Incomplete gift nongrantor trusts: Personal Income Tax Law.

Senator Valladares's proposal to amend California's Personal Income Tax Law clarifies the treatment of charitable remainder trusts by explicitly excluding them from incomplete gift nongrantor trust classifications. The measure modifies existing requirements that mandate including incomplete gift nongrantor trust income in grantors' gross income calculations.

The legislation maintains current provisions allowing incomplete gift nongrantor trusts to avoid grantor income inclusion when they meet specific criteria: filing timely California Fiduciary Income Tax Returns with irrevocable elections for resident nongrantor trust status, qualifying as nongrantor trusts under state law, and distributing at least 90 percent of net income to charitable organizations. Under the amendment, trusts qualifying as charitable remainder trusts under Section 664 of the Internal Revenue Code receive automatic exclusion from these requirements.

The Franchise Tax Board retains authority to issue implementing regulations and guidance without adhering to standard administrative rulemaking procedures. According to the bill's findings, these modifications codify existing interpretations rather than substantively altering current law.