Discussion Archives:Grantor Trust as disregarded entity

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Discussion Forum Index --> Advanced Tax Questions --> Grantor Trust as disregarded entity

Discussion Forum Index --> Tax Questions --> Grantor Trust as disregarded entity

Rikquinn (talk|edits) said:

23 January 2008
501-c-3 organization A owns a piece of real estate as the sole asset of a Grantor Trust where 501-c-3 A is the sole beneficiary of the Trust.

501-c-3 A sells the Grantor Trust and Real estate to 501-c-3 organization B.

In both cases the property meets 501-c-3 requirement that the property is utilized in the tax exempt service of the missions of the respective organizations.

Is 501-c-3 A subject to any tax on gains at the time of the sale? Would 501-c-B be subject to any gains tax should it sell the property in the future?

In other words, is a grantor Trust of a c-3 organization treated as a disregarded entity for federal tax purposes?

The question is now with regard to Grantor Trusts where the owner and sole benficiary of the Trust is a 501-c-3.

Edcosoft (talk|edits) said:

23 January 2008
No tax, they are tax exempt orgainizations. It is immaterial that the property is in a Grantor Trust. HOWEVER, the funds can't be dispersed beyond the scope of the 501-c-3 A operations, but can be donated to another 501-c-3 organization. To get the result the purchaser needn't be a 501-c-3 orgainization but then any future use and sale is taxable to 501-c-3 B.


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