N.Y. Comp. Codes R. & Regs. tit. 20 § 119.1

Current through Register Vol. 46, No. 45, November 2, 2024

Section 119.1 - New York fiduciary adjustment and its allocation

Tax Law, § 619

(a)General.

A resident estate or trust may realize items of income or gain or incur items of loss or deduction which, if received or incurred by an individual taxpayer, would give rise to one or more of the modifications described in sections 112.2 -112.5, 112.7-112.9 and 115.2-115.3 of this Article. In the case of a resident estate or trust, all such modifications are combined in the New York fiduciary adjustment, which must be allocated among the estate or trust and its beneficiaries as provided in section 119.2 or 119.3 of this Part. The modifications, or portions thereof, which may not be included in the New York fiduciary adjustment and which, therefore, may not be allocated among the estate or trust and its beneficiaries, are discussed in subdivision (c) of this section. The Federal taxable income of the estate or trust is modified to reflect its share of the New York fiduciary adjustment, and the Federal adjusted gross income of each resident beneficiary is modified to reflect his share thereof (see section 112.4 and 118.4 of this Article). As to nonresident estates and trusts and nonresident beneficiaries, see Part 139 of this Title.

(b)Definition of New York fiduciary adjustment.

The New York fiduciary adjustment is the net amount of the modifications described in sections 112.2 -112.3, 112.7-112.9, 115.2 and subdivisions (b) and (c) of section 115.3 of this Article, which relate to items of income, gain, loss or deduction of the estate or trust. If the estate or trust is a beneficiary of another estate or trust or is a member of a partnership, the New York fiduciary adjustment also includes the modifications described, respectively, in section 112.4 or 112.5 of this Article with respect to such other estate or trust or partnership.

Example:

A resident estate or trust has the following modifications for 1979:

Additions:
(1)	Interest income received on bonds of the State of California. (See section 112.2[a] of this Article.)	$1,000
(2)	New York State personal income tax paid in 1979. (See section 115.2[a] of this Article.)	300
(3)	Expenses deducted in computing Federal taxable income of the estate or trust which were incurred for the production or collection of income from United States government bonds. (See section 115.2[c] of this Article.)	50
Total additions		$1,350
Subtractions:
(4)	Interest income received on United States government bonds. (See section 112.3[a] of this Article.)	$600
(5)	Refund received in 1979 of overpayment of prior year's New York State personal income tax. (See section 112.3[g] of this Article.)	100
(6)	Ordinary and necessary expenses paid during 1979 for the production or collection of income from State of California bonds. (See section 115.3[c] of this Article.)	150
Total subtractions		850
New York fiduciary adjustment		$500

Since the total of the items to be added to Federal taxable income is more than the total of the items to be subtracted, the New York fiduciary adjustment (net amount) is a plus figure; that is, the share of the trust or estate in this fiduciary adjustment must be added to its Federal taxable income, and the share of any 400 resident beneficiary must be added to his Federal adjusted gross income. If the fiduciary adjustment, on the facts of a particular case, should be a minus figure, the share of the estate or trust would be subtracted from its Federal taxable income and the share of any resident beneficiary would be subtracted from his Federal adjusted gross income.

(c) The net amount of the modifications which comprise the New York fiduciary adjustment does not include:

(1) any of the modifications or portions thereof, described in sections 118.3 and 118.5 of this Article, which relate to principal or corpus items included in the Federal taxable income of the estate or trust and which are not included in the Federal distributable net income of the estate or trust;

(2) any modification or portion thereof, described in subdivisions (a) and (b) of section 112.2 of this Article, subdivisions (a), (b) and (d)-(g) of section 112.3 of this Article, with respect to any amount which is paid or permanently set aside during the taxable year for a charitable purpose in accordance with the terms of the governing instrument. If a charitable organization is specifically designated in the governing instrument as a distributee of a particular item of income, or portion thereof, in respect of which a modification would ordinarily be required under any of the subdivisions referred to in this paragraph, no part of such modification is to be included in the New York fiduciary adjustment. If a charitable organization is designated in the governing instrument as a distributee of a percentage or part of the estate or trust income, but not as the distributee of a particular item of income, the portion of such a modification to be excluded from the New York fiduciary adjustment is such proportion of the modification as the amount paid or payable to the charitable organization bears to the total income of the estate or trust.

Example:

The governing instrument of a resident trust provides that the income of the trust is to be divided as follows: one-third to a charitable organization, one-third to a designated beneficiary, and the remaining one-third accumulated for later distribution to a minor. The income of the trust for taxable year 1979 includes interest on California bonds of $9,000 and ordinary dividend in come of $15,000. Based upon these facts, the New York fiduciary adjustment would be determined in the following manner:

Total California bond interest
Less: Portion attributable to the charitable organization computed as follows:
$8,000 (total income paid or set aside for charitable organization)	×	$9,000 (California	=	$3,000
$2,400 (total income of trust)	bond interest)
New York fiduciary adjustment

N.Y. Comp. Codes R. & Regs. Tit. 20 § 119.1