Taxation of Income - General Overview
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Character - A general rule about the character of income within an estate or a trust is that the entity does not change the character of the income within it when the income leaves the entity.
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Tax-free income remains tax-free.
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Ordinary income remains ordinary income.
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Capital gains remain capital gains.
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Qualified dividends remain qualified dividends.
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Taxation General Rule – If taxable at all, it is only taxable once.
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To the Trustor (if the Trust is a Grantor Trust); or
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To the Trust (or Estate) itself; or
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To the Beneficiary
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