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Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

    Intermediate

  • work Practice Area

    Tax Preparer

Date & Time
  • event Date

    Wednesday, January 17, 2024

  • schedule Time

    1:00 p.m. ET./10:00 a.m. PT

  • timer Program Length

    110 minutes

Credit Information

  • BARBRI is a NASBA CPE sponsor and this 110-minute webinar is accredited for 2.0 CPE credits.

  • BARBRI is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).

$197.00
CPE
ALL

This course will provide tax advisers and counsel with a drill down into the rules and practices covering the inclusion of capital gains in distributable net income (DNI) for trusts and estates. The panel will review the requirements within trust documents to allow treating capital gains as DNI and explore state and local requirements for inclusion of capital gains in fiduciary accounting income (FAI) where the trust's governing document does not contain such a provision.

Faculty

Jeremiah W. Doyle
Senior Vice President
Bank of New York Mellon, Corp

Mr. Doyle provides clients with integrated wealth management advice on how to hold, manage and transfer their wealth in a tax efficient manner. He is the editor and co-author of Preparing Fiduciary Income Tax Returns, a contributing author of Preparing Estate Tax Returns and Understanding and Using Trusts and a contributing author of Drafting Irrevocable Trusts in Massachusetts. He is a lecturer in law in the Graduate Tax Program at Boston University School of Law.

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Jacqueline Patterson
Partner
Buchanan & Patterson, LLP

Ms. Patterson specializes in tax, estate and financial transactions, with an emphasis on asset protection and succession planning. She advises grantors, fiduciaries and beneficiaries in matters involving the transfer, administration, investment and management of assets and is a consultant to attorneys and CPAs in fiduciary accounting, taxation and litigation. She has held Adjunct Faculty positions in the graduate tax programs at both USC and Golden Gate University. 

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Description

The treatment of capital gains held within a trust or estate is one of the more complex aspects of fiduciary accounting and taxation. The general rule is that an estate or trust must file a tax return and pay income tax on any undistributed net income.

Where the executor of the estate or administrator of the trust has the discretion, the general practice is to distribute income whenever possible. However, trust accounting rules and IRC 643 generally treat capital gains as part of the corpus of the trust.

The current tax treatment of trusts provides a significant incentive for getting capital gains out of a trust. Currently, trusts are taxed at the maximum rate on any capital gains above the statutory threshold ($15,200 in 2024).

Additionally, these amounts are subject to the 3.8 percent NIIT, which results in a trust's capital gains being potentially taxed at a much higher rate than an individual would pay. Taxpayers can usually achieve lower taxes by including capital gains in DNI rather than the corpus amount.

Getting the most beneficial treatment of capital gains income involves careful planning by estate attorneys, financial planners, and tax accountants. By including capital gains in DNI, taxpayers may realize overall lower taxes. Tax advisers must pay close attention to ensure the trust document and the trust return permit distribution of capital gains to beneficiaries as income.

Listen as our experienced panel delves into the complex intersection of FAI and IRS rules to provide tax advisers and preparers with best practices for making the most tax-advantaged treatment of trust capital gains.

Outline

  1. FAI under IRC Section 643
  2. Treas. Reg. Section 643(a)-3(b) provisions for including cap gains in DNI
    1. The instrument provides for inclusion in trust accounting income
    2. Allocated to corpus but treated as a distribution
    3. Actually distributed
  3. State unitrust rules
  4. Non-tax considerations

Benefits

The panel will review these and other key issues:

  • What are the general requirements of IRC 643 on the treatment of capital gains and FAI?
  • How can the trust document be structured--and interpreted--to allow the inclusion of capital gains in DNI?
  • What states or localities allow total-return-investing under the UPAIA?
  • What are local and state provisions that may allow capital gains inclusion in DNI?

NASBA Details

Learning Objectives

After completing this course, you will be able to:

  • Determine how to write a trust document to allow the inclusion of capital gains in DNI
  • Recognize the three methods for including capital gains in DNI
  • Discern the tax treatment of capital gains held within a trust or estate
  • Establish how to get the most beneficial tax treatment of capital gains
  • Identify the impact of making in-kind distributions

  • Field of Study: Taxes
  • Level of Knowledge: Intermediate
  • Advance Preparation: None
  • Teaching Method: Seminar/Lecture
  • Delivery Method: Group-Internet (via computer)
  • Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
  • Prerequisite: Three years+ business or public firm experience preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of estate, gift and trust taxation including various trusts types, the unified credit, and portability.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).