§ 30-2-14-43 — Adjustments to offset shifting of economic interests or tax benefits between income beneficiaries and remainder beneficiaries

Indiana § 30-2-14-43

• Jurisdiction: Indiana
• Art. 2: GENERAL PROVISIONS
• Ch. 14: Uniform Principal and Income Act

Text

(a) A fiduciary may make adjustments
between principal and income to offset the shifting of economic
interests or tax benefits between income beneficiaries and remainder
beneficiaries that arise from:
(1) elections and decisions, other than those described in
subsection (b), that the fiduciary makes from time to time
regarding tax matters;
(2) an income tax or any other tax that is imposed upon the
fiduciary or a beneficiary as a result of a transaction involving or
a distribution from the estate or trust; or
(3) the ownership by an estate or trust of an interest in an entity
whose taxable income, whether or not distributed, is includable
in the taxable income of the estate, trust, or a beneficiary.
(b) If the amount of an estate tax marital deduction or charitable
contribution deduction is reduced because a fiduciary deducts an
amount paid from principal for income tax purposes instead of
deducting it for estate tax purposes, and as a result estate taxes paid
from principal are increased and income taxes paid by an estate, a trust,
or a beneficiary are decreased, each estate, trust, or beneficiary that
benefits from the decrease in income tax shall reimburse the principal
from which the increase in estate tax is paid. The total reimbursement
must equal the increase in the estate tax to the extent that the principal
used to pay the increase would have qualified for a marital deduction
or charitable contribution deduction but for the payment. The
proportionate share of the reimbursement for each estate, trust, or
beneficiary whose income taxes are reduced must be the same as its
proportionate share of the total decrease in income tax. An estate or
trust shall reimburse principal from income.

Legislative History

As added by P.L.84-2002, SEC.2.