Section 16374 Of Article 6. Allocation Of Disbursements During Administration Of Trust From California Probate Code >> Division 9. >> Part 4. >> Chapter 3. >> Article 6.

. (a) A tax required to be paid by a trustee based on receipts allocated to income shall be paid from income.
  (b) A tax required to be paid by a trustee based on receipts allocated to principal shall be paid from principal, even if the tax is called an income tax by the taxing authority.
  (c) A tax required to be paid by a trustee on the trust's share of an entity's taxable income shall be paid as follows:
  (1) From income to the extent that receipts from the entity are allocated only to income.
  (2) From principal to the extent that receipts from the entity are allocated only to principal.
  (3) Proportionately from principal and income to the extent that receipts from the entity are allocated to both income and principal.
  (4) From principal to the extent that the tax exceeds the total receipts from the entity.
  (d) After applying subdivisions (a), (b), and (c), the trustee shall adjust income or principal receipts to the extent that the trust's taxes are reduced because the trust receives a deduction for payments made to a beneficiary.