Section 506 – Income taxes.

• (1) A tax required to be paid by a fiduciary that is based on receipts allocated to income shall be paid from income.

• (2) A tax required to be paid by a fiduciary that is based on receipts allocated to principal shall be paid from principal, even if the tax is called an income tax by the taxing authority.

• (3) Subject to Subsection (4) and Sections 22-3-504, 22-3-505, and 22-3-507, a tax required to be paid by a fiduciary on a share of an entity’s taxable income in an accounting period shall be paid from:
  • (a) income and principal proportionately to the allocation between income and principal of receipts from the entity in the period; and
  • (b) principal, to the extent that the tax exceeds the receipts from the entity in the accounting period.

• (4) After applying Subsections (1) through (3), a fiduciary shall adjust income or principal receipts, to the extent that the taxes the fiduciary pays are reduced because of a deduction for a payment made to a beneficiary.

Amended by Chapter 348, 2020 General Session