Chapter 34 - § 34.16 • TAX ELECTIONS AND TRUST ACCOUNTING — AMOUNT OF MARITAL DEDUCTION

• Jurisdiction: Colorado

§ 34.16 • TAX ELECTIONS AND TRUST ACCOUNTING — AMOUNT OF MARITAL DEDUCTION

Care must be taken to be sure that no confusion in trust accounting principles arises by reason of the election to treat administration expenses as income tax deductions. Even if they are taken as income tax deductions, the expenses nevertheless must be charged to corpus for the purpose of accounting between those entitled to income and those entitled to principal, except that in proper cases, an equitable share of such expenses may be treated as allocable to the cost of securing income.⁷⁰

An apparent exception to the rule just stated, but arising out of the proper construction of the will, is in the computation of the marital deduction. If administration expenses are taken as income tax deductions, the action affects the size of the marital deduction allowable, and if the will uses a formula clause that states the quantum of the marital deduction fund in terms of the allowable deduction, the exercise of the election usually affects the amount of the fund.

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