the state of residency on all passive type income, such as interest, dividends, etc...............but active business income is usually taxed by the state of the location of the business.

So..........if the trust owns a business.........say a dry cleaners..........then the state in which that business is located taxes the individual on that element of the individual's income.  The form provided by the Trustees (K-1) to beneficiaries would disclose that data.

I would GUESS that the Trust would be owning financial instruments that would kick out interest and dividends and capital gains...............and those get taxed to the beneficiary's state of residency--------USUALLY.

I would bet that is the situation in MN.  MN instructions would disclose that.  I leave the MN returns to No. 2 son, who resides in MN.

Lots of exceptions------------used to be one of the big attractions to living in Florida was that Florida had no state income tax...............so a retired person could move to FL, and say, own 10 million in CDs of Iowa bank...........collect all that interest while living in FL, and pay no state tax on it.

However, FL started enforcing its tax on "intangibles"--------- if you owned certain financial instruments that had value.......say, 10 million.............you paid......I don't remember the rate.........something like 5% on the VALUE................so, FL got around its no state income tax, and got the money from another direction.

Further, FL had a hellacious estate tax..........big dogfights over that................actual case where fellow moved to FL, croaked, and the state from which he moved (I think NJ) went after the estate since he was not gone long enough to be declared out of that state.........and FL went after it because their residency rules were quick, so the guy qualifed as resident of both states.  I am told it wiped out his estate...........I never saw actual case and numbers, but the fellow who relayed the data was a tax guru, so I have no reason to disbelieve it.