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Sale of Interest in Trust; Negative Capital Accounts; Final Regs on Transfer for Value

Steve Gorin, CPA

Thompson Coburn LLP

Thursday, February 27, 2020 | 10:00 AM EDT

  • CPA


Subject Area

Upcoming Webinars

Course Description

First, the IRS has issued private letter rulings deeming an income taxable sale when a trustee commuted a trust. We will review the rules on whether changes to a trust will trigger income tax consequences. 

Next, the IRS has started requiring partnerships to report “tax basis” capital accounts, presumably with an eye toward scrutinizing “negative basis.” “Negative basis” is the colloquial description where liabilities allocated to one’s partnership interest exceed basis, so that the disposition would be subject to income tax; and the IRS may be seeing whether those are ripe for current taxation. We will briefly review the reporting and the income tax planning. Finally, on Halloween final regulations were issued rewriting the rules of when a transfer of a life insurance policy will cause the death benefit to be subject to income tax.

This webinar will go through the basics of the new rules and will cover : 

  • Trust Divisions, Mergers, and Commutations
  • Commutation vs Mere Division
  • Consequences of Changes in Liability Allocations 
  • Tax Basis Capital Reporting
  • Special Rules

Learning Objectives

  • To learn about the consequences when a modification or other change to a trust trigger income tax.
  • To understand which modifications or other changes to trusts definitely avoid income tax, which definitely trigger income tax, and what is uncertain.
  • To learn the Strategy of minimizing any adverse income tax consequences of a modification or other change to a trust.
  • To get an overview of basic income tax planning for partnership interests with liabilities in excess of basis.
  • To know when a transfer of a policy will trigger income taxation of its death benefit, including changes arising from 2017 tax reform and changes to the "rules that apply" even if 2017 tax reform does not apply.

Who Should Attend?

  • Accountant
  • Accounting Managers
  • Tax Accountant (Industry)
  • Tax Attorney
  • Tax Director (Industry)
  • Tax Firm
  • Tax Managers