Hill v. Estate of Richards

The opinion of the Court was delivered by

O’HERN, J.

This appeal concerns the proper allocation of federal income tax liability between the income and principal shares of a trust. Federal income tax law may disregard the law of trust and estates in determining whether a distribution to beneficiaries is of income or principal. In order to avoid the tracing of income, the Internal Revenue Code provides generally that, to the extent that a trust or estate has accumulated income during a tax year, any distributions from the trust during that tax year shall be treated as taxable income for federal…