RELATES TO:
KRS
141.010,
141.019,
141.020,
141.030,
141.081,
141.190,
141.900
NECESSITY, FUNCTION, AND CONFORMITY:
KRS
131.130(1) authorizes the
Kentucky Department of Revenue to promulgate administrative regulations to
prescribe tax return filing requirements for fiduciaries including estates and
trusts. This administrative regulation outlines procedure for computing estate
and trust income for Kentucky income tax purposes including instructions
covering both resident and nonresident situations.
Section 1. Computation of Income. Taxable
income of an estate or trust is net income as defined by
KRS
141.019 except:
(1) The standard deduction permitted
individuals in
KRS
141.081 is not allowed;
(2) Federal estate tax paid on income accrued
at the date of death of a decedent is deductible;
(3) Deductions that have been allowed on the
Kentucky inheritance tax return or the Kentucky individual income tax return
may not be claimed on the fiduciary income tax return; and
(4) Any deductions (or federal tax) related
to nontaxable income are not allowed.
Section 2. Tax Credits. A trust is allowed a
tax credit of two (2) dollars; an estate is allowed a tax credit of ten (10)
dollars.
Section 3. Resident Estate
or Trust. A resident estate or trust shall report and pay tax on all taxable
income except that portion of net income distributable or distributed during
the taxable year, and that portion of the net income from intangible personal
property attributable to a nonresident beneficiary.
Section 4. Resident Beneficiary. A resident
beneficiary shall report and pay tax on his share of the distributed or
distributable income from a resident or nonresident estate or trust.
Section 5. Income from Kentucky Sources.
Income from Kentucky sources shall include income arising from all:
(1) Activities carried on in this state,
including labor performed or business done in this state;
(2) Services performed in this
state;
(3) Real or tangible
property located in this state; or
(4) Intangible property that has acquired a
business situs in this state.
Section
6. Nonresident Estate or Trust. A nonresident estate with gross
income for the taxable year from Kentucky sources of $1,200 or more and a
nonresident trust with gross income for the taxable year from Kentucky sources
of $100 or more shall pay tax on all taxable income from Kentucky sources,
except that portion of net income distributable or distributed during the
taxable year and that portion of the net income from intangible personal
property attributable to a nonresident beneficiary.
Section 7. Nonresident Beneficiaries.
Nonresident beneficiaries shall pay tax on income derived from Kentucky
sources.
