Tag: NIIT

Code Sec. 1411 Material Participation by Trusts— Part 2

~ lsaret

Lewis Saret authored the following column, published in CCH Taxes – The Tax Magazine, The Estate Planner: Code Sec. 1411 Material Participation by Trusts – Part 2.

This column, the second of a two-part column, concludes a series of interrelated columns dealing with the Code Sec. 1411, 3.8-percent net investment income tax (NIIT). It discusses material participation of trusts and estates, analyzing several factors that may be relevant to the determination of material participation by trusts and estates.

The full column may be downloaded by clicking the following link: Material Participation by Trusts Part 2.

Income Tax Alert: Tax Court Rules That Trust Qualifies For Passive Activity Exception

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On March 27, 2014, the U.S. Tax Court issued its decision for the case of Frank Aragona Trust et al. v. Commissioner, 142 T.C. No. 9, No. 15392-11 (2014). The Court held that the Frank Aragona Trust (“the Trust”) qualified for the Internal Revenue Code (“IRC”) Sec. 469(c)(7) passive activity exception. The Tax Court found that a trust is capable of performing personal services through its individual trustees and that the Trust materially participated in real property trades or business. It concluded that the Trust’s rental activities were consequently not passive.

In light of the recent imposition of the 3.8 % Net Investment Income Tax (NIIT), this ruling is especially important because any income derived from trade or activities in which a trust or estate materially participates would not be subject the NIIT. Continue reading “Income Tax Alert: Tax Court Rules That Trust Qualifies For Passive Activity Exception” →

Code Sec. 1411 Material Participation by Trusts & Estates (Part 1) – Current Status and Planning

~ lsaret

Lewis Saret authored the following column, published in CCH Taxes – The Tax Magazine, The Estate Planner: Code Sec. 1411 Material Participation by Trusts & Estates (Part 1) – Current Status and Plannning.

“This column, the first of a two-part column, concludes a series of interrelated columns dealing with the Code Sec. 1411, 3.8-percent net investment income tax (NIIT). This column deals with material participation of trusts and estates and recaps various planning suggestions that have been made to mitigate the NIIT.”

The full column may be downloaded by clicking the following link: Material Participation of Trusts & Estates Part 1 Continue reading “Code Sec. 1411 Material Participation by Trusts & Estates (Part 1) – Current Status and Planning” →

Happy New Year from the Treasury: The Final 3.8-Percent Net Investment Income Tax Regs-Part II (May 2014)

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Lewis Saret authored the following column, published in CCH Taxes – The Tax Magazine, The Estate Planner: Happy New Year from the Treasury: The Final 3.8-Percent Net Investment Income Tax Regs-Part II.

“On December 2, 2013, the Treasury published final regulations (“Final Regulations”) with respect to Code Sec. 1411, which finalized the proposed regulations that Treasury released on November 30, 2012 (“Proposed Regulations”). In addition to the Final Regulations, the Treasury and the IRS contemporaneously published a new set of proposed regulations (“New Proposed Regulations”) relating to Code Sec. 1411. Part I of this column began to discuss the Final Regulations. This column, Part II, continues where Part I left off and concludes the discussion.”

Continue reading “Happy New Year from the Treasury: The Final 3.8-Percent Net Investment Income Tax Regs-Part II (May 2014)” →

Happy New Year from the Treasury: The Final 3.8-Percent Net Investment Income Tax Regs-Part I (March 2014)

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Lewis Saret authored the following column, published in CCH Taxes – The Tax Magazine, The Estate Planner: Happy New Year from the Treasury: The Final 3.8-Percent Net Investment Income Tax Regs-Part I.

“The health care legislation enacted in 2010, often referred to as “Obamacare,” included a significant tax provision, the Unearned Income Medicare Contribution, which has generally been referred to as the 3.8-Percent Net Investment Income Tax (NIIT). The NIIT has received a significant amount of attention among tax professionals. On November 30, 2012, the Treasury released proposed regulations that provide guidance with respect to Code Sec. 1411 (“Proposed Regs”). In response to the Proposed Regs, the IRS received numerous comments. On December 2, 2013, the Treasury published final regulations (“Final Regs”) with respect to Code Sec. 1411. In addition to the Final Regs, the Treasury and the IRS contemporaneously published a new set of proposed regulations (“New Proposed Regs”). This column, the first of a planned two-part series, will summarize the key provisions of the Final Regs.” Continue reading “Happy New Year from the Treasury: The Final 3.8-Percent Net Investment Income Tax Regs-Part I (March 2014)” →