Material Participation Rules for Trusts: Leveraging Aragona Trust to Minimize NIIT
Avoiding the Passive Activity Loss Rules for Trusts Through Strategic Planning
Recording of a 110-minute CPE webinar with Q&A
This course will provide tax professionals with a deep dive into the determination of “material participation” (MP) regarding trusts and estates in applying passive activity rules. The panel will analyze the tax court’s groundbreaking holding in Aragona Trust v. Comm'r (2014) and offer perspectives on MP issues that Aragona either did not address or did not provide specific guidance for structuring trust holdings. The panel will outline practical approaches consistent with Aragona and IRS rulings to minimize the impact of the net investment income tax (NIIT) for trusts and estates.
- IRC 469 passive activity definitions
- Previous standards
- Carter Trust v. United States
- TAM 200733023
- PLR 201029014
- PLR 201317010
- Aragona standard—employee participation
- State law fiduciary considerations
- Remaining questions regarding material participation rules after Aragona
The panel will discuss these and other critical questions:
- What are the evolving standards for determining whether a trust has MP in a trade or business activity?
- What is the current IRS audit position on MP in a trade or business for trusts and fiduciaries?
- What are the NIIT consequences of the passive vs. active classification for trusts?
- What questions were not settled by Aragona regarding MP in trust holdings?
Eric S. Fletcher, CPA
Mr. Fletcher has more than 20 years of public accounting experience and focuses his practice on working with... | Read More
Mr. Fletcher has more than 20 years of public accounting experience and focuses his practice on working with closely-held businesses and their owners, especially family-run enterprises. He has served clients in the construction, real estate, and professional services industries in addition to working with many affluent individuals and family groups. His expertise includes all aspects of tax and business planning including mergers and acquisitions, private equity, succession and estate planning, capital budgeting and investment analysis, as well as IRS representation.Close
Michael T. Donovan
Mr. Donovan is Chairman of his firm's Tax Department. He has significant experience in all aspects of tax planning... | Read More
Mr. Donovan is Chairman of his firm's Tax Department. He has significant experience in all aspects of tax planning for partnerships and LLCs, corporations, real estate, REITs, and funds. He regularly advises clients in connection with M&A transactions, real estate projects, and complex partnership issues. He also counsels exempt organizations on issues relating to tax-exempt status, intermediate sanctions, and joint ventures with for-profit entities. He has spoken and written extensively on a variety of tax topics, including a recent article for the Journal of Taxation on the complex FATCA final regulations.Close