.
4. From principal to the extent that the tax exceeds the total receipts from the entity.
D. After applying subsections A, B and 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.