Iowa Code 637.505 – Income taxes
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Terms Used In Iowa Code 637.505
- 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
- following: when used by way of reference to a chapter or other part of a statute mean the next preceding or next following chapter or other part. See Iowa Code 4.1
- Trustee: A person or institution holding and administering property in trust.
637.505 Income taxes.
1. A tax required to be paid by a trustee based on receipts allocated to income must be paid from income.
2. 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.
3. A tax required to be paid by a trustee on the trust’s share of an entity’s taxable income must be paid according to all of the following principles:
a. From income, to the extent that receipts from the entity are allocated only to income. b. From principal, to the extent that receipts from the entity are allocated only to principal. c. Proportionately from principal and income to the extent that receipts from the entity
are allocated to both income and principal.
d. From principal to the extent that the tax exceeds the total receipts from the entity.
4. After applying subsections 1 through 3, the trustee shall adjust income or principal receipts to the extent that the taxes of the trust are reduced because the trust receives a deduction for payments made to a beneficiary.
99 Acts, ch 124, §28; 2009 Acts, ch 52, §13, 14
1. A tax required to be paid by a trustee based on receipts allocated to income must be paid from income.
2. 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.
3. A tax required to be paid by a trustee on the trust’s share of an entity’s taxable income must be paid according to all of the following principles:
a. From income, to the extent that receipts from the entity are allocated only to income. b. From principal, to the extent that receipts from the entity are allocated only to principal. c. Proportionately from principal and income to the extent that receipts from the entity
are allocated to both income and principal.
d. From principal to the extent that the tax exceeds the total receipts from the entity.
4. After applying subsections 1 through 3, the trustee shall adjust income or principal receipts to the extent that the taxes of the trust are reduced because the trust receives a deduction for payments made to a beneficiary.
99 Acts, ch 124, §28; 2009 Acts, ch 52, §13, 14