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(A) There shall be allowed as a deduction in computing the taxable income of the estate or trust the
amount of the income of the estate or trust for the taxable year which is to be distributed currently by
the fiduciary to the beneficiaries, and the amount of the income collected by a guardian of an infant which
is to be held or distributed as the court may direct, but the amount so allowed as a deduction shall be
included in computing the taxable income of the beneficiaries, whether distributed to them or not. Any
amount allowed as a deduction under this Subsection shall not be allowed as a deduction under
Subsection (B) of this Section in the same or any succeeding taxable year.
(B) In the case of income received by estates of deceased persons during the period of administration or
settlement of the estate, and in the case of income which, in the discretion of the fiduciary, may be either
distributed to the beneficiary or accumulated, there shall be allowed as an additional deduction in
computing the taxable income of the estate or trust the amount of the income of the estate or trust for
its taxable year, which is properly paid or credited during such year to any legatee, heir or beneficiary but
the amount so allowed as a deduction shall be included in computing the taxable income of the legatee,
heir or beneficiary.
(C) In the case of a trust administered in a foreign country, the deductions mentioned in Subsections (A)
and (B) of this Section shall not be allowed: Provided, That the amount of any income included in the
return of said trust shall not be included in computing the income of the beneficiaries.
SEC. 62. Exemption Allowed to Estates and Trusts. - For the purpose of the tax provided for in this Title,
there shall be allowed an exemption of Twenty thousand pesos (P20,000) [39] from the income of the estate
or trust.
SEC. 63. Revocable trusts. - Where at any time the power to revest in the grantor title to any part of the
corpus of the trust is vested (1) in the grantor either alone or in conjunction with any person not having a
substantial adverse interest in the disposition of such part of the corpus or the income therefrom, or (2)
in any person not having a substantial adverse interest in the disposition of such part of the corpus or the
income therefrom, the income of such part of the trust shall be included in computing the taxable income
of the grantor.
SEC. 64. Income for Benefit of Grantor. (A) Where any part of the income of a trust (1) is, or in the discretion of the grantor or of any person not
having a substantial adverse interest in the disposition of such part of the income may be held or
accumulated for future distribution to the grantor, or (2) may, or in the discretion of the grantor or of any
person not having a substantial adverse interest in the disposition of such part of the income, be
distributed to the grantor, or (3) is, or in the discretion of the grantor or of any person not having a
substantial adverse interest in the disposition of such part of the income may be applied to the payment
of premiums upon policies of insurance on the life of the grantor, such part of the income of the trust
shall be included in computing the taxable income of the grantor. `
(B) As used in this Section, the term 'in the discretion of the grantor' means in the discretion of the
grantor, either alone or in conjunction with any person not having a substantial adverse interest in the
disposition of the part of the income in question.
SEC. 65. Fiduciary Returns. - Guardians, trustees, executors, administrators, receivers, conservators and
all persons or corporations, acting in any fiduciary capacity, shall render, in duplicate, a return of the
income of the person, trust or estate for whom or which they act, and be subject to all the provisions of
this Title, which apply to individuals in case such person, estate or trust has a gross income of Twenty
thousand pesos (P20,000) [40] or over during the taxable year. Such fiduciary or person filing the return for
him or it, shall take oath that he has sufficient knowledge of the affairs of such person, trust or estate to
enable him to make such return and that the same is, to the best of his knowledge and belief, true and
correct, and be subject to all the provisions of this Title which apply to individuals: Provided, That a return
made by or for one or two or more joint fiduciaries filed in the province where such fiduciaries reside;
under such rules and regulations as the Secretary of Finance, upon recommendation of the Commissioner,
shall prescribe, shall be a sufficient compliance with the requirements of this Section.
SEC. 66. Fiduciaries Indemnified Against Claims for Taxes Paid. - Trustees, executors, administrators and
other fiduciaries are indemnified against the claims or demands of every beneficiary for all payments of
taxes which they shall be required to make under the provisions of this Title, and they shall have credit
for the amount of such payments against the beneficiary or principal in any accounting which they make
as such trustees or other fiduciaries.