Following the conversion of an income trust to a total return unitrust, the trustee:

(1) Shall treat the unitrust amount as the net income of the trust for purposes of determining the amount available, from time to time, for distributions from the trust; and

Ask a will, trust or estate question, get an answer ASAP!
Thousands of highly rated, verified estate & trust lawyers.
Click here to chat with a lawyer about your rights.

(2) May allocate to trust income for each taxable year of the trust (or portions thereof):

(a) Net short–term capital gain described in 26 U.S.C. § 1222(5), as amended and in effect on January 1, 2023, for such year (or portion thereof) but only to the extent that the amounts so allocated together with all other amounts allocate to trust income for such year (or portion thereof) does not exceed the unitrust amount for such year (or portion thereof); and

(b) Net long–term capital gain described in 26 U.S.C. § 1222(7), as amended and in effect on January 1, 2023, for such year (or portion thereof) but only to the extent that the amount so allocated together with all other amounts, including amounts described in subsection (a) above, allocated to trust income for such year (or portion thereof) does not exceed the unitrust amount for such year (or portion thereof).

Source: SL 2002, ch 225, § 8; SL 2023, ch 161, § 13.