Incomplete gift nongrantor trusts: Personal Income Tax Law.
Vote required
Majority
Fiscal committee
No
Appropriation
No
Current location
Chaptered
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Progress
Where this bill stands in the legislative process.
- Introduced
- Passed Senate
- Passed Assembly
- To Governor
- Became Law
Overview
This bill modifies California’s tax law regarding incomplete gift nongrantor trusts. Specifically, it excludes charitable remainder trusts from being classified as incomplete gift nongrantor trusts for tax purposes. To avoid being taxed as an incomplete gift nongrantor trust, a trust must make an irrevocable election to be taxed as a resident nongrantor trust and distribute at least 90% of its income to qualified charitable organizations.
Key provisions
- Excludes charitable remainder trusts from the definition of ‘incomplete gift nongrantor trust’.
- Requires a trust to make an irrevocable election to be taxed as a resident nongrantor trust.
- Specifies that at least 90% of the trust’s distributable net income must be distributed to qualified charitable organizations.
- Defines ‘incomplete gift nongrantor trust’ and ‘qualified taxpayer’.
- Allows the Franchise Tax Board to create regulations and guidelines for implementing the changes.
Who is affected
- Taxpayers who establish incomplete gift nongrantor trusts.
- Trustees of incomplete gift nongrantor trusts.
- Charitable organizations receiving distributions from incomplete gift nongrantor trusts.
- The Franchise Tax Board
Notable changes
- Clarifies the definition of ‘incomplete gift nongrantor trust’ by explicitly excluding charitable remainder trusts.
Bill text
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Sponsors
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1 on record
Primary sponsor
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