[WSBAPT] tax question

[Kate Szurek]

Doug’s post nailed it!

I love this listserv . . .

Thanks to one and all.

Kate

From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Kate Szurek
Sent: Tuesday, September 20, 2016 1:25 PM
To: WSBA Probate & Trust Listserv
Subject: Re: [WSBAPT] tax question

Yes, the trusts were created by order of the court to hold, manage, and distribute the settlement proceeds fbo the minors.  Minors’ money; minors are sole beneficiaries during their lifetimes; minors get remainder when trusts terminate.

From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of John J. Sullivan
Sent: Tuesday, September 20, 2016 12:58 PM
To: WSBA Probate & Trust Listserv
Subject: Re: [WSBAPT] tax question

If they are designed and operated as grantor trusts they are disregarded entities like revocable trusts. Otherwise they are taxed at compressed rates except distributions of DNI are deducted.

Are they actually grantor trusts of court created for minors?

John J. Sullivan.

Sent from my iPhone

On Sep 20, 2016, at 12:36 PM, Kate Szurek <kate at skagitlaw.com<mailto:kate at skagitlaw.com>> wrote:
If I can, I’ll post this question to the tax section’s listserv, but perhaps I can get help from this list . . . which is nearly always so very helpful (and absolutely always a tremendous resource)!

We helped a number of families to create settlement trusts for the minor beneficiaries of parents killed in a local explosion (settlement of tort claims).  My question relates to taxation of the income generated by the settlement trusts.  The CPA for one of the trusts is concerned that trust income must be taxed at the compressed rates for trusts, and uses Form 1120-SF and instructions to prove that point.  One trust officer says that, because the trusts are grantor trusts, the income is taxed to the minor beneficiaries.  I would like a cite to the IRC or regs which resolves the question.

Any help will be much appreciated!!

Kate


<image001.jpg>
Kate Szurek, J.D., LL.M.
kate at skagitlaw.com<mailto:kate at skagitlaw.com>

Skagit Law Group, PLLC
P.O. Box 336 / 227 Freeway Drive, Suite B
Mount Vernon, WA  98273
360.336.1000
360.336.6690 (fax)
http://www.skagitlaw.com<http://www.skagitlaw.com/>

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