(a) A tax required to be paid by a trustee based on receipts allocated to income must be paid from income.(b) 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.(c) A tax required to be paid by a trustee on the trust's share of an entity's taxable income must be paid:(1) From income to the extent that receipts from the entity are allocated only to income;(2) From principal to the extent that receipts from the entity are allocated only to principal;(3) Proportionately from principal and income to the extent that receipts from the entity are allocated to both income and principal; and(4) From principal to the extent that the tax exceeds the total receipts from the entity.(d) After applying subsections (a)-(c), 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.Acts 2000, ch. 829, § 1; 2010, ch. 725, § 2.
Tennessee Legal Code