Earlier this year, the Tax Court held that a trust qualified for the Sec. 469(c)(7) real estate professional exception and materially participated in its rental real estate business under Sec. 469(h) through the activities of its trustees.This item focuses on the material participation portion of the decision.
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TOPICS
Taxation of Estates & Trusts
Keeping Up With Increasingly Mobile Clients: Navigating U.S. Tax Reporting for U.S. Persons With Ties to Foreign Trusts
Despite the significant efforts of tax advisers to ensure their U.S. clients understand and comply with required tax and information-reporting forms on U.S. trust relationships, all too often transactions go unreported, even though penalties in these cases can be quite severe.
Recent Developments in Estate Planning: Part 2
This is the second in a two-part article examining developments in estate, gift, and generation-skipping transfer tax and trust income tax between June 2013 and May 2014. This article covers trust developments, the taxation of trusts under the new 3.8% net investment income tax, President Barack Obama’s estate and gift tax proposals, and inflation adjustments for 2014.
Fiduciary Fee Unbundling Rules Delayed Until 2015
In response to a comment that the current effective date of the new rules on fiduciary fees does not give fiduciaries enough time to implement them, the IRS amended T.D. 9664 to delay the date.
Recent Developments in Estate Planning: Part 1
This is the first in a two-part article examining developments in estate, gift, and generation-skipping transfer tax and trust income tax between June 2013 and May 2014.
Removing Capital Gains From Trusts
The implementation of the Uniform Principal and Income Act of 1997 (UPAIA) and the 2004 revisions to the regulations under Sec. 643 have provided fiduciaries with some flexibility in making distributions of capital gains to beneficiaries.
Tax Planning Opportunities With BAPTs
A new tax planning idea that the authors of this item call a Business Asset Protection Trust (BAPT) creates a variety of income tax planning opportunities touching on international transfer pricing, S corporation trust eligibility rules, Sec. 355 split-offs, and captive insurance companies. It also creates user-friendly internal swaps that do not need to meet the draconian requirements of Sec. 1031.
DINGs, DAPTs, and Tax Planning With Self-Settled Trusts
This item looks at a trust-planning strategy that has received greater attention recently—an arrangement that can allow trust income to avoid state income taxes.
Final Sec. 67(e) Regulations: The End of a Long Journey
Sec. 67(e) reached the end of a long and tortured journey recently, when the IRS issued final regulations defining, once and for all, which expenses of an estate or trust are classified as miscellaneous itemized deductions subject to the 2% floor and the alternative minimum tax.
Effective Date of Fiduciary Fee Unbundling Rules Delayed Until 2015
The new rules governing which costs of trusts and estates are subject to the 2% floor on miscellaneous deductions now apply to tax years beginning after Dec. 31, 2014, rather than to tax years beginning on or after May 9, 2014.
Final Regs. on Trust Expenses and 2% Floor on Miscellaneous Itemized Deductions
The IRS issued final regulations on the controversial question of which costs incurred by trusts and estates are subject to the 2% floor on miscellaneous deductions under Sec. 67(a).
Trust Can Qualify for Sec. 469(c)(7) Exception
The Tax Court held that a trustee’s activities in a trade or business of a trust was work performed by an individual, and, therefore, it was possible for a trust to qualify for the Sec. 469(c)(7) exception to the treatment of rental real estate activities as per se passive activities.
Final Rules on Fiduciary Fees Are Issued
The IRS issued final regulations on the controversial question of which costs incurred by trust and estates are subject to the 2% floor on miscellaneous deductions under Sec. 67(a).
Rev. Proc. 2014-18: Automatic Extension for Qualifying Estates to Elect Portability
IRS recently issued Rev. Proc. 2014-18, which provides an automatic extension for certain taxpayers to elect portability of the deceased spousal unused exclusion.
How the Sec. 1411 Tax Applies to CRTs and Beneficiaries
This item discusses how the net investment income tax under Sec. 1411 applies to charitable remainder trusts and their beneficiaries.
The Mechanics of Decanting
This item addresses the mechanics of decanting and provides guidance on how not to spill or otherwise compromise the trust assets.
Case Law Opens Options for Trusts Looking to Minimize State Income Taxes
Armed with two planning strategies derived from recent cases involving the taxation and administration of trusts, tax advisers can take steps to alleviate the state tax burden on undistributed trust income.
Coordinating Charitable Trusts and Private Foundations for the Business Owner: Complying With UBIT and Self-Dealing Rules
This item details some charitable giving options for owners of closely held businesses, the applicable unrelated business income and self-dealing rules, and best practices for taxpayers who have these charitable desires and restrictions.
Estates Get Simplified Method to Request Extended Time to Make Portability Election
The IRS issued a revenue procedure that provides executors of certain estates a simplified way to request an extension of time to make the “portability” election to transfer a deceased spouse’s unused estate tax exclusion to the surviving spouse
Trust Materially Participated in Real Estate Business
The Tax Court held that a trust materially participated in its rental real estate business and therefore could deduct the losses it incurred in conducting those activities as losses from nonpassive activities.
TAX PRACTICE MANAGEMENT
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