Chap. 172.—-An ACT to amend and re-enact Section 50 of the Tax Code as hereto-
fore amended, in relation to the income taxation of estates and trusts. [S B 168]

Approved March 10, 1942

1. Be it enacted by the General Assembly of Virginia, That section
fifty of the Tax Code, as heretofore amended, be amended and re-enacted
so as to read as follows: | :

Section 50. Estates and Trusts—1, The tax imposed by this
chapter upon individuals shall apply to estates and trusts, which tax is
hereby levied annually upon and with respect to the income of estates or
of any kind of property held in trust including : —

a. Income received by estates of deceased persons during the period
of administration or settlement of the estate : Lo

_ b. Income accumulated in trust for the benefit of unborn or unas-
certained persons or persons with contingent interests; _ Oo

c. Income held for future distributions under the terms of the will

or trust; “ | _ | a :
d. Income which is to be distributed to the beneficiaries periodically,

whether or not at regular intervals, and the income collected by a guardian

of an infant to be held or distributed as the court may direct: and |
e. Income of an estate during the period of administration or set-
tlement permitted by subdivision three of this section to be deducted from
the net income upon which the tax is to be paid by the fiduciary.

2. The fiduciary shall be responsible for making the return of
income for the estate or trust for which he acts, whether such income
be taxable to the estate or trust or to the beneficiaries thereof. The net
income of an estate or trust shall be computed in the same manner and
on the same basis as provided in this chapter for individual taxpayers,
except that lawful commissions paid to the fiduciary, bond premiums paid
and fees paid to the Commissioners of Accounts shall be allowable as
deductions, and except that there shall also be allowed as a deduction
any part of the gross income, without limitation, which pursuant to the
terms of the will or deed creating the trust, is during the taxable year
paid to or permanently set aside for the purposes and in the manner
specified in subsection (m) of section twenty-five of the Tax Code of
Virginia or is to be used exclusively for religious, charitable, scientific,
literary or educational purposes or for the prevention of cruelty to chil-
dren or animals and in cases under paragraphs d and e of subdivision
one of this section the fiduciary shall include in the return a statement of
each beneficiary’s distributive share of such net income, whether or not
distributed before the close of the taxable year for which the return is
made.

3. In cases under paragraphs a, b, and c of subdivision one, of this
section, the tax shall be imposed upon the estate or trust with respect to
the net income of the estate or trust and shall be paid by the fiduciary,
except that in determining the net income of the estate of any deceased
person during the period of administration or settlement there may be
deducted the amount of any income properly paid or credited to any
legatee, heir or other beneficiary. In such cases, the estate or trust shall
be allowed the same exemption as is allowed to single persons by this
chapter, and in such cases an estate or trust created by a person not a
resident, and an estate of a person not a resident shall be subject to tax
only to the extent to which individuals other than residents are liable
under this chapter.

4. In cases under paragraphs d and e of subdivision one of this
section, if the distribution of income is in the discretion of the fiduciary,
either as to the beneficiaries to whom payable or as to the amounts to
which any beneficiary is entitled, the tax shall be imposed upon the estate
or trust in the manner provided in subdivision three of this section, but
without the deduction of any amounts of income paid or credited to any
such beneficiary. In all other cases under paragraphs d and e of subdi-
vision one of this section, the tax shall not be paid by the fiduciary, but
there shall be included in computing the net income of each beneficiary
his distributive share whether distributed or not, of the net income of the
estate or trust for the taxable year, or, if his net income for such taxable
year is computed upon the basis of a period different from that upon the
basis of which the net income of the estate or trust is computed, then his
distributive share of the net income of the estate or trust for any account-
ing period of such estate or trust ending within the fiscal or calendar
year upon the basis of which such benenciarys net income 1s computed.
In such cases the income of a beneficiary, not a resident, derived through
such estate or trust, shall be taxable only to the extent provided in this
chapter. .

This section, as hereby amended, shall be in force for the taxable
year nineteen hundred and forty-one, and for every taxable year there-
after, until otherwise provided by law.