Oregon Administrative Rules
Chapter 150 - DEPARTMENT OF REVENUE
Division 316 - PERSONAL INCOME TAX GENERAL PROVISIONS
Section 150-316-0575 - Amount Specially Taxed Under Federal Law to Be Included in Computation of State Taxable Income: Accumulation Distributions
Current through Register Vol. 63, No. 9, September 1, 2024
(1) Oregon law contains no alternate method of calculating tax in the manner provided by the Internal Revenue Code for the federal tax treatment of accumulation distributions. Therefore, income from an accumulation distribution must be added to Oregon taxable income.
(2) Distribution of a trust's income accumulation must be included in the income of the Oregon resident beneficiary for the taxable year that such income is distributed by the trust. The distributions are included in Oregon income in the same manner and to the same extent that the trust's income accumulations are includable in the taxable income of the beneficiary under federal law. The change in the Oregon fiduciary adjustment will also be distributed to the beneficiary.
On the Oregon return, the total fiduciary adjustment was ($10,862), of which the beneficiary's share was ($6,626), leaving ($4,236) as the fiduciary's share. The fiduciary's Oregon taxable income was $13,800 ($18,036 minus $4,236), and the Oregon tax was $1,102.
In 1993, the trust distributed more DNI to the beneficiary than the current year's DNI amount, resulting in a distribution of the 1987 accumulated income. The addition to Oregon income is the taxable accumulation distribution as defined in the Internal Revenue Code, Sections 665-668. The beneficiary is also allowed an additional fiduciary adjustment amount, based on the additional 1987 DNI distributed in 1993. This additional amount is calculated as follows: [Formula not included. See ED. NOTE.]
(3) See OAR 150-316-0410 for the limitations imposed on the portion of the fiduciary subtraction allowed to the beneficiaries.
(4) The change in fiduciary adjustment will be distributed to the beneficiaries in the same allocable portions as the income was distributed, according to the provisions in the trust instrument.
(5) Income accumulation distributions of a trust must be included in the income of a nonresident beneficiary for the taxable year that distribution is actually made by the trust. The distributions are included in the adjusted gross income of a nonresident in accordance with the provisions of ORS 316.127. The nonresident will also be allowed the change in fiduciary adjustment to the extent this change is applicable to Oregon source income.
(6) A copy of the Schedule J of federal Form 1041, "Allocation of Accumulation Distribution," shall be attached to the Oregon fiduciary return for the taxable year of distribution, and a copy of federal Form 4970, "Tax on Accumulation Distribution of Trust," shall be attached to the Oregon return of the beneficiary.
(7) For information about calculating the accumulation distribution credit for Oregon taxes paid by a trust during income accumulation years, see OAR 150-316-0415.
Publications: The publication(s) referred to or incorporated by reference in this rule is available from the Department of Revenue pursuant to ORS 183.360(2) and ORS 183.355(6).
Attachment referenced is not included in rule text. Click here for PDF of attachment.
Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 316.737
