Cal. Code Regs. tit. 18 § 17743
If there are two or more fiduciaries of a trust, and one or more are residents and one or more are nonresidents, and all the beneficiaries are nonresidents, the trust is taxable upon (a) all net income (less the deductions allowed under Article 1 of Chapter 9 (Section 17731 and following)) from business carried on within this State, from real or tangible personal property located in this State, and from intangible personal property having a business or taxable situs in this State (see Reg. 17952); and (b) that proportion of the net income (less the deductions allowed under Article 1 of Chapter 9 (Section 17731 and following)) from all other sources which the number of fiduciaries who are residents of this State bears to the total number of fiduciaries.
EXAMPLE (1). B, a resident, and C, a nonresident of this State, are the trustees of a trust created by A. All the beneficiaries are nonresidents. During the year 1980, the trust received $60,000 as rent from real and tangible personal property located in, and from business carried on in this State, from which expenses of $10,000 were deducted, $60,000 from real and personal property located, and business carried on, outside this State from which expenses of $10,000 were deducted, and $50,200 income from stocks and bonds, none of which had a business or taxable situs in this State. None of the income was paid or credited to the beneficiaries during the year. The $50,000 income from real and personal property located in, and business transacted in this State is taxable. Since there are two fiduciaries, one of which is a resident of this State, one-half of the balance of the income of the trust is likewise taxable to the trust. Thus, the taxable income amounts to $100,100 ($50,000 from property located in this State, plus one-half of $100,200 which is the remainder of the trust's income).
EXAMPLE (2). E, a resident, and F and G, nonresidents of this State, are the trustees of a trust created by D. All of the beneficiaries are nonresidents. The corpus of the trust consists entirely of stocks and bonds and property located outside this State. One-third of the income taxable under Section 17742 (i.e., net income less the deductions allowed under Article 1 of Chapter 9), which is the proportion of total income taxable which the number of fiduciaries who are residents of this State bears to the total number of fiduciaries, is taxable to the trust.
Cal. Code Regs. Tit. 18, § 17743
2. Editorial correction of subsection (a) (Register 83, No. 19).
Note: Authority cited: Section 19253, Revenue and Taxation Code. Reference: Section 17743, Revenue and Taxation Code.
2. Editorial correction of subsection (a) (Register 83, No. 19).