HRS § 235-4.5 — Taxation of trusts, beneficiaries; credit


§235-4.5 Taxation of trusts, beneficiaries;
credit. (a) There shall be excluded from gross income any intangible
income, such as dividends and interest, earned by a trust sited in this State
to the extent that, during the taxable year of the trust, the beneficial
interest in the trust shall be held by a beneficiary or beneficiaries residing
outside this State. This exclusion shall not apply to income received from
real property held in a land trust formed under chapter 558.
(b) If a trust sited in this State owns one
hundred per cent of the stock of a foreign corporation which does not engage in
an active trade or business but acts solely as a holding company receiving
intangible income, such as dividends and interest, the intangible income of the
foreign corporation shall be excluded from gross income for Hawaii income tax
purposes but only to the extent that the income of the trust beneficiaries is
excluded from taxation under subsection (a). As used in this section, foreign
corporation means a corporation not created or organized in the United States
or under the laws of the United States, Hawaii, or any other state.
(c) Any resident beneficiary of a trust with a
situs in another state may claim a credit for income taxes paid by the trust to
the other state on any income received which is attributable to assets other
than intangibles.