Iowa Administrative Code › Agency 701 - Revenue Department › Title I - Administration › Chapter 89 - Fiduciary Income Tax › Rule 701-89.3 - Situs of Trusts

Current through Register Vol. 47, No. 3, July 24, 2024
(1)
Testamentary trusts.
The situs of a testamentary trust for tax
				purposes is the state of the decedent's residence at the time of death until
				the jurisdiction of the court in which the trust proceedings are pending is
				terminated. In the event of termination and the trust remains open, the situs
				of the trust is governed by the same rules as pertain to the situs of inter
				vivos trusts.
(2)
Inter
				vivos trusts.
If an inter vivos trust is created by order of court or
				makes an accounting to the court, its situs is the state where the court having
				jurisdiction is located until the jurisdiction is terminated. The situs of an
				inter vivos trust which is subject to the grantor trust rules under 26 U.S.C.
				Sections 671 to 679 is the state of the grantor's residence, or the state of
				residence of the person other than the grantor deemed the owner, to the extent
				the income of the trust is governed by the grantor trust rules.
If an inter vivos trust (other than a trust subject to the
				  grantor trust rules in 26 U.S.C. Sections 671 to 679) is not required to make
				  an accounting to and is not subject to the control of a court, its situs
				  depends on the relevant facts of each case. The relevant facts include, but are
				  not limited to: the residence of the trustees or a majority of them; the
				  location of the principal office where the trust is administered; and the
				  location of the evidence of the intangible assets of the trust (such as stocks,
				  bonds, bank accounts, etc.). The residence of the grantor of a trust, not
				  subject to the grantor trust rules under 26 U.S.C. Sections 671 to 679, is not
				  a controlling factor as to the situs of the trust, unless the person is also a
				  trustee. A statement in the trust instrument that the law of a certain
				  jurisdiction shall govern the administration of the trust is not a controlling
				  factor in determining situs. The residence of the beneficiaries of a trust is
				  also not relevant in determining situs.
(3)
Part year trust.
A trust
				that has its situs part of the year within Iowa and part of the same year
				outside of Iowa is to report its income on Iowa Form 1A-1041. Essentially, to
				report the income, the trust will be treated similarly to a nonresident for
				Iowa income tax purposes. To complete the return, the trust should complete
				page one of Form 1A-1041, the income and deductions portions of the form. The
				income and deductions reported in these two portions of the form should include
				the trust's income only for the period during the tax year at issue when the
				trust had its situs in Iowa, and all Iowa source income for the tax year at
				issue, regardless of the situs of the trust. After the previous computation has
				been completed, then all of the trust's income for the tax year at issue,
				regardless of the source of the income, is to be reported by completing
				Schedule C. After Schedule C is completed, then lines 33 through 36 on the
				first page of the form must be completed to determine the Iowa fiduciary tax
				due.
This rule is intended to implement Iowa Code sections 422.6,
				  422.8, and 422.14.