Calculating Trust Accounting Income Under Uniform Principal and Income Act and Uniform Fiduciary Income and Principal Act

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.

I. Importance of principal and income allocation and basics

II. State adoption of UPIA and UFIPA

III. Ordering rules

IV. Where a trust instrument may deviate from UPIA or UFIPA treatment

V. UPIA Rules

VI. UFIPA Rules

VII. Capital gains allocated to income

VIII. Power to adjust under UPIA

IX. UPIA provisions dealing with specific assets and payment streams

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

Learning Objectives

After completing this course, you will be able to:

• Recognize when a trustee has the power to adjust
• Establish the UPIA framework for determining principal and income in TAI calculations
• Differentiate between TAI and GAAP accounting
• Understand the UPIA approach to timing and character of distributions
• Interpret UPIA provisions in circumstances where operating documents are silent, inconclusive, or in opposition to UPIA provisions

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite:

  Three years+ business or public firm experience preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of estate, gift and trust taxation including various trusts types, the unified credit, and portability.

  
  

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).