Section 59-04.2-28 - (505) Income taxes1. A tax required to be paid by a trustee based on receipts allocated to income must be paid from income.2. A tax required to be paid by a trustee based on receipts allocated to principal must be paid from principal, even if the tax is called an income tax by the taxing authority.3. A tax required to be paid by a trustee on the trust's share of an entity's taxable income must be paid: a. From income to the extent that receipts from the entity are allocated to income;b. From principal to the extent that receipts from the entity are allocated only to principal;c. Proportionately from principal and income to the extent that receipts from the entity are allocated to both income and principal; andd. From principal to the extent that the tax exceeds the total receipts from the entity.4. After applying subsections 1 through 3, the trustee shall adjust income or principal receipts to the extent that the trust's taxes are reduced because the trust receives a deduction for payments made to a beneficiary.