“Income” in the Trust and Estate Context

In the Monday, August 28, 2006 issue of the I.R.S. newsletter e-News For Tax Professionals, the Service reminds estate practitioners about the 2004 regulations regarding the definition of “income” for trusts and estates as follows:
   

In 2004, the IRS published new final regulations regarding the definition of “income” for trust and estate purposes, responding to changes in state law in this area.  In particular, these regulations concern those circumstances in which trust or estate distributions may be considered as carrying out income, with the associated income tax liability, to the beneficiaries of the trust or estate. However, questions submitted at recent liaison meetings and seminars indicate not all practitioners, administrators, and trustees are aware of the changes.