Trust Material Participation Decision Will Significantly Affect NII Tax


Richard Dees said that the most important part of a U.S. Tax Court ruling that a trust holding rental real estate properties qualifies for the section 469(c)(7) passive activity exception was “the court’s reliance on the fiduciary constraints state law imposes on the trustee when he acts as an employee or other trust-owned business.” Mr. Dees said the court considered the trustees’ actions as employees when it determined that the trust in question materially participated in a family real estate business, and that it completely rejected contrary arguments made by the IRS.