IRS Crackdown on Abusive Trust Arrangements: Taxation, Audit Triggers, Reporting, DNI, Foreign Trusts

In the past year, the IRS has continued to crack down on abusive trust arrangements and transactions involving various trust types and planning techniques. Estate planners must ensure compliance with the Internal Revenue Code (IRC) and avoid any IRS examination triggers when structuring trusts and related transactions.

To combat abusive tax avoidance schemes, the IRS has issued numerous notices and guidance with an intense focus on how taxpayers utilize trusts. The IRS recognizes various types of legal trust arrangements commonly used for estate planning, charitable purposes, and holding of assets for beneficiaries. The income of a trust, from either foreign or domestic sources, is taxable to the trust, the beneficiary, or the grantor unless specifically exempted under the IRC. The distribution of income and any deductions appear to be the primary source of abusive trust arrangements in addition to provisions within trust documents and certain transactions.

Estate planners must grasp key concepts regarding the taxation of trusts under Subchapter J, the deduction for DNI, trusts and gift tax reporting obligations, issues stemming from foreign trusts, and other critical issues.

Listen as our panel discusses key areas of focus by the IRS in examining trust arrangements and related transactions, taxation of trusts and audit triggers, reporting issues and potential civil and criminal penalties, DNI, foreign trust challenges, and other items that are targeted in an IRS examination of certain trust arrangements.

1. Applicable tax rules and trust structures
2. IRS enforcement initiatives
3. Trust filing requirements
   1. Domestic trusts
   2. Foreign trusts
4. Best practices for estate planners and taxpayers

The panel will discuss these and other key issues:

• What are the applicable tax rules and reporting obligations for domestic and foreign trusts?
• What are the areas of focus of the IRS regarding abusive trust arrangements and transactions?
• How can estate planners and taxpayers avoid potential audit triggers in trust structuring and transactions?
• What are the key provisions or modifications available for trust documents in light of the IRS crackdown on trust arrangements?

Learning Objectives

After completing this course, you will be able to:

• Identify the applicable tax rules and reporting obligations for domestic and foreign trusts
• Recognize the IRS areas of focus regarding abusive trust arrangements and transactions
• Ascertain methods to allow taxpayers to avoid potential audit triggers in trust structuring and transactions

• 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 and gift taxation and reporting, pass-through taxation, including taxation of partnerships, S corporations and sole proprietorships, qualified business income, net operating losses and loss limitations.

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).