North Dakota Code 59-04.2-28 – (505) Income taxes
1. A tax required to be paid by a trustee based on receipts allocated to income must be paid from income.
Terms Used In North Dakota Code 59-04.2-28
- 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.
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:
a. From income to the extent that receipts from the entity are allocated 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; and
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 trust’s taxes are reduced because the trust receives a deduction for payments made to a beneficiary.