Chapter 34 - § 34.19 • ALLOCATIONS OF INCOME TAXES

• Jurisdiction: Colorado

§ 34.19 • ALLOCATIONS OF INCOME TAXES

If it becomes necessary to allocate income taxes between income and principal, it must be done in an equitable manner. If there is income in respect of a decedent, which usually is a corpus item, it must receive its proper share of exemptions, credits, and deductions so that the tax charged to principal will be the correct part of the total tax attributable to the receipt of that income, each of the classes of income receiving the proportionate benefit of the lower brackets and being charged with their proportionate share of the higher brackets (see § 34.2).

If there is a capital gain involved, the amount of the gain to enter into the computation will be the amount left after the appropriate deduction for net long-term gains, if it is a long-term gain; otherwise the whole gain will be taken into account. There will be an exception if the alternative tax computation is used, in which event the tax attributable...