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- Tax News & Comment – April 2017 March 13, 2017
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- FROM FEDERAL AND NYS COURTS: Recent Developments & 2015 Decisions of Note May 13, 2016
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- Creating and Maintaining Flexibility in Wills and Trusts May 13, 2016
- Escaping the Quandary Posed by Unreported Foreign Accounts May 13, 2016
- Like Kind Exchanges Alive and Well: An Update May 13, 2016
- Tax News & Comment — March 2015 February 19, 2015
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- Executor and Trustee Commissions Under NY EPTL
- Legal Basis for Seeking Abatement of New York State Tax Penalties
- Executor and Trustee Commissions Under the New York EPTL
- Defeating The Right of Election in EPTL § 5-1.1-A
- Gain, Loss and Depreciation Issues in Like Kind Exchange
- Depreciation Recapture
- Use of Disclaimers in Pre and Post-Mortem Estate Planning
- Modifying or "Decanting" Irrevocable Trusts
- Installment Sales in Real Estate Transactions
- The IRC § 2036 Trap in Planning With FLPs & Grantor Trusts
Tag Archives: promissory note
INSTALLMENT SALES OF ASSETS TO “DEFECTIVE” GRANTOR TRUSTS
Installment sales of assets to grantor trusts indirectly exploit income tax provisions enacted to prevent income shifting at a time when trust income tax rates were much lower than individual tax rates. Specifically, the technique capitalizes on different definitions of “transfer” for transfer tax and grantor trust income tax purposes. The resulting trusts are termed “defective” because the different definitions of “transfer” result in a serendipitous divergence in income and transfer tax treatment when assets are sold by the grantor to his own grantor trust. Continue reading
INSTALLMENT SALES OF ASSETS TO GRANTOR TRUSTS
Installment sales of assets to irrevocable grantor trusts is one of the most powerful estate planning techniques available today. Sales to “intentionally defective” irrevocable grantor trusts capitalize on different definitions of “transfer” for income and transfer tax purposes. Following such a sale, the grantor reports income tax on trust income. However, the grantor no longer owns the assets for gift and estate tax purposes. Therefore, the trust assets (and appreciation) will be removed from the grantor’s gross estate. Assets sold to the trust may consist of stock in a closely held business, real estate, marketable securities, or limited partnership interests. The trust may even hold S Corporation stock without jeopardizing the election. Continue reading
