Section 19-3A-505 Income taxes. - Alabama Statutes

Section 19-3A-505

Income taxes.

(a) A tax required to be paid by a fiduciary based on receipts allocated to income shall be paid from income.

(b) A tax required to be paid by a fiduciary based on receipts allocated to principal shall 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 fiduciary on the trust's share of an entity's taxable income shall be paid proportionately as follows:

(1) From income to the extent that allocation from the entity of the items giving rise to the tax either are or would be, if distributed by the entity, allocated to income; and

(2) From principal to the extent that allocation from the entity of the items giving rise to the tax either are or would be, if distributed by the entity, allocated to principal.

(d) For purposes of this section, receipts allocated to principal or income shall be reduced by the amount distributed to a beneficiary from principal or income for which the trust receives a deduction in calculating the tax.

(Act 2000-675, p. 1343, §1.)