Oklahoma § 60-175.506 - Adjustments between principal and income because of

§ 60-175.506. Adjustments between principal and income because of

taxes.

ADJUSTMENTS BETWEEN PRINCIPAL AND INCOME BECAUSE OF TAXES

A. A fiduciary may make adjustments between principal and

income to offset the shifting of economic interests or tax benefits

between income beneficiaries and remainder beneficiaries which arise

from:

1. Elections and decisions, other than those described in

subsection B of this section, that the fiduciary makes from time to

time regarding tax matters;

Oklahoma Statutes - Title 60. Property

2. An income tax or any other tax that is imposed upon the

fiduciary or a beneficiary as a result of a transaction involving or

a distribution from the estate or trust; or

3. The ownership by an estate or trust of an interest in an

entity whose taxable income, whether or not distributed, is

includable in the taxable income of the estate, trust, or a

beneficiary.

B. If the amount of an estate tax marital deduction or

charitable contribution deduction is reduced because a fiduciary

deducts an amount paid from principal for income tax purposes

instead of deducting it for estate tax purposes, and as a result

estate taxes paid from principal are increased and income taxes paid

by an estate, trust, or beneficiary are decreased, each estate,

trust, or beneficiary that benefits from the decrease in income tax

shall reimburse the principal from which the increase in estate tax

is paid. The total reimbursement must equal the increase in the

estate tax to the extent that the principal used to pay the increase

would have qualified for a marital deduction or charitable

contribution deduction but for the payment. The proportionate share

of the reimbursement for each estate, trust, or beneficiary whose

income taxes are reduced must be the same as its proportionate share

of the total decrease in income tax. An estate or trust shall

reimburse principal from income.

Added by Laws 1998, c. 115, § 30, eff. Nov. 1, 1998.