Trusts

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.

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.

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).

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.

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.

Computing the Charitable Tax Deduction for a Charitable Remainder Trust

The methods for calculating a charitable remainder annnuity trust and a charitable remainder unitrust are different because the CRUT income stream fluctuates with changes in the value of the trust property. The technicalities involved in determining the value of the income stream or the remainder interest are much more complex for a CRUT.

Alternatives to Form 1041 for Grantor Trusts

For most grantor trusts, filing Form 1041 is optional. Described in this item are alternative methods of reporting and the situations when an alternative reporting method is available.

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Get your clients ready for tax season

With the extended 2017 tax filing season drawing to a close, now is the time to get your practice and your clients ready for the 2018 season.

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2016 Best Article Award

The winners of The Tax Adviser’s 2016 Best Article Award are Edward Schnee, CPA, Ph.D., and W. Eugene Seago, J.D., Ph.D., for their article, “Taxation of Worthless and Abandoned Partnership Interests.”