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Income Taxation of Fiduciaries and Beneficiaries (2008) Two-Volume Set

Income Taxation of Fiduciaries and Beneficiaries (2008) Two-Volume Set

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Income Taxation of Fiduciaries and Beneficiaries provides step-by-step guidance on the taxation of fiduciary income. This comprehensive guide for practitioners advising fiduciaries and beneficiaries in federal and state income tax matters covers the broad range of complex issues from charitable remainder trusts to nexus rules and their effect. Providing expert practical advice, Income Taxation of Fiduciaries and Beneficiaries helps the practitioner obtain the most advantageous outcomes for his/her fiduciary and beneficiary clients. Key feature: 35 case studies with filled-in forms 1041 and accompanying documents. The 2008 edition brings you up to date on the latest developments in this complex and constantly changing area. Highlights include: Detailed discussion of the application of the IRC §67(e) 2 percent reduction rules and the controversial proposed regulations that are based upon the government s win in the Knight (nee Rudkin) decision in the Second Circuit. Knight expanded the application of IRC §67(e) to items that could have been incurred by an individual, in extension of the law that used the word would have been incurred. The proposed regulations were issued despite the granting of certiorari by the Supreme Court, which then heard the arguments in November 2007 and affirmed the decision of the Second Circuit. · Coverage of Other events affecting fiduciary income tax include: Denial of use of the constructive trust doctrine by the IRS to determine taxable individuals; Additional rejection of the business trust plan for offsetting personal expenses with business or wage income (such claims resulted in accuracy-related penalties); Sham trust formation that resulted in jail sentencing and fraud penalties; Recognition of switch to total return from an income distribution provision based upon change in state law; how tax withholding, primarily foreign taxes, are factored into DNI by a gross-up, the withholdings then subject to credit or deduction based upon taxpayer election; No charitable deduction to a trust if the distribution is restricted by the governing instrument; A termination distribution is not subject to sale/exchange taxability treatment; the IRS issued a TAM that all but denies material participation by a fiduciary that owns a trade or business, so PAL treatment results; Designation of a trust or estate as beneficiary of an IRA or other retirement plan is not a taxable event taxable income only results from plan distributions; A trust and its beneficiaries can engage in a IRC §1031 tax-free like kind exchange; Use of the combined return election under IRC §645 to bring a revocable trust under favorable rules involving a foreign estate by a combined return election of the trust and the foreign estate. (including no accumulation distribution). Discussion of significant activity occurred affecting split-interest trusts: A trustee s sprinkling powers for determining individual payees cannot be subject to change by the donor unless the donor is the sole beneficiary of a CRT; CRTs must qualify from day one or qualified CRT status is not recognized; Special care is required regarding a testamentary CRT; it cannot be the source of payment of any related estate tax or non-qualification results; The IRS is liberal with respect to reformations by local court action to meet qualification tests; the Service denies such action where donor desired higher return from a NIMCRUT, when the document that was followed for years provided for a CRUT no scrivener s error existed; The IRS determines valuation of NIMCRUT interest on early termination using approach other than Treasury tables used for CRATs and CRUTs; Use of corporate blocker to eliminate exposure to unrelated business income (UBI)