Colorado Code
Part 4 - Uniform Principal and Income Act
§ 15-1-430. Income Taxes









Source: L. 2000: Entire part R&RE, p. 1147, § 1, effective July 1, 2001. L. 2009: Entire section amended, (SB 09-139), ch. 131, p. 567, § 2, effective April 16.
Electing Small Business Trusts. An Electing Small Business Trust (ESBT) is a creature created by Congress in the Small Business Job Protection Act of 1996 (P.L. 104-188). For years beginning after 1996, an ESBT may qualify as an S corporation stockholder even if the trustee does not distribute all of the trust's income annually to its beneficiaries. The portion of an ESBT that consists of the S corporation stock is treated as a separate trust for tax purposes (but not for trust accounting purposes), and the S corporation income is taxed directly to that portion of the trust even if some or all of that income is distributed to the beneficiaries.
A trust normally receives a deduction for distributions it makes to its beneficiaries. Subsection (4) takes into account the possibility that an ESBT may not receive a deduction for trust accounting income that is distributed to the beneficiaries. Only limited guidance has been issued by the Internal Revenue Service, and it is too early to anticipate all of the technical questions that may arise, but the powers granted to a trustee in Sections 15-1-431 and 15-1-404 to make adjustments are probably sufficient to enable a trustee to correct inequities that may arise because of technical problems.

Structure Colorado Code

Colorado Code

Title 15 - Probate, Trusts, and Fiduciaries

Article 1 - Fiduciary

Part 4 - Uniform Principal and Income Act

§ 15-1-401. Short Title

§ 15-1-402. Definitions

§ 15-1-403. Fiduciary Duties - General Principles

§ 15-1-404. Trustee's Power to Adjust

§ 15-1-404.5. Conversion - Unitrusts - Administration

§ 15-1-405. Notice of Action

§ 15-1-406. Determination and Distribution of Net Income

§ 15-1-407. Distribution to Residuary and Remainder Beneficiaries

§ 15-1-408. When Right to Income Begins and Ends

§ 15-1-409. Apportionment of Receipts and Disbursements When Decedent Dies or Income Interest Begins

§ 15-1-410. Apportionment When Income Interest Ends

§ 15-1-411. Character of Receipts

§ 15-1-412. Distribution From Trust or Estate

§ 15-1-413. Business and Other Activities Conducted by Trustee

§ 15-1-414. Principal Receipts

§ 15-1-415. Rental Property

§ 15-1-416. Obligation to Pay Money

§ 15-1-417. Insurance Policies and Similar Contracts

§ 15-1-418. Insubstantial Allocations Not Required

§ 15-1-419. Deferred Compensation, Annuities, and Similar Payments

§ 15-1-420. Liquidating Asset

§ 15-1-421. Minerals, Water, and Other Natural Resources

§ 15-1-421.5. Disposition of Natural Resources

§ 15-1-422. Timber

§ 15-1-423. Property Not Productive of Income

§ 15-1-424. Derivatives and Options

§ 15-1-425. Asset-Backed Securities

§ 15-1-426. Disbursements From Income

§ 15-1-427. Disbursements From Principal

§ 15-1-428. Transfers From Income to Principal for Depreciation

§ 15-1-429. Transfers From Income to Reimburse Principal

§ 15-1-430. Income Taxes

§ 15-1-431. Adjustments Between Principal and Income Because of Taxes

§ 15-1-432. Uniformity of Application - Construction

§ 15-1-433. Severability

§ 15-1-434. Effective Date - Application to Existing Trusts and Estates - Election

§ 15-1-435. Application of Certain Provisions - Notice of Election

§ 15-1-436. Transitional Matters

§ 15-1-451. Short Title

§ 15-1-452. Source and Prior Enactment - Uniform Application

§ 15-1-453. Definitions - Construction of Terms

§ 15-1-454. Applicability

§ 15-1-455. Application of This Subpart 7 - Powers of Settlor

§ 15-1-456. Income and Principal - Disposition

§ 15-1-457. Apportionment of Income

§ 15-1-458. Corporate Dividends and Share Rights

§ 15-1-459. Premium and Discount Bonds

§ 15-1-460. Principal Used in Business

§ 15-1-461. Principal Comprising Animals

§ 15-1-462. Principal Subject to Depletion

§ 15-1-463. Unproductive Estate

§ 15-1-464. Disposition of Natural Resources

§ 15-1-464.5. Disposition of Natural Resources - Special Applicability

§ 15-1-465. Expenses - Trust Estates

§ 15-1-466. Expenses - Nontrust Estates

§ 15-1-467. Disposition of Net Probate Income

§ 15-1-468. Repeal of Part