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H.B. 888
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VETOES
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(2) An income tax or any other tax that is imposed upon the fiduciary or
a beneficiary as a result of a transaction involving or a distribution from the estate or
trust; or
(3) [The] SUBJECT TO SUBSECTION (B) OF THIS SECTION, THE
ownership by an estate or trust of an interest in an entity whose taxable income,
whether or not distributed, is includable in the taxable income of the estate, trust, or
a beneficiary.
(B) A TRUSTEE SHALL MAKE AN ADJUSTMENT FROM PRINCIPAL TO INCOME
TO COMPENSATE AN INCOME BENEFICIARY FOR TAXES PAID OR PAYABLE BY THE
INCOME BENEFICIARY IN RESPECT OF THE TAXABLE INCOME OF AN ENTITY THAT IS
TAXABLE TO THE INCOME BENEFICIARY BUT THAT IS DISTRIBUTED TO THE
TRUSTEE AND ALLOCATED TO PRINCIPAL.
[(b)](C) (1) If the amount of an estate tax marital deduction or charitable
contribution deduction is reduced because a fiduciary deducts an amount paid from
principal for income tax purposes instead of deducting it for estate tax purposes, and
as a result estate taxes paid from principal are increased and income taxes paid by an
estate, trust, or beneficiary are decreased, each estate, trust, or beneficiary that
benefits from the decrease in income tax shall reimburse the principal from which the
increase in estate tax is paid.
(2) The total reimbursement must equal the increase in the estate
tax to the extent that the principal used to pay the increase would have qualified for
a marital deduction or charitable contribution deduction but for the payment.
(3) The proportionate share of the reimbursement for each estate,
trust, or beneficiary whose income taxes are reduced must be the same as its
proportionate share of the total decrease in income tax. An estate or trust shall
reimburse principal from income.
SECTION 2. AND BE IT FURTHER ENACTED, That this Act applies to each
trust or decedent's estate existing on or after the effective date of this Act.
SECTION 3. AND BE IT FURTHER ENACTED, That this Act shall take
effect October 1, 2002.
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May 16, 2002
The Honorable Casper R. Taylor, Jr.
Speaker of the House
State House
Annapolis MD 21401
Dear Mr. Speaker:
In accordance with Article II, Section 17 of the Maryland Constitution, I have today
vetoed House Bill 888 - Commercial Law - Uniform Commercial Code - Secured
Transactions - Scope.
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This bill exempts from the payment rights that must be assignable under Title 9 of
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- 5258 -
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