California Code of Regulations › Title 18 - Public Revenues › Division 3 - Franchise Tax Board › Chapter 2.5 - Personal Income Tax (Taxable Years Beginning After 12-31-54) › Subchapter 9 - Estates, Trusts, Beneficiaries and Decedents › Article 1 - General Rules for Taxation of Estates and Trusts › Section 17742 - Taxability of Estates

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) In
					 the case of an estate, if the decedent and noncontingent beneficiaries are all
					 nonresidents of this State, and, in the case of a trust, if the fiduciaries and
					 noncontingent beneficiaries are all nonresidents of this State, only income
					 from real or personal property located in this State (see Reg. 17951-3),
					 business carried on within this State (see Reg. 17951-4), and intangible
					 personal property having a business or taxable situs in this State (see Section
					 17952) is taxable.
In computing the taxable income from these sources, only
						the gross income from these sources is considered. From such gross income, the
						deductions allowed by the law are subtracted. See Sections
						17301-17303 and Section
						17734. The amount remaining is
						taxable income of the estate or trust to which the rates of tax specified in
						Section 17041 apply.
EXAMPLE. B is the executor of the estate of A, who was a
						nonresident of this State at the time of death. All the beneficiaries are
						likewise nonresidents. During the year 1980, the gross income of the estate
						from all sources amounted to $100,000, $50,000 of which was derived from real
						and personal property located, and from business transacted, in this State. The
						losses, depreciation, and depletion sustained with respect to the property in
						California, and the taxes, licenses, expenses, bad debts, etc., properly
						deductible from the California income amounted to $40,000. Thus, the income
						from California sources, prior to deducting amounts distributed to
						beneficiaries, amounted to $10,000. Of this amount, $6,000 was distributed to
						beneficiaries during the year pursuant to a partial distribution of the estate.
						The remaining $4,000 is the net income of the estate, as defined in Section
						18411.
(b) A noncontingent beneficiary is one whose
					 interest is not subject to a condition precedent.
(c) On the death of a married person, the
					 deceased spouse's share of the community property is, in some circumstances,
					 subject to administration in the hands of his or her estate (California Probate
					 Code Sections
					 201-
					 206). The
					 estate of the deceased spouse is taxable on the income from that part of his or
					 her one-half of the community property that is properly subject to
					 administration. Income received by the estate, but derived from the surviving
					 spouse's share of the community property (acquired after July 28, 1927) is
					 taxable to the surviving spouse.
1. New
						section filed 8-18-82; effective thirtieth day thereafter (Register 82, No.
						34).
2. Editorial correction of subsection (a) (Register 83, No.
						19).
Note: Authority cited: Section
						  19253,
						  Revenue and Taxation Code. Reference: Section
						  17742,
						  Revenue and Taxation Code; and Section
						  5105, Civil
						  Code.