Chap. 95.—An ACT to amend and re-enact Section 50 of the Tax Code of Vir-
ginia relating to income taxes on estates and trusts. [H B 178]

Approved March 10, 1938

1. Be it enacted by the General Assembly of Virginia, That sec-
ion fifty of the Tax Code of Virginia be amended and re-enacted so
1s 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 ;

(b) Income accumulated in trust for the benefit of unborn or

unascertained persons or persons with contingent interests ;

(c) Income held for future distributions under the terms of the
will or trust;

(d) Income which is to be distributed to the beneficiaries period-
ically, 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
settlement permitted by subdivision three ot 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 tax-
payers, 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 tc
or permanently set aside for the purposes and in the manner specifiec
in subsection (m) of section twenty-five of the Tax Code of Virginie
or is to be used exclusively for religious, charitable, scientific, literary
or educational purposes or for the prevention of cruelty to children o1
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 eact
beneficiary’s distributive share of such net income, whether or nol
distributed before the close of the taxable year for which the returt

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 re-
spect 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 fidu-
ciary, 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 sec-
tion, 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 subdivision one of this section, the tax shall not be paid
by the fiduciary, but there shall be included in computing the net in-
come 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 accounting period of such estate
or trust ending within the fiscal or calendar year upon the basis of
which such beneficiary’s net income is 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.