Calculating Trust Accounting Income Under Uniform Principal and Income Act

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Wednesday, May 3, 2023

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Course Materials

This course will provide tax advisers and compliance professionals with an in-depth exploration of the fiduciary income calculations and determinations contained in the Uniform Principal and Income Act (UPIA). The panel will detail how to apply UPIA provisions to differentiate between corpus and income and identify trust provisions that can create challenges in allocating trust accounting income (TAI) under UPIA terms.

Description

Advisers preparing trust income tax returns face the initial challenge of calculating TAI, the amount generally available to the income beneficiaries of a trust or estate. Calculating TAI depends on the trust operating instrument and state law. Virtually every state has adopted the UPIA to determine how to allocate the income and corpus of a trust in full or with changes.

The UPIA details the proper financial treatment of payment streams from various asset sources. The UPIA outlines the default treatment for capital gains, depreciation, and amortization. Absent a specific and permissible provision in the trust documents, most states default to UPIA treatment. This becomes critical in making distribution decisions before the filing of the tax return.

Trust accountants and tax advisers also need to identify the critical differences between UPIA fiduciary accounting principles and income tax treatment to avoid tax consequences and beneficiary challenges.

Listen as our experienced panel provides a broad and practical guide to mastering fiduciary accounting income beyond the basics.

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Outline

  1. UPIA framework for determining principal and income in TAI calculations
  2. Components of TAI
  3. Differences between TAI and GAAP accounting
  4. Power to adjust
  5. UPIA provisions dealing with specific assets and payment streams
  6. Where a trust instrument may deviate from UPIA treatment

Benefits

The panel will discuss these and other essential questions:

  • Default UPIA provisions on treatment of bond and financial instrument periodic income and sales proceeds
  • Reconciling trust operating documents with UPIA provisions for TAI calculations
  • Interpreting UPIA provisions in circumstances where operating documents are silent or inconclusive
  • UPIA approach to timing and character of the distribution amount

Faculty

Rappaport, Matthew
Matthew E. Rappaport, Esq., LL.M.
Vice Managing Partner
Falcon Rappaport & Berkman

Mr. Rappaport counsels clients on technical and complex tax issues. He works closely with closely held business owners,...  |  Read More

Sanger, Howard
Howard L. Sanger
Attorney
Sanger & Molever

Mr. Sanger has over a quarter century of experience in estate planning, trust and estate administration, tax...  |  Read More

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