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I have an estate with all assets located in the State of WA, with no CA source income. The estate has one fiduciary and beneficiary who is a Resident of WA and one fiduciary and beneficary who is a resident of CA. I understand the law regarding income retained at the Estate level where income is taxable to CA based on a ratio of CA resident fiduciaries and beneficaries to the total fiduciaries and beneficiaries. In this case, 50% of the fiduciaries and beneficiaries are residents of CA, so 50% of the estate income would be taxable to CA.
My question - If the income is distributed to beneficiaries, does the same pro-rata law apply where the beneficiaries are taxable on the ratio of fiduciaries/beneficiaries? This would include the non-resident beneficiary of CA who would be taxed in CA on the pro-rata income?
Thank you for your reply.