PLR 201928004: Ruling on Proposed Trust Division

In PLR 201928004, the IRS ruled on a proposed division of a trust into subtrusts. The PLR made the following rulings:

 1. The Proposed Division of Trust into the Subtrusts and the pro rata allocation of the assets of Trust among the Subtrusts will not cause Trust or any of the Subtrusts to lose its grandfathered status for purposes of the GST tax, or otherwise become subject to GST tax.

2. The Subtrusts will be treated as separate taxpayers for federal income tax purposes under § 643(f) of the Internal Revenue Code (Code).

3. The Proposed Division will not be treated as a distribution and cause any of the Subtrusts to recognize income, gain or loss from a sale or other disposition of property under § 61, § 661, § 662 or § 1001.

4. The adjusted basis and holding periods of each of the Subtrust assets will be the same as the adjusted basis and holding periods of the Trust assets under § 1015 and

§ 1223(2).

5. The Proposed Division of Trust and the pro rata allocation of the assets of Trust among the Subtrusts will not cause such assets to be includable in the gross estate of any of the beneficiaries under § 2035, § 2036, § 2037, or § 2038.

6. The Proposed Division of Trust and the pro rata allocation of the assets of Trust among the Subtrusts will not constitute a transfer subject to federal gift tax under § 2501.

Click here to see full PLR 201928004: Ruling on Proposed Trust Division.

Posted by Lewis J. Saret, Co-General Editor, Wealth Strategies Journal..

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