Bill > SB376

This bill amends California's Personal Income Tax Law to modify the treatment of incomplete gift nongrantor trusts (IGNTs), which are specialized trusts where the donor has not completely transferred assets and retains some control. Specifically, the bill explicitly excludes charitable remainder trusts from the definition of IGNTs, ensuring they are not subject to the same tax reporting requirements. The bill clarifies that for an IGNT to avoid including its income in the grantor's gross income, the trust must meet certain conditions: the fiduciary must file a California Fiduciary Income Tax Return, make an irrevocable election to be taxed as a resident nongrantor trust, and distribute at least 90% of its distributable net income to a charitable organization. An IGNT is defined as a trust that is not considered a grantor trust under federal tax law and where the asset transfer is treated as an incomplete gift for tax purposes. The legislation also grants the Franchise Tax Board authority to prescribe regulations and guidance for implementing these provisions. Importantly, the bill includes a declaration that these amendments are not a change in existing law, but rather a clarification of current tax treatment.

Budget and Finance

https://leginfo.legislature.ca.gov/faces/billStatusClient.xhtml?bill_id=202520260SB376