TRUSTS.

For the purpose of the income tax, income of estates and trusts may be divided into two classes:

First: Income, the tax upon which is imposed upon the estate or trust and the tax paid by the fiduciary, consisting of (a) Income received by estates of deceased persons during the period of administration or settlement except as provided in "f" below;

(b) Income accumulated in trust for the benefit of unborn or unascertained persons or persons with contingent interests;

(c) Income held in trust for future distribution under the terms of the will or trust.

Second: Income, the tax upon which is imposed upon and paid by the beneficiaries, consisting of

(d) Income which is to be distributed to beneficiaries period. ically whether or not at stated intervals;

(e) Income collected by the guardian of an infant to be held or distributed as the court may direct;

(f) Income of the estate of any deceased person which during the period of administration or settlement is properly paid or credited to any legatee, heir or other beneficiary.

B. RESIDENT AND NONRESIDENT ESTATES AND TRUSTS DISTINGUISHED.

For the purpose of the income tax, estates and trusts are (a) resident estates and trusts, or (b) nonresident estates and trusts. If the decedent was at the time of his death a resident of New York State, his estate is a resident estate and any trust created by his will is a resident trust. If the decedent was at the time of his death a nonresident, his estate is a nonresident estate and any trust created by his will is a nonresident trust. If the creator of a trust was at the time the trust was created a resident of New York State, the trust is a resident trust. Conversely, if the creator of a trust was at the time the trust was created a nonresident of the State, the trust is a nonresident trust. The residence or situs of the fiduciary does not in any sense control in the classification of estates and trusts as resident or nonresident.

C. INFORMATION (NON-TAXABLE) RETURNS ON FORM 205 FOR ESTATES AND TRUSTS. Every fiduciary or at least one of joint fiduciaries (except receivers appointed by authority of law and in possession of part only of the property of the taxpayer) of every estate or trust, resident or nonresident, must make an information return on Form 205, if any beneficiary receives or is entitled to a diatributive share of taxable income of $1,000 or over during the taxable year in the following cases:

(a) Income which is to be distributed to beneficiaries periodically, whether or not at stated intervals,

(b) Income collected by the guardian of an infant to be held or distributed as the court may direct,

(e) Income of the estate of any deceased person which during the period of administration or settlement, is properly paid or credited to any legatee, heir or other beneficiary.

No tax is to be paid by the fiduciary on this return as the income is taxable to the beneficiaries, but there shall be included in computing the net income of each beneficiary, his distributive share, whether distributed or not, of the net income of the estate or trust for the taxable year.

D. TAX RETURNS ON FORM 200 OR 201 FOR

ESTATES AND TRUSTS.

The fiduciary of every resident estate or trust must make a tax return on Form 200 or 201 and the fiduciary of every nonresident trust or estate must make a tax return on Form 200 or 201a and pay the tax on the taxable income of each estate or trust taxed as an entity, having a net income of $1,000 or more during the taxable year in the case of

(a) Income received by estates of deceased persons during the period of administration or settlement;

(b) Income accumulated in trust for the benefit of unborn or unascertained persons or persons with contingent interest.

(e) Income held for future distribution under the terms of a will or trust.

In (a) the fiduciary is entitled to deduct the amount of income properly paid or credited to any beneficiary. In the absence of any specific allocation of income under the will or deed of trust every distribution shall be deemed to apply ratably to taxable and non-taxable income of the estate or trust.

The fiduciary of a resident estate or trust is entitled to a personal exemption of $1,000 in ascertaining the tax liability of the estate or trust. The fiduciary of a nonresident estate or trust is not entitled to any personal exemption whatever.

E. TAX RETURNS FOR BENEFICIARIES. Every fiduciary must make a return of income on Form 200 or 201 for every individual whose entire income is in charge of such fiduciary, if such individual is a resident and his net income is $2,000 or over, if living with husband or wife, or $1,000 or over in other cases. If such individual is a nonresident, the fiduciary must make a return of income of such individual on Form 200-a or 201-a, regardless of the amount of his taxable income. In all such cases, the fiduciary must pay the tax duo thereon.

F. RETURN FOR DECEDENT.

If the net income of a decedent from the beginning of a taxable year to the date of his death is $1,000, if unmarried, or $2,000 if married and living with wife or husband, the execu tor or administrator shall make a tax return for such decedent on Form 200 or 201 if he was a resident, or on Form 200-a or 201-a if he was a nonresident, and pay the tax due thereon.

G.

RETURNS WHERE MORE THAN ONE TRUST. In the case of two or more trusts the income of which is taxable to the beneficiaries, which were created by the same person and are in charge of the same trustee, the trustee may at his option make a single return on Form 205 for all such trusts, notwithstanding that they may arise from different instruments. When, however, a trustee holds trusts erented by different persons for the benefit of the same beneficiary, he shall make a return on Form 205 for each trust separately.

H. ACCRUED OR RECEIVED INCOME. Fiduciaries may make their return

(a) On a cash basis, that is reporting income received and expenses, etc., paid or

(b) On an accrual basis, that is showing income accrued and expenses, etc., incurred or accrued,

in accord with the method of accounting regularly employed in keeping the accounts of the estate or trust provided such method clearly reflects its true income. If the books are not kept on the accrual basis, fiduciaries should report income received and expenses paid, but in any event, must report all the income of the estate or trust even if not entered on the books.

If income is reported on the cash basis there must be included all income constructively received, such as bank interest credited or interest coupons due and collectible, but not collected.

I. PERIOD TO BE COVERED BY RETURN. The dates on which the period covered by the return began and ended, if other than the calendar year 1919, must be plainly stated at the head of the return. If the books of the estate were regularly closed in 1919 at the end of some month other than December, the return must be made on the basis of the fiscal year which ended in 1919.

J. WHEN AND WHERE RETURNS SHOULD FE

FILED.

This return should be filed at the office of the New York State Income Tax Bureau, Albany, N. Y., and should be sent or mailed on or before March 15, 1920. Penalties attach for failure to file return within the time required by law.

NOTE

SPECIFIC INSTRUCTIONS

INSTRUCTION

(a) Salaries, wages and other compensation received as an official or employee of the United States in civil, military or naval service.

(b) Interest upon bonds or other obligations of the United States

(c) Interest on securities issued under the July 17. 1916, and on bonds of the War Fiaprovisions of the Federal Farm Loan Act of ance Corporation

(d) Interest on bonds or other obligations of the State of New York or of any munic ipal corporation or political subdivision of the State of New York (but interest on the obligations of other states and their political subdivisions is taxable)

(e) Interest on bonds or other obligations on which the luvestment tax was paid to the

INSTRUCTION 9-INCOME FROM INTEREST:

(a) Do not include interest accrued prior to January 1, 1919, even if received on or after that date.

(b) Interest on muricipal and State bonds, other than municipal or State bonds of the State of New York, is taxable, and must be reported here.

10- INCOME FROM

INSTRUCTION DIVIDENDS: (a) Report here all dividends including those from personal service corporations received in 1919 whether paid in cash. ut ock or other property except dividends received in 1919 which were declared payable to stockholders of record in 1918

(b) When dividends are paid in property or stock of the corporation the fair market value of property or stock of the corporation at the the made payable should be reported and a statement should be attached to the return explaining the valuation placed on such dividends

(c) The time when the profits distributed in dividends were earned by the corporation is of no significance under the State Income Tax Law that law differing somewhat in that respect from the Federal Income Tax Law. INSTRUCTION 11 INCOME FROM PARTNERSHIPS, AND FROM OTHER ESTATES AND TRUSTS.

Report the whare of the estate or trust (wheiber distributed or not) in the net income of a partnership. or other estate or trust, during the accounting period (whether fiscal or calendar year) of the partnership or ether estate or trust which cuded during your taxable year (whet ber fiscal or calendar year).

INSTRUCTION 12 INCOME FROM BUSINESS OR PROFESSION (INCLUDING FARMING): Estates or trusts Laving several businesses 717 separate schedule for each submit a business in the same form as that shown on the return and enter the combined total net income on item W of the return. Report here incurce from

(a) Sales of merchandise or of the prod19 of manufacturing, construction mining and agriculture

such

(b) Farms, fishing and logging operations (c) Business service. as transportafion, storage, laundering, hotel and restaurant service, livery and garage service, etc la general, report in item 12 any income in earning of which expenses for Isbor rent, etc., were incurret Do not report bere partnership profits which should be entered auder item 11 or dividends from personal service corporation, which should be entered ander New 10

The

Income received from the sale of lands buildings, equipment, stocks, bonds and other property not dealt in as a business should be reported under Items 14 or 15

Income Accrued or Received: See Instruc. tion on the reverse side of this page.

goods dealt la or kind of services rendered Item a-Kind of business: State kind of and whether manufacturer, jobber, wholesaler, retailer, importer, broker, etc

Items to an Cost of goods sold. Do not include cost of business equipment or furniture, expenditures for permanent improve. ments to property, or living and family expenses of any beneficiary.

OTHER BUSINESS DEDUCTIONS Interest: Do not include bore Interest on business indebtedness. All deductibly interest 18 to be claimed specifically as a deduction in item 18a.

Item p-Tores Do not include taxes for local benefits of a kind tending to increase the value of the property assessed as for paving, ete, nor income taxes.

Report here
Item 9-Repairs, depreciation and depletion

erty in usable condition;
(a) Minor repairs required to keep prop.

(b) A reasonable allowance for exhaustion, wear and tear to the extent not offset by re pairs, replacements or lowes claimed as deductions in this return,

(c) Any claim for depletion of mines, off

and gas wells or timber lands

State of New York between June 1, 1917, and May 14, 1919

(f) Gifts (other than those received as con. and property acquired under a will or by insideration for service rendered) and money beritance (but the income derived therefrom must be included in gross income, subject to the provisions of the law)

(g) Proceeds of life insurance policies and contracts paid On the death of the insured, to individual beneficiaries or the estate of the insured (but the income therefrom must be reported), but the acount by which the total received on surrender or expiration of policies during the life of the insured exceeds the total premiums paid, is income and must be reported in item 16

INSTRUCTION 14-PROFIT (OR LOSS) FROM THE SALE OR EXCHANGE OF STOCKS AND BONDS NOT DEALT IN AS A BUSINESS: Sale price. State the actual consideration fair market value of the property received. or price or in the case of an exchange, the

Cost Enter the original cost of the prop erty or if it was acquired before January 1, 1919 the fair market value on that date. For the manner of determining the fair market value on January 1, 1919, see regulations. INSTRUCTION 15-PROFIT (OR LOSS)

FROM THE SALE OR EXCHANGE OF
LANDS, BUILDINGS AND OTHER
PROPERTY NOT DEALT IN AS A
BUSINESS

Sale price State the actual consideration or price or in the case of an exchange the fair market value of the property received.

Cost: Enter in item F the cost of the prop erty or if it was acquired before January 1, 1919, its fair market value on that date.

Depreciation See Instruction 12 above. INSTRUCTION 18-GENERAL DEDUCTIONS:

the

(a) Interest on indebtedness: Show the total interest paid by the estate or trust. If it has no non taxable income, the fiduciary may de all the interest paid by the estate or Trust If it has non taxable income, fiduciary may deduct only a proportion of Do not claim depreciation for articles that the interest pod to be determined as fot have been taken into your inventory lows To the gross taxable income of the exThe amount claimed for depreciation abouid tate Or Trust add its on taxable income. be based on Bome approved accounting That will give its total gross" income, method and must be based on the cost of the The fiduciary is entitled to deduct such a property (or its value on January 1, 1919. if proportion of the interest paid by the es acquired before that date) Late or trust, as its gross taxable income Item - Bad Debts Report bere only debts bears to ha total gross income. which you have ascertained to be worthless and have charged off during the year In case of bad debts created prior to January 1 1919 only the fair market value on that date can be deducted as a loss Bad debts arising out of personal loans should be reported under item 18 INSTRUCTION

13 INCOME

FROM

RENTS AND ROYALTIES Amount of rent you accept crops or other property in lieu of cash rents, report the income as though the rent had been paid! in eash

(b) Tases Report here all taxes paid by the estate or trust not already claimed as a deduction in the foregoing part of the return except (a) taxes for local benefits of a kind tending to increase the value of the property sexed. (b) income taxes or (c) estate of inheritance taxes.

6) Contributions Report here the amount of gross income which pursuant to the terms or the will or deed creating the trust, was, during the period covered by this return. paid to of permanently set aside for the United Statée au te any state. territory or any political subdivision thereof. or the District Columbia or 10y corporation or association Repairs, depreciation and depletion See lu organized and operated exclusively for re struction 12 above ligious charitable. scientific or educational Tazer Report taxes on tented or lead purposes, or for the prevention of cruelty to Do property Bul include Lives for Jual children or animels to part of the net earn. benefits of a kind tending to increase the Ings of which inures to the benefit of any value of the property assessed private stockholder or individual. Interest Do not include interest incurred or continued to purchase or carry the property Deductible Interest should be claimed specifically under item 18a

Bad Debts Bad debts arising out of loans not connected with business, may be reported bere