(a) The share of a nonresident estate or trust under subdivision (1) of subsection (a) of section 12-713, and the share of a nonresident beneficiary of any estate or trust under subsection (a) of section 12-711, in estate or trust income, gain, loss and deduction derived from or connected with sources within this state shall be determined as follows:

(1) There shall be determined the items of income, gain, loss and deduction which are derived from or connected with sources within this state, which would be included in the determination of federal adjusted gross income if the estate or trust were an individual and which enter into the definition of federal distributable net income of the estate or trust for the taxable year, including any such items from another estate or trust of which the subject estate or trust is a beneficiary. Such determination of source shall be made in accordance with the provisions of section 12-711 in the same manner as for a nonresident individual.

(2) The amounts determined under subdivision (1) of this subsection shall be allocated among the estate or trust and its beneficiaries, including, solely for the purpose of this allocation, resident beneficiaries, in proportion to their respective shares of federal distributable net income.

(3) The amount allocated under subdivision (2) of this section shall have the same character under this chapter as for federal income tax purposes. Where an item entering into the computation of such amounts is not characterized for federal income tax purposes, it shall have the same character as if it were realized directly from the source from which it was realized by the estate or trust, or as if it were incurred in the same manner as it was incurred by the estate or trust.

(b) (1) If the estate or trust has no federal distributable net income for the taxable year, the share of each beneficiary, including, solely for the purpose of this allocation, resident beneficiaries, in the net amount determined under subdivision (1) of subsection (a) of this section shall be in proportion to his share of the estate or trust income for such year, under local law or the governing instrument, which is required to be distributed currently and any other amounts of such income distributed in such year. Any balance of such net amount shall be allocated to the estate or trust.

(2) The commissioner may by regulation establish such other method or methods of determining the respective shares of the beneficiaries and of the estate or trust in its income derived from sources within this state as may be appropriate and equitable. Such method may be used by the fiduciary in his discretion whenever the allocation of such respective shares under subsection (a) of this section or subdivision (1) of this subsection would result in an inequity which is substantial in amount.

(June Sp. Sess. P.A. 91-3, S. 65, 168.)

History: June Sp. Sess. P.A. 91-3, S. 65, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991.