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Discussion:Taxable QPRT Trust. CA wants it all

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Discussion Forum Index --> Basic Tax Questions --> Taxable QPRT Trust. CA wants it all


Discussion Forum Index --> Tax Questions --> Taxable QPRT Trust. CA wants it all

Barbara13 (talk|edits) said:

1 April 2014
I know CA demands its share of taxes for trusts with CA trustees or beneficiaries but I just would like verification that I have not overlooked anything that is causing a large payment to CA. Montana QPRT with one CA Trustee, one CA Beneficiary and one non-CA beneficiary. Nothing was distributed to anyone and tax is due. Right now it looks like CA is apportioning the entire tax liability to CA as though all income was earned in CA based on the CA Trustee. Any comments?

Dennis (talk|edits) said:

1 April 2014
See

LEGAL RULING NO. 238

CAL. RTC. CODE § 17743

CAL. RTC. CODE § 17744

Any comments?

Preparers who practice over their heads should be shot...♫

Barbara13 (talk|edits) said:

1 April 2014
Thanks, Dennis. That is the way I prepared the return but before I sent it off I wanted to make sure I was not missing something. In 5 years, this is the first where there was any taxable income.

BTW: If we don't stretch, how do we ever learn?

Thanks again!

Dennis (talk|edits) said:

1 April 2014
The time to have stretched is long gone.

Note: Typically a QPRT is written to be a grantor trust both during and after term, (It does not have to be) so that after term rental payments are not a taxable transaction.

In any CA trust with a non-resident beneficiary a decision should be made in advance whether CA taxation is desirable.

Barbara13 (talk|edits) said:

1 April 2014
In this particular case, grantor and property are in MT, the attorney who drew it all up for TP & spouse in '98 after he retired & the financial advisor are in CT. Trustee is in CA, along with one child (beneficiary). The other child is living abroad. Rent agreements are part of the deal in 5-year increments - - 1st 5 years passed and a new agreement began 12/1/13 for the next 5 years. I have done the personal tax returns and then a trust return after the spouse passed since before they retired to MT but was not aware of the QPRT until 3 years ago when the financial advisor realized that the attorney had forgotten that the 10 year term had ended in '08 (there is now a new attorney). I admit that when this trust landed in my lap I knew next to nothing about QPRTs but engaged a fellow EA who is a trust "guru" to help me and I continue to learn as much as I can about the subject. Again, thank you for your added wisdom!

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