Iowa Administrative Code › Agency 701 - Revenue Department › Title VIII - Fiduciary Income Tax › Chapter 700 - Fiduciary Income Tax › Rule 701-700.3 - 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 IA-1041. Essentially, to report the income, the trust will be
				treated similarly to a nonresident or part-year resident for Iowa income tax
				purposes. To complete the return, the trust should complete page one of Form
				IA-1041, the income and deductions portions of the form. The income and
				deductions reported in these two portions of the form should include all the
				trust's income reported during the tax year. After the previous computation has
				been completed, then Schedule C of Form IA-1041 is completed to determine a
				nonresident/part-year resident credit similar to the calculation set forth in
				rule 701-42.5 (422) for individual
				income tax.
This rule is intended to implement Iowa Code sections
				  422.6,
				  422.8, and
				  422.14.