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 17744 - Taxability of Trust Dependent upon Residence of Beneficiary

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
If one or more of the noncontingent beneficiaries of a
						trust are residents and one or more are nonresidents, and the fiduciaries are
						nonresidents, the trust is taxable upon (a) all income (less the deduction
						allowed under Article 1 of Chapter 9 (Section
						17731 and following) from real and
						tangible personal property located in this State, and from business carried on
						within this State and from intangible personal property having a business or
						taxable situs in this State (see Reg. 17952); and (b) that proportion of all
						net income (less the deduction allowed under Article 1 of Chapter 9 (Section
						17731 and following)) from all
						other sources which eventually is to be distributed to the noncontingent
						beneficiaries who are residents of this State.
EXAMPLE (1). A transferred property located outside this
						State in trust to pay equal shares of the income to B, a resident, and C, a
						nonresident of this State. The beneficiaries have noncontingent interests. The
						fiduciaries of the trust are nonresidents. During the year 1980, the trust
						realized $50,000 from real and tangible personal property located, and business
						carried on, within this State, $50,000 from real and tangible personal property
						located, and business carried on, outside this State, and $50,000 from stocks
						and bonds, none of which had a business or taxable situs in this State. None of
						the income was paid or credited to the beneficiaries during the year. The trust
						is taxable upon the $50,000 realized from real and tangible personal property
						located, and business carried on, within this State. The trust is also taxable
						upon one-half of the balance of the income since one-half of such income will
						eventually be distributed to B, a resident of this State.
EXAMPLE (2). A transferred stocks and bonds and real and
						personal property located outside this State in trust to B, a nonresident of
						this State. Under the terms of the trust, the income from the intangible
						personal property is to be accumulated for a number of years and then
						distributed to C, a resident of this State with a noncontingent interest. The
						balance of the income is to be distributed to certain named beneficiaries who
						are nonresidents of this State. The trust is taxable upon all the income from
						the intangible personal property, i.e., the stocks and bonds, but is not
						taxable upon any of the income from the remainder of the trust
						property.
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
						  17744,
						  Revenue and Taxation Code.