Planning for Deductions in Trusts and Estates: Excess Losses on Termination, Distributions, Charitable Contributions

Distributions, charitable contributions, and excess losses on termination dramatically impact the taxation of a trust and its beneficiaries. Proper planning can minimize taxation and maximize deductions for trusts and estates. Trusts and estates can take tax deductions for charitable contributions. Unlike individual deductions, these are not subject to adjusted gross income limitations, and these contributions can be made to foreign charities. However, there must be a provision for the contribution in the trust document or will.

IRC Section 661 governs distributions made by complex trusts. Complex trusts, unlike simple trusts, are not required to distribute all income but can accumulate accounting income. These trusts can deduct the income required to be distributed but not more than the trust's distributable net income for the year. The elimination of miscellaneous deductions by the Tax Act of 2017 paved the way for Section 67(e). This section states that trusts are not affected by the suspension of miscellaneous deductions and further that administrative costs incurred, which would not have been if assets weren't held in the trust or estate, are indeed deductible.

Planning for excess deductions on termination can provide significant tax deductions for beneficiaries. The trustee has discretion to allocate these deductions to various types of income and, ultimately, the trust or the beneficiary. Analyzing these deductions to ascertain the type of income each can offset and whether they are deductible by the trust or beneficiary can provide significant tax savings.

Listen as our panel of trust and estate experts explains how planning for deductions can substantially reduce taxes paid by trusts and estates and their beneficiaries and heirs.

1. Planning for deductions in trusts and estates: introduction
2. Distributions
3. Charitable deductions
4. Excess losses on termination
5. Trusts
6. Estates
7. Reporting deductions

This webinar will review these and other critical issues:

• Planning for excess deductions on termination to maximize tax savings
• Steps to ensure a trust's or estate's charitable contribution is deductible
• Reporting excess deductions on termination
• Allowable deductions under IRC Section 67(e)

Learning Objectives

After completing this course, you will be able to:

• Determine how planning can maximize deductions for trusts and estates
• Decide how to best allocate excess deductions on termination
• Ascertain differences in charitable deduction requirements for individuals and trusts
• Identify allowable deductions under IRC Section 67(e)

• 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).