California has a very complicated system of fiduciary (trust) income tax. Taxation is based both on the residence of the trustees and the residence of the non-contingent (this has a special definition for fiduciary income tax purposes) beneficiaries. It is very important that you discuss this issue with a California attorney or CPA familiar with fiduciary income tax. You may need to discuss this with both a California attorney and CPA. This will apply regardless of the location that you use for the trust administration on the application for an EIN. The details of California fiduciary income tax are too complicated to explain briefly on this type of forum.
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Typically it is the location of the Trustees. Depending on the assets of the trust, it may be liable for income tax in multiple locations, but for Federal purposes, it is where the trustee is located.
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I would strongly urge you to retain an experienced estate administration and tax lawyer in New Mexico to advise you on this matter. You will want to make sure that you are paying taxes to the appropriate state and should also be receiving advice regarding the terms of the trust document itself. Good luck to you.
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