This item discusses how the net investment income tax under Sec. 1411 applies to charitable remainder trusts and their beneficiaries.
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TOPICS / ESTATES
Types of Trusts
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.
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.
Election to Treat Qualified Revocable Trust as an Estate and the Separate-Share Rules
The election to treat a qualified revocable trust as an estate under Sec. 645 can result in some complicated accounting and tax consequences as well as some interesting tax planning opportunities because of the separate-share rules.
Recent Developments in Estate Planning: Part I
This article examines developments in estate, gift, and generation-skipping transfer (GST) tax and trust income tax between June 2012 and May 2013.
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.
IRS Once Again Confirms Unfavorable Position on Material Participation Standard for Trusts
Sec. 1411(a)(2) imposes a tax of 3.8% on estates and trusts on the lesser of their undistributed net investment income or the excess of their adjusted gross income over the dollar amount at which the highest tax bracket in Sec. 1(e) begins for the tax year.
New Decanting Statutes Offer Road Map for Escaping Fiduciary Tax and Updating Trust Terms
As trust decanting statutes proliferate, federal and state taxing authorities must wrestle with the income, estate, and gift tax issues raised by decanting.
Reporting Trust and Estate Distributions to Foreign Beneficiaries (Part II)
This two-part article explains the computations, payment, and reporting requirements for U.S. trust and estate distributions to foreign beneficiaries.
Reporting Trust and Estate Distributions to Foreign Beneficiaries (Part I)
This article explains the procedures and tax compliance issues that fiduciaries face before domestic trust or estate distributions are paid or allocated to foreign beneficiaries.
State Taxation of Trusts: Credit for Taxes Paid to Other States
The state income taxation of trusts and estates has become an increasingly complicated and challenging task for trustees and their tax advisers.
Computing the Includible Portion for Graduated GRATs
Recent regulations provide practitioners a reminder that planning discussions with clients considering graduated GRATs should include a review of the potential consequences presented if the grantor dies prematurely
Trust Deductions: Knight, Prop. Regs. Still Govern
Preparers of fiduciary tax returns for tax years 2011 and 2012 will not be required to unbundle fiduciary fees, but they still must treat payments readily identifiable as subject to the 2% floor separately from a bundled fiduciary fee.
Transfers to Skip Trusts in 2010: Not Necessarily Free from GST Tax
Planning opportunities exist to minimize the generation-skipping transfer tax by severing trusts to which generation-skipping transfers were made in 2010.
Tax Court Rules Notice Not Required for Crummey Powers
In Turner, the Tax Court ruled that actual notice of a benficiary’s Crummey withdrawal right is not required to satisfy the present-interest requirement for the gift tax annual exclusion.
Estate Tax Treatment of Grantor Retained Interests Clarified
The IRS issued final regulations providing guidance on the portion of property (held in trust or otherwise) includible in the grantor’s gross estate if the grantor has retained the use of the property or the right to an annuity, unitrust, graduated retained interest, or other payment from the property for life, for any period not ascertainable without reference to the grantor’s death, or for a period that does not in fact end before the grantor’s death.
Significant Recent Developments in Estate Planning (Part II)
This article covers gift tax, generation-skipping transfer (GST) tax, trust developments, and the annual inflation adjustments for 2011 relevant to estate and gift tax.
employee benefits & pensions
Profits interests: The most tax-efficient equity grant to employees
By granting them a profits interest, entities taxed as partnerships can reward employees with equity. Mistakes, however, could cause challenges from taxing authorities.
