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Richard
Richard, Tax Attorney
Category: Tax
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Experience:  29 years of experience as a tax, real estate, and business attorney.
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If a trust is part owner of an entity and the entity has a

Resolved Question:

If a trust is part owner of an entity and the entity has a Section 179 deductions does the deduction get allocated based on ownership even though the Trust cannot use the deduction or does it get allocated to the owners that can use the deduction?
Submitted: 5 years ago.
Category: Tax
Expert:  Richard replied 5 years ago.

Good morning. The deduction must be allocated as provided in the operating document for the entity without regard to whether or not it is deductible, but allocations of loss in the operating document, except with respect to nonrecourse deductions, must have substantial economic effect. It's a very complex concept and too complicated for this forum, but basically you are not allowed to allocate certain allocations to one owner and other allocations to another owner based on whether or not one owner can deduct the losses and the other cannot.

 

 

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The information given here is not legal advice. As all states have different intricacies in their laws, the information given is general only. This communication does not establish an attorney-client relationship with you. I hope this answer has been helpful to you.

 

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