<html><head><meta http-equiv="content-type" content="text/html; charset=utf-8"></head><body dir="auto"><div>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. </div><div id="AppleMailSignature"><br></div><div id="AppleMailSignature">Are they actually grantor trusts of court created for minors?</div><div id="AppleMailSignature"><br></div><div id="AppleMailSignature">John J. Sullivan. <br><br>Sent from my iPhone</div><div><br>On Sep 20, 2016, at 12:36 PM, Kate Szurek <<a href="mailto:kate@skagitlaw.com">kate@skagitlaw.com</a>> wrote:<br><br></div><blockquote type="cite"><div>
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<p class="MsoNormal"><span style="font-size:12.0pt">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)!<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">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.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">Any help will be much appreciated!!<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">Kate<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman","serif";color:#1F497D"><image001.jpg><o:p></o:p></span></p>
<p class="MsoNormal"><b><i><span style="font-size:13.5pt;font-family:"Cataneo BT","serif";color:blue">Kate Szurek</span></i></b><span style="font-size:12.0pt;font-family:"Times New Roman","serif";color:black">, J.D., LL.M.<o:p></o:p></span></p>
<p class="MsoNormal"><a href="mailto:kate@skagitlaw.com"><span style="font-size:12.0pt;font-family:"Times New Roman","serif";color:blue">kate@skagitlaw.com</span></a><span style="font-size:12.0pt;font-family:"Times New Roman","serif";color:#1F497D"><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman","serif";color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoNormal"><b><i><span style="font-size:14.0pt;font-family:"Times New Roman","serif";color:#1F497D">Skagit Law Group, PLLC<o:p></o:p></span></i></b></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman","serif";color:#1F497D">P.O. Box 336 / 227 Freeway Drive, Suite B<o:p></o:p></span></p>
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