1. A tax required to be paid by a trustee based on receipts allocated to income must be paid from income.
2. A tax required to be paid by a trustee based on receipts allocated to principal must be paid from principal, even if the tax is called an income tax by the taxing authority.
3. A tax required to be paid by a trustee on the trust’s share of an entity’s taxable income must be paid:
(a) From income to the extent that receipts from the entity are allocated only to income;
(b) From principal to the extent that receipts from the entity are allocated only to principal;
(c) Proportionately from principal and income to the extent that receipts from the entity are allocated to both income and principal; and
(d) From principal to the extent that the tax exceeds the total receipts from the entity.
4. After applying the provisions of subsections 1, 2 and 3, the trustee shall adjust income or principal receipts to the extent that the taxes on the trust are reduced because the trust receives a deduction for payments made to a beneficiary.
(Added to NRS by 2003, 1981; A 2009, 331)