{"data":{"id":"us-ky/krs-386.500","jurisdiction":"us-ky","citation":"KRS 386.500","heading":"Adjustments between principal and income because of taxes.","body":"(1) A fiduciary may, with District Court approval, make adjustments between principal\nand income to offset the shifting of economic interests or tax benefits between\nincome beneficiaries and remainder beneficiaries which arise from:\n(a) Elections and decisions , other than those described in subsection (2) of this\nsection, that the fiduciary makes from time to time regarding tax matters;\n(b) An income tax or any other tax that is imposed upon the fiduciary or a\nbeneficiary as a result of a transaction involving,  or a distribution from, the\nestate or trust; or\n(c) The ownership by an estate or trust of an interest in an entity whose taxable\nincome, whether or not distributed, is includable in the taxable income of the\nestate, trust, or a beneficiary.\n(2) If the amount of an estate tax marital deduction or charitable contribution deduction\nis reduced because a fiduciary deducts an amount paid from principal for income\ntax purposes instead of deducting it for estate tax purposes and, as a result, estate\ntaxes paid from principal are increased and income taxes paid by an estate, trust, or\nbeneficiary are decreased, each estate, trust, or beneficiary that benefits from the\ndecrease in income tax shall reimburse the principal from which the increase in\nestate tax is paid . The total reimbursement shall equal the increase in the estate tax\nto the extent that the principal used to pay the increase would have qualified for a\nmarital deduction or charitable contribution deduction but for the payment. The\nproportionate share of the reimbursement for each estate, trust, or beneficiary whose\nincome taxes are reduced shall be the same as its proportionate share of the total\ndecrease in income tax. An estate or trust shall reimburse principal from income.","path":["KRS Chapter 386"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=35942","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:59:16Z","sha256":"2fc2741e27e28fb4243e3bcd26947d26278985c888f0109ae6a9d22e8787ddc5","source_id":"us-ky","stale":false,"prev":"us-ky/krs-386.498","next":"us-ky/krs-386.502"},"notice":"GroundRules: Original legal text. Not legal advice."}