A.R.S. tit. 43 ch. 13 — Arizona Revised Statutes Title 43 Chapter 13 — Estates And Trusts

43-1301. Definitions; estates and trusts In this chapter, unless the context otherwise requires: 1. "Arizona gross income" means: (a) Of a nonresident estate or trust, the taxable income from sources within this state for the taxable year, computed according to the internal revenue code. (b) Of a resident estate or trust, the taxable income for the taxable year, computed according to the internal revenue code. 2. "Arizona taxable income" of a resident or nonresident estate or trust means its Arizona gross income adjusted by the modifications specified in article 3 of this chapter. 3. "Nonresident estate or trust" means an estate or trust that is not a resident estate or trust. 4. "Resident estate" means the estate of a decedent who was a resident of this state at the time of death. 5. "Resident trust" means a trust of which the fiduciary is a resident of this state. If a trust has more than one fiduciary, the trust is a resident trust if at least one of the fiduciaries is a resident of this state. If a corporate fiduciary engaged in interstate trust administration is the sole fiduciary of a trust, or is a cofiduciary with a nonresident, the trust is a resident trust only if the corporate fiduciary conducts the administration of the trust in this state. 43-1311. Tax imposed on estates and trusts; rates; annual adjustment A. Except for trusts that are taxable as partnerships or corporations under the internal revenue code, the income of estates or of any kind of property held in trust is subject only to the income tax imposed by subsection B of this section. B. There shall be levied, collected and paid for each taxable year on the entire taxable income of every resident trust of this state and on the entire taxable income of nonresident trust that is derived from sources within this state taxes determined in the following manner: 1. For taxable years beginning from and after December 31, 2020 through December 31, 2021: If taxable income is: The tax is: $0 — $27,272 2.59% of taxable income $27,273 — $54,544 $686, plus 3.34% of the amount over $27,272 $54,545 — $163,632 $1,571, plus 4.17% of the amount over $54,544 $163,633 and over $5,991, plus 4.50% of the amount over $163,632 2. Subject to subsection C of this section, for taxable years beginning from and after December 31, 2021 through December 31 of the year in which notice is provided to the department pursuant to section 43-244, subsection A or subsection B, paragraph 1: If taxable income is: The tax is: $0 — $27,272 2.55% of taxable income $27,273 and over $695, plus 2.98% of the amount over $27,272 3. Subject to subsection C of this section, for taxable years beginning from and after December 31 of the year in which notice is provided to the department pursuant to section 43-244, subsection A or subsection B, paragraph 1 through December 31 of the year in which notice is provided to the department pursuant to section 43-244, subsection B, paragraph 2: If taxable income is: The tax is: $0 — $27,272 2.53% of taxable income $27,273 and over $690, plus 2.75% of the amount over $27,272 4. For taxable years beginning from and after December 31 of the year in which notice is provided to the department pursuant to section 43-244, subsection B, paragraph 2, the tax is 2.5% of taxable income. C. For each taxable year beginning from and after December 31, 2021, the department shall adjust the income dollar amount for each rate bracket prescribed by subsection B, paragraphs 2 and 3 of this section, as applicable, according to the average annual change in the metropolitan Phoenix consumer price index published by the United States department of labor, bureau of labor statistics. The revised dollar amounts shall be raised to the nearest whole dollar. The income dollar amounts for each rate bracket may not be revised below the amounts prescribed in the prior taxable year. 43-1314. Charge for estate or trust taxes upon estate or trust Taxes on income of an estate or trust which is taxable to the estate or trust are a charge upon the estate or trust and shall be paid by the fiduciary. 43-1315. Liability of beneficiaries for trust taxes If for any reason the taxes imposed on income of a trust are not paid when due and remain unpaid when such income is distributable to the beneficiaries, or if the income is distributable to the beneficiaries before the taxes are due and the taxes are not paid when due, such income shall be taxable to the beneficiaries when distributable to them, except that in the case of nonresident beneficiaries such income shall be taxable only to the extent it is derived from sources within this state. 43-1331. Additions to Arizona gross income; estates and trusts In computing Arizona taxable income of an estate or trust, the estate or trust's share of the fiduciary adjustment shall be added to Arizona gross income to the extent that the amount determined pursuant to section 43-1333 increases the estate or trust's Arizona gross income. 43-1332. Subtractions from Arizona gross income; estates and trusts In computing Arizona taxable income of an estate or trust, the following shall be subtracted from Arizona gross income: 1. The estate or trust's share of the fiduciary adjustment to the extent that the amount determined pursuant to section 43-1333 decreases the estate or trust's Arizona gross income. 2. In the case of an estate, the amount of federal estate taxes paid in the current taxable year. 43-1333. Fiduciary adjustment; allocation of shares A. The fiduciary adjustment for a resident estate or trust shall be the net amount of the additions and subtractions required by sections 43-1021 and 43-1022 including the addition required by section 43-1021, paragraph 1 or the subtraction required by section 43-1022, paragraph 3 if the estate or trust is a beneficiary of another estate or trust. B. In the case of a nonresident estate or trust, the fiduciary adjustment shall be the net amount of the additions and subtractions required by sections 43-1021 and 43-1022 that are derived from or related to income from sources within this state. C. The estate or trust and its beneficiaries shall apportion the fiduciary adjustment in the same proportion as their respective shares of federal distributable net income of the estate or trust. D. If the estate or trust has no federal distributable net income for the taxable year, the share of each beneficiary in the fiduciary adjustment shall be in proportion to the beneficiary's share of the estate or trust income for the year, under local law or terms of the instrument, that is required to be distributed currently and any other amounts of the income distributed in the year. Any balance of the fiduciary adjustment shall be allocated to the estate or trust. E. In the case of a nonresident beneficiary of an estate or trust, including a nonresident estate or trust that is a beneficiary of another estate or trust, the addition required by section 43-1021, paragraph 1 or the subtraction required by section 43-1022, paragraph 3 shall be limited to that portion of the beneficiary's share of the fiduciary adjustment that is derived from or related to income from sources within this state. 43-1361. Certificate of payment of taxes If the value of the assets of an estate at the death of the decedent exceeds twenty thousand dollars and if any beneficiary is a nonresident, the final account of the fiduciary shall not be allowed by the probate court unless the fiduciary obtains from the department and files with the court a certificate to the effect that all taxes imposed by this title upon the estate or decedent which have become payable have been paid, and that all taxes which may become due are secured by bond, deposit or otherwise. 43-1362. Request for certificate Within thirty days after receiving a request for a certificate, the department shall either issue the certificate or notify the person requesting the certificate of the amount of tax that shall be paid or the amount of bond, deposit or other security that shall be furnished as a condition of issuance of the certificate. 43-1363. Effect of certificate The certificate of the department shall not relieve the estate for which the fiduciary acts of liability for any taxes which may become due from the decedent or estate under this title after the issuance of the certificate. It also shall not relieve the fiduciary of the liability imposed by section 43-1364. 43-1364. Liability of fiduciary for nonpayment of estate or trust taxes Every fiduciary who knowingly pays in whole or in part any claim, other than claims for taxes, expenses of administration, funeral expenses, expenses of last illness and family allowance, against the person, estate or trust for whom or for which the fiduciary acts or who makes any distribution of the assets of the person, estate, other than estates allowed by law to be set aside to a surviving spouse or minor children, or trust, before the fiduciary satisfies and pays taxes, interest and penalties, except penalties due from a decedent, which are imposed by this title on the person, estate or trust for whom or for which the fiduciary acts and which are known by such fiduciary to constitute a claim against such person, estate or trust or which are known by such fiduciary to constitute a lien or charge on or against the assets of such person, estate or trust, is personally liable to the state for the taxes, interest and penalties to the extent of such payments and distributions. 43-1365. Request for prompt assessment In the case of income received or accrued during the lifetime of a decedent, or by the decedent's estate during the period of administration, the department shall send by physical mail or e-mail notices proposing to assess the tax and shall commence any proceeding in court without assessment for the collection of the tax within eighteen months after the fiduciary of the estate or any other person who is liable for the tax or any portion of the tax files a written request after the return is filed. After filing the request, a fiduciary may consent in writing to waive the limitation under this section. 43-1366. Notice of fiduciary relationship On giving notice to the department, any person acting in a fiduciary capacity shall assume the duties, rights and privileges of a taxpayer with respect to any tax imposed by this title. A person assumes these fiduciary duties until the person gives notice to the department that the fiduciary capacity is terminated. 43-1381. Credit for taxes paid to other state or country A. If an estate or trust is a resident of this state and also a resident of another state or country, the estate or trust is allowed a credit against the taxes imposed by this title for net income taxes imposed by and paid to the other state or country, subject to the following conditions: 1. The credit is allowed only for the proportion of the taxes paid to the other state or country that the income taxable under this title and also subject to tax in the other state or country bears to the entire income on which the taxes paid to the other state or country are imposed. 2. The credit shall not exceed the proportion of the tax payable under this title that the income subject to tax in the other state or country and also taxable under this title bears to the entire income that is taxable under this title. 3. The credit shall not be allowed for taxes paid to the other state or country on income from sources within this state. B. If any taxes paid to another state or country for which a taxpayer has been allowed a credit under this section are at any time credited or refunded to the taxpayer, the taxpayer shall immediately report this fact to the department. C. A tax equal to the credit allowed for the taxes credited or refunded by the other state or country is due and payable from the taxpayer on notice and demand from the department. D. For the purposes of this section, an estate or trust is considered to be a resident of the state or country that is legally entitled to tax the income of the estate or trust regardless of whether the income is derived from sources in that state or country. E. For purposes of this section, net income taxes imposed by another country shall include those taxes that qualify for a credit under sections 901 and 903 of the internal revenue code and the regulations thereunder. 43-1382. Credit for entity-level income tax A. For taxable years beginning from and after December 31, 2021, a credit is allowed against the taxes imposed by this title for a taxpayer who is a partner in a partnership or a shareholder of an S corporation that elects to pay the tax under section 43-1014. B. The amount of the credit is the portion of the tax paid by the partnership or S corporation under section 43-1014 that is attributable to the partner's or shareholder's share of income taxable in this state. C. The estate or trust and its noncorporate beneficiaries shall apportion the credit under this section in the same proportion as their respective shares of the federal distributable net income of the estate or trust from the partnership or S corporation. The noncorporate beneficiaries shall treat their share of the credit under this section as a credit under section 43-1077. D. If the allowable credit exceeds the taxes due under this title on the claimant's income, or if there are not taxes due under this title, the amount of the claim not used to offset taxes due under this title may be carried forward for not more than five consecutive taxable years as a credit against subsequent years' income tax liability.