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New Filing Requirements of a Resident Trust Not Subject to Tax



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New Filing Requirements of a Resident Trust Not Subject to Tax – Under prior Departmental policy (TSB-M-96(1)I), a resident trust that met the conditions above and was not subject to tax, was also not required to file a return. But effective for tax years beginning on or after January 1, 2010, this policy is revoked. Under the new policy outlined in TSB-M-10(5)I, a resident trust must file a New York fiduciary income tax return if the trust:

  1. Is required to file a federal return for that year;

  2. Had any New York taxable income for the year;

  3. Had tax preference items for minimum income tax purposes in excess of the specific deduction; or

  4. Is subject to a separate tax on lump-sum distributions.

    1. 2014-2015 Executive Budget – Proposal to Close the Resident Trust Loophole

  1. Governor Cuomo’s Executive Budget for Fiscal Year 2014-2015 seeks to amend the Tax Law regarding the taxation of trusts in two respects:

        1. Distributions of accumulated trust income would be taxed to New York beneficiaries of nonresidents trusts and exempt trusts; and


        2. Incomplete gift, non-grantor trusts set up by New York residents would be subject to New York income tax.



  1. The bill would also tax New York beneficiaries of nonresident trusts and exempt resident trusts on the accumulated income of the trusts when the income is distributed to the beneficiary. In addition, the income of an ING trust established by a New York resident would be included in the current income of the grantor.

    1. 2010 Higher New York City Resident Tax Rates

  1. Effective for tax years beginning after 2009, New York City residents face a new tax rate applicable to income in excess of $500,000:

  2. Married filing jointly, qualified widow(er), or head of household: $18,028 plus 3.876% of the excess over $500,000.

  3. Single, married filing separately, or estates and trusts: $18,122 plus 3.876% of the excess over $500,000.




5000160.00593 Business 12388064v1


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