Taxation of Trust Income: What Is a Resident Trust And How Does a Jurisdiction Decide It Should Be Taxed?

The Bloomberg BNA Tax Management Weekly State Tax Report filters through current state developments and analyzes those critical to multistate tax planning.

Taxpayers and their advocates must know the limitations of a state's authority to impose tax on trust income. In this first part of a two-part series, Thomas W. “TJ” Aldous of Williams Mullen uses Virginia law as a lens through which to review basic principles regarding the nature of trusts and trust income, including triggers of trust income tax liability. The second part of the series, appearing next week, discusses constitutional issues related to imposing income tax on trusts and how to reconcile seemingly divergent court decisions.