The time has come to develop and adopt a uniform law for administering state income taxation of trusts. State laws should uniformly provide that the undistributed income of a trust can only be taxed by the state where the trust is administered.
When it comes to taxation of the undistributed income of trusts, states are all over the map—some impose a tax on trust income while others don’t. Among those that impose a tax, some base it on the place of administration while others look at the residence of the trustees, the beneficiaries, or both.
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