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Recent Marital Deduction questions

Question on tax treatment of capital gains in the final year

Question on tax treatment of capital gains in the final year of a trust.A marital deduction trust was created in 1998 upon the decease of a husband. The trust invested in a diversified stock portfolio and has remitted all dividend income generated over the years to the income beneficiary, the surviving widow. Per the trust document, capital gains and/or principal may be remitted as well if needed by the widow , but over the life of the trust this was never necessary or done.Each year, capital gains and losses from transactions in the trust were offset, or loss carryforwards used, to zero out the trust's capital gains and losses on the trust's tax return. Income was reported on K1 to the income beneficiary who paid income taxes on it.The income beneficiary passed away this year (2016), the stock portfolio was entirely liquidated, generating net capital gains, and the trust assets (all cash now) will be distributed to the designated heirs/beneficiaries. (There are two children and four grandchildren.)Questions:1. Must the trust itself pay the taxes on the final-year capital gains generated?2. I believe it is not permitted to remit net capital gains to the beneficiaries in this case. True?3. Instead may we remit gross gains and losses to the beneficiaries, some of whom have a lower tax rate? (I believe so)4. Do we have discretion on which approach to use? If both ways are permitted, does the IRS look on the latter approach, with its lower tax result, as particularly aggressive, a red audit flag, etc.?Background:I'm no expert but the online commentary on the Regs do suggest that the trust may remit the gross capital gains, reporting on a K1, pro rata to the remainder beneficiaries, and also remit the gross losses in the form of loss carryforwards that each beneficiary can apply against their share of gains, all of this on their personal tax returns in the same year, 2016. I get this from online commentaries on §1.643(a)-3(b) and §1.642(h)-1.(It is assumed that the ordinary income (dividends) generated by the trust after the widow's death will be distributed to the remainder beneficiaries, who will pay income tax on it.)

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Stephen G.

Sr Financial & Tax Consultant

Bachelor's Degree

9,022 satisfied customers
Spanish citizen married to a US citizen (all our income

Spanish citizen married to a US citizen (all our income assets are joint property) living abroad. Question on Estate taxes. How will our assets be taxed if one of us died?- When US citizen dies I understand there is a large exemption ($5+M). Does this apply even if recipient (spouse) is a non citizen?- If non-citizen dies I understand that only certain assets (real estate, securities located in the US) are subject to the tax. But what is the exemption that applies? In general is low for non-citizens (about $60,000). But what if the receiving spouse happens to be a US citizen? Does the large exemption apply as well?Any other thoughts on this situation would be appreciated.

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Mark Taylor

Certified Public Accountant

Masters

1,250 satisfied customers
If my wife passes away and leaves me with $140,000 dollars

If my wife passes away and leaves me with $140,000 dollars is it taxable as an inheritance or what?

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PDtax

Owner

Master's Degree

6,994 satisfied customers
I am a non resident non US citizen married to a US citizen,

I am a non resident non US citizen married to a US citizen, we live in London UKJA: The Accountant will know how to help. Please tell me more, so we can help you best.Customer: Looking to buy a property in US, what is the most efficient way to do it from tax perspective?JA: Is there anything else important you think the Accountant should know?Customer: We both work and pay taxes in UK, my wife files tax returns in US but she pays enough tax in UK so that she does not need to pay any tax in USJA: OK. Got it. I'm sending you to a secure page on JustAnswer so you can place the $5 fully-refundable deposit now. While you're filling out that form, I'll tell the Accountant about your situation and then connect you two.

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Robin D.

Vocational, Technical or Trade School

21,204 satisfied customers
I am a U.S. citizen, and a naturalized Mexican retired and

I am a U.S. citizen, and a naturalized Mexican retired and living full time in México for over 30 years.My now exwife who was a Mexican non U.S. resident owned a business Mexico as a sole owner, and filed her taxes seperately.In our divorce the judge ordered the business to be sold and the proceeds be divided equally.My question is my divorce settlement taxable in the U.S.?

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Robin D.

Vocational, Technical or Trade School

21,204 satisfied customers
I am a UK citizen with a vacation home in Palm Beach, FL

I am a UK citizen with a vacation home in Palm Beach, FL that is approximately valued at $5 million. My health is failing and my wife will be the beneficiary of the home when I pass.My chartered accountant in the UK recommends I see an estate attorney here to set up a Qualified Domestic Trust so that my wife does not incur a large estate tax bill.Do you recommend I do this?

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Robin D.

Vocational, Technical or Trade School

21,204 satisfied customers
I am on a non immigrant L1 visa living in the state of

I am on a non immigrant L1 visa living in the state of Indiana and in the process of buying a house. We plan to use cash to fund 80% of the purchase, cash that is located out of the country. The cash was left to my wife in a will and is fully tax compliant in the country of origin. The cash is currently in my wife's back account and the bank advise that given her name is ***** ***** the mortgage documents she needs to gift the money to me her husband. Therefore when the money is lodged into our joint account here in the US I can show the bank how it got there etc. The value of the gift is well in excess 50k USD. My question is are we liable for Indiana state or federal IRS based tax? Its my understanding gifts between spouses are not taxable however as we are not US citizens does this make a difference?

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Lane

JD, MBA, CFP, CRPS

Doctoral Degree

17,750 satisfied customers
Is there anyway to get money back out of an ILIT that is

Is there anyway to get money back out of an ILIT that is irrevocable or does that cash value of the variable universal life policy have to remain in the ilit I assume

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Lane

JD, MBA, CFP, CRPS

Doctoral Degree

17,750 satisfied customers
Shawn, I just reviewed the question asked previously

Hi Shawn, I just reviewed the question asked previously regarding the "grantor" question in establishing tax i.d. for revocable lvg trust where grantor has passed. You stated it is o,k. to have the responsible party and the grantor the same even though the online program lists the grantor name next to the grantor's soc sec number. It is confusing and I am a tax preparer/adviser, etc.

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Stephen G.

Sr Financial & Tax Consultant

Bachelor's Degree

9,022 satisfied customers
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