DGAA bLAWg

Trust Payments and the Capital Gains Tax

Web Admin - Wednesday, August 27, 2014

capital gains tax in IllinoisThe capital gains tax exists as a way for the government to tax the income that flows to investors from certain investments. In general, the capital gains tax applies to the sale of most assets other than inventory. This includes the sale of things like stocks, bonds, and real estate. The current capital gains tax rates vary depending on a person's income bracket. According to the IRS, the capital gains tax for people in the 25 percent, 28, percent, 33 percent, and 35 percent income tax brackets would be 15 percent.

People paying taxes in the highest bracket, 39.6 percent, would pay 20 percent in capital gains tax, and people in the other, lower tax brackets do not pay capital gains tax at all for most capital gains income. Additionally, the Affordable Care Act also introduced a further 3.8 percent tax on capital gains income for people earning either $200,000 a year as single filers, or $250,000 a year as married filers, which went into effect at the start of 2013.

This capital gains tax can interact with trusts in complex ways, and trustees should be aware of the issues created by the capital gains tax and trusts. First, trustees should be aware of how capital gains affects the way that they manage K-1 tax forms. Second, trustees should keep in mind the interaction between capital gains and the income distribution tax deduction that trusts are allowed to take.

K-1 Forms

K-1 forms are a type of tax form that exists to help the owners of pass through entities fill out their personal income tax returns. Pass through entities are entities like S corporations and some LLCs that do not pay taxes themselves, but instead pass the taxes on to the owners. Trusts, strictly speaking, are not actually pass through entities since the trust is responsible for paying some taxes, but the beneficiaries may also owe taxes based on distributions to them from the trust, so they often receive a K-1 form. As far as the need to report capital gains income on a K-1 form, that depends on the specifics of the trust. As a default rule, the capital gains and losses stay with the trust itself, but the trust instrument may choose to pass those along to the beneficiaries, which would result in the trustee needing to add them to the K-1 form.

Capital Gains and the Income Distribution Deduction

Capital gains may also have an effect on the trust's income distribution deduction, a tax deduction that trusts may take for amounts paid to an income beneficiary. The income distribution deduction is equal to the lesser of either (1) the distributions minus tax-exempt income or (2) the “distributable net income” minus tax exempt income. Capital gains may affect this distribution because it figures into the calculation of distributable net income under several circumstances, most commonly if the trust requires the trustee to distribute the gains to the beneficiaries.

Managing a trust is a complex task from both a legal and financial perspective. If you have questions, seek help from an experienced Illinois estate planning attorney. Our firm's skilled lawyers serve clients in many northwest suburban towns such as Inverness, Barrington, and Kenilworth.

About the Author: Attorney Jay Andrew is a founding partner of Drost, Gilbert, Andrew & Apicella, LLC. He is a graduate of the University of Dayton School of Law and has been practicing in estate planning, probate, trust administration, real estate law, residential/ commercial leasing, contracts, and civil litigation. Since 2005, Jay has been a Chair of the Mock Trial Committee for the Annual Northwest Suburban Bar Association High School Mock Trial Invitation which serves over 240 local Illinois students each year.


Recent Posts


Tags

Crystal Lake criminal defense attorney Illinois elder law attorney estate plan caregiver Arlington Heights car accident lawyer drug crimes lawyer vacation home pain and suffering Inverness estate planning lawyer Schaumburg car accident attorney Illinois Human Rights Act Arlington Heights injury attorney license Deer Park workers compensation lawyer CAM healthcare college kids Schaumburg elder law lawyer advance healthcare directive Barrington Illinois estate planning lawyer Buffalo Grove insurance claim dispute lawyers pay when paid contract Illinois employment laws Buffalo Grove life insurance attorney distracted driving accident victims drugs Arlington Heights real estate lawyer Arlington Heights wills and trusts lawyer wrongful termination, employment law, whistleblower protections, Illinois employment laws, discrimination in the workplace manufacturing real estate closing PTSD Illinois workplace discrimination attorney Crystal Lake medical malpractice law firm personal injury claim Schaumburg medical malpractice lawyer insurance disputes, Illinois insurance disputes, Illinois insurance dispute attorneys, denied insurance claims, Arlington Heights insurance dispute attorneys Crystal Lake traffic attorney Illinois real estate overtime violations Illinois probate lawyer Des Plaines insurance attorney digital evidence Arlington Heights pedestrian accidents breathalyzer test Illinois bicycle safety Palatine estate planning lawyer Crystal Lake pedestrian accident lawyer probate claims process car accident lawyer minimum wage Des Plaines criminal attorney Illinois registered agent comparative negligence disability benefits beneficiary complications Illinois jet ski accident lawyer Inverness DUI lawyer Chicago insurance claim attorneys Palatine workers compensation lawyer Kenilworth estate planning attorney license revocation medical malpractice claims unfunded trust consent to a search Des Plaines motorcycle accident attorney FSLA insurance disputes gift taxes insurance dispute Schaumburg Attorney Arlington Heights traffic attorney Barrington life insurance lawyer Des Plaines medical malpractice attorney Chicago insurance law firm Class A misdemeanor taxes Schaumburg personal injury lawyer Buffalo Grove medical malpractice lawyers Schaumburg employment law attorneys Illinois workers compensation attorney car crashes Inverness personal injury attorney swimming pools Illinois first degree murder probate pedestrian accident Buffalo Grove employment lawyer Chicago corporate attorney Chicago life insurance attorney living trust vs will POA eluding a police officer Mt Prospect Attorney Buffalo Grove criminal defense lawyer employment lawyer Schaumburg personal injury attorney Barrington civil litigation attorney Deer Park traffic accident attorney foreclosure motorcycle accident Buffalo Grove real estate attorney Inverness insurance attorney Arlington Heights wills and trusts lawyers compensatory time Long Grove estate planning attorney LLCs digital information drug possession Palatine insurance lawyer employment contract fatal car accidents Illinois Sales Representative Act insurance claims Barrington estate planning attorney probate lawyer Buffalo Grove traffic lawyers traffic crimes defective products rent to own real estate contracts Illinois rollover accident lawyers uninsured motorist Barrington injury attorney hit and run accident Chicago lawyer how to avoid common denials of life insurance claims child safety overtime pay Rolling Meadows accident lawyer truck collisions tax attorney criminal record Illinois attorney Illinois insurance claim dispute lawyers Joliet general practice lawyers workplace sexual harassment Crystal Lake civil litigation lawyer Palatine employment lawyer Arlington Heights tax lawyer clemency Illinois workplace lawyer wage theft real estate attorneys breach of contract Long Grove real estate lawyer Rolling Meadows car accident lawyers probate fees operating agreements Illinois defective products attorney Palatine civil litigation lawyer Illinois car accident attorney Arlington Heights employment law attorneys spinal cord injuries Barrington business law firm pedestrian-automobile accident Crystal Lake personal injury lawyer Rolling Meadows personal injury attorney Inverness corporate attorney Crystal Lake traffic lawyer natural gas explosion Illinois trusts attorney slip and fall accidents income distribution deducation Illinois living will Barrington medical malpractice lawyers insurance denials fiduciary rule Palatine drug lawyer Deer Park real estate law firm employee rights South Barrington real estate lawyer Deer Park motorcycle accident lawyer construction accidents, personal injury, wrongful death, Arlington Heights personal injury attorneys, workers' compensation trench injuries Barrington personal injury attorney lapse in policy agent Rolling Meadows insurance attorney trustee Palatine personal injury lawyer civil litigation bike accident comp time driving Inverness real estate attorney Rolling Meadows corporate lawyer Schaumburg traffic lawyer Crystal Lake injury attorney Deer Park accident attorney Deer Park criminal attorney Palatine trusts lawyer car accident lawyers motorcycle accident lawyer Home Remodeling Repair Act condo association Transfer on Death Instrument home inspection lawyer Schaumburg life insurance attorney health insurance dispute deadly crashes Barrington Traffic Lawyer license reinstatement homestead rights Palatine elder law attorney Schaumburg personal injury lawyers trucking accidents Long Grove real estate attorney privacy unauthorized overtime pet bites Long Grove wills and trusts attorneys Illinois trucking safety insurance negligence Crystal Lake car accident attorney Illinois employment attorneys Do Not Resuscitate traffic tickets top life insurance claim denials Barrington estate planning lawyer mass shooting IRELA Long Grove estate planning boating under the influence Barrington criminal defense lawyer Buffalo Grove personal injury attorney Illinois job attorney estate planning lawyer independent contractor back injuries wills and trusts liability Illinois home inspection Jay Andrew employment law, meal breaks, rest breaks, hotel employees, Des Plaines employment law attorneys startup company personal injury law firm material misrepresentation Illinois criminal defense attorney underage DUI federal regulations for LLCs insurance dispute, insurance dispute lawyers, insurance claim denial, insurance claim delays, Rolling Meadows insurance dispute attorneys Illinois wrongful termination lawyer life insurance claim denial, denial of life insurance claim civil litigation attorney Arlington Heights trucking lawyer Illinois mortgages Fair Labor Standards Act Rolling Meadows employment law attorney Illinois wills and trusts Chicago employment attorney trauma after an accident Federal Food Drug and Cosmetic Act creditors whistleblower protections Mount Prospect real estate lawyer Des Plaines tax law firm federal crimes rest breaks Chicago trucking accident attorney hiring employees Illinois Smoke Detector Act in terrorem provision Des Plaines personal injury lawyers Rolling Meadows Attorney Inverness injury lawyer Des Plaines Arlington Heights insurance attorney BAC slip and fall TBI cell phone tower data internet dog bites Illinois Workers’ Compensation Commission trucking accident lawyers Barrington employment attorney DUI Rolling Meadows criminal lawyer Buffalo Grove probate lawyer suspended license Palatine real estate lawyer Arlington Heights Attorney coronavirus DUI penalities bicycle accidents Chicago estate planning Palatine criminal defense lawyer holiday statistics Schaumburg employment attorney insurance agent negligence Illinois employment law firm marijuana Long Grove estate planning attorneys elder abuse revenge porn brain injury Deer Park DUI lawyer Inverness civil lawyer Barrington boating accident attorney Rolling Meadows marijuana attorney Illinois traffic accident lawyer foreclosed rental property civil rights violation Illinois collections attorney Rolling Meadows criminal attorney business litigation medical malpractice, missed diagnosis, delayed diagnosis, medical mistake, Deer Creek medical malpractice lawyers Illinois medical malpractice attorney Illinois will lawyer traffic deaths Buffalo Grove traffic attorney Chicago biking tips traffic accidents Landlord Tenant Ordinance employees Inverness real estate lawyer Illinois insurance lawyer Chicago estate planning lawyer pet law insurance claim Chicago will attorney, social media platforms, Illinois estate planning lawyer, loss of consortium speeding anesthesia errors commercial leasing Schaumburg real estate lawyer texting and driving Arlington Heights wills and trusts attorney paid sick leave Illinois pet lawyer Crystal Lake insurance lawyer Chicago employment lawyer drug crimes estate planning trusts DNR contracts Schaumburg construction accident lawyer no contest clauses Colin Gilbert Rolling Meadows insurance lawyer Illinois Probate Act of 1975 Illinois employment law attorneys Fourth of July Legal Info Rolling Meadows DUI lawyer Des Plaines pet law attorney Rolling Meadows personal injury lawyer Illinois real estate lawyer Inverness accident lawyer Colin H. Gilbert power of attorney Palatine employment attorney Inverness traffic law firm Schaumburg criminal law attorney digital assets blood alcohol content Illinois estate planning Rolling Meadows traffic attorney life insurance Illinois medical malpractice case condo School Visitation Rights Act most common reasons for life insurance claim denials Liquor Control Act dynasty trusts life insurance claims Chicago traffic lawyer bad faith insurance claims ken apicella marijuana crimes attorney car crash elder law sexual images traumatic brain injury Illinois civil litigation lawyer Self-Directed IRA Accounts wills Barrington attorney Schaumburg civil litigation attorney Rolling Meadows probate lawyer Rolling Meadows drug defense attorney Buffalo Grove personal injury lawyer medical research Illinois speeding lawyer murder Schaumburg estate planning attorney car accident Family Medical Leave Act Rolling Meadows tax attorney guardianship attorney Illinois employment law attorney Barrington real estate lawyer estate planning Des Plaines collections attorney wrongful death Illinois Transfer on Death Instrument residential real estate Barrington workers compensation attorney preventable medical errors llinois Real Estate Lawyers Association Illinois traffic ticket lawyer Arlington Heights employment attorney Affordable Care Act employment law Palatine civil attorney real estate attorney Deer Park employment law attorney Illinois motorcycle accident lawyer Illinois law boating accidents attorney fees vacation home fines Palatine employment law lawyer car crash injuries denial of insurance claim Des Plaines DUI attorney institutional trustee Illinois lawyer rollover car crashes Rolling Meadows litigation lawyer probate claims Rolling Meadows estate planning attorney insurance adjusters Crystal Lake estate planning lawyer Palatine traffic accidents Super Mario Arlington Heights medical malpractice lawyer Crystal lake insurance dispute attorney South Barrington real estate attorney Barrington litigation attorney criminal Illinois estate planning attorney Detainer Actions DMV real estate contract medical marijuana reckless homicide Crystal Lake bike accident lawyer Illinois pedestrian accident attorney appealing an insurance claim Des Plaines Traffic Lawyer Palatine corporate law attorneys trusts Illinois employment law crossover accidents Des Plaines real estate attorney Attorney Ken Apicella surgical mistakes Food and Drug Administration's Food Safety Modernization Act estate attorney Deer Park personal injury lawyer IRA trust transfer insurance claim dispute Rolling Meadows Traffic Lawyer texting while driving senior citizens Des Plaines personal injury lawyer Rolling Meadows personal injury lawyers Barrington personal injury lawyer Deer Park medical malpractice attorney Crystal Lake personal injury attorney Rolling Meadows boating crash lawyer Illinois insurance dispute lawyers Barrington employment law firm Rolling Meadows business lawyer subcontractor DGAA Palatine injury attorney workers comp Des Plaines real estate lawyer power of attorney for healthcare Arlington Heights estate planning attorney products liability special needs trust Kenilworth estate planning lawyer Barrington drug crime attorney Deer Park traffic lawyer Palatine traffic lawyer Arlington Heights accident attorney liability claims workers compensation benefits small business Retaliatory Discharge defective products lawyer nursing home negligence Exclusions Chicago will attorney accidental death benefits Crystal Lake employment attorney cell phone criminal law digital media accounts, estate planning, Arlington Heights estate planning attorney, job lawyers Rolling Meadows life insurance claim denial attorney jet ski Rolling Meadows traffic law firm controlled substance digital assets, digital fiduciary, estate planning, digital content, Long Grove estate planning lawyers Illinois medical malpractice claim Arlington Heights Traffic Lawyer Illinois business lawyer liens right to work privacy laws loopholes Illinois estate planning law firm employee discrimination Riverwoods estate planning lawyer insurance attorney living wills Rolling Meadows medical malpractice lawyers employment attorney gift tax exemption, estate planning, estate planning strategies, Illinois estate planning, South Barrington estate planning attorneys problem employees Kenilworth estate planning attorneys ObamaCare unpaid assessment Arlington Heights personal injury attorney workers compensation Arlington Heights personal injury lawyer Inverness probate lawyer hands free device Illinois insurance claim dispute lawyer distracted driving accidents Crystal Lake business law attorneys Illinois insurance disputes personal injury irrevocable trust DUI defense Des Plaines personal injury attorney Crystal Lake law firm Illinois personal injury bicycle dooring accidents Des Plaines claims law firm BAIID Crystal Lake medical malpractice lawyer Barrington criminal lawyer Crystal Lake pet attorney Illinois medical malpractice lawyers life insurance policy Des Plaines injury law firm Chicago car accident lawyer premises liability Buffalo Grove law firm Illinois personal injury attorney traffic violations Schaumburg estate planning lawyer low-ball insurance settlement sexual harassment Home Sale Contingencies Crystal Lake will lawyer Palatine life insurance lawyer Des Plaines drug crimes lawyer Palatine construction attorney Illinois injury lawyer drug crime installment contracts jet ski accidents insurance claim delay personal injury attorney insurance agents personal injury accidents severance agreements denial of life insurance commercial real estate employment law, Illinois employment laws IRS real estate Forcible Entry employee misclassification Palatine business attorney Illinois employee rights attorney. Arlington Heights wills and trusts attorneys pizza emoji Schaumburg corporate attorney Rolling Meadows employment attorney Palatine probate lawyer Schaumburg drug defense lawyer financial advisors living trust benefits construction contracts food poisoning Des Plaines drug lawyer Illinois DUI attorney natural gas insurance dispute attorney estate planning, death tax, succession plans, business estate plans, Barrington estate planning lawyers IRA benefits involuntary manslaughter drunk driving statistics Barrington employment law attorney owner responsibility Schaumburg injury lawyer Illinois red light cameras changes to mortgage law Palatine punch death Arlington Heights lawyer cell phone accidents Illinois traffic attorneys pedestrian injuries, pedestrian fatality medication errors underfunded trust Illinois traffic attorney Illinois business law atorneys Rolling Meadows employment law attorneys life insurance lawyer Arlington Heights criminal lawyer traffic laws probate process deed transfer rumble strips capital gains tax mortgage car accidents Buffalo Grove injury lawyer rollover accidents Schaumburg probate attorney personal injury, auto accident injuries, delayed injuries, serious injuries, Des Plaines personal injury attorneys Mount Prospect elder law attorney cause-of-death exclusions insufficient documentation Des Plaines accident attorney golf accidents Illinois tax attorney new real estate form Illinois workers compensation lawyer wrongful termination Palatine law firm Illinois employment lawyer meal breaks investment property real estate leasing spinal cord injury Whistleblower Claims medical malpractice compensation Illinois LLC creation boating DUI Illinois personal injury lawyer caretaker rights work unions Rolling Meadows insurance dispute lawyers preventing accidents Thanksgiving medical malpractice Illinois personal injury lawyers estate planning for college students Employment Discrimination Law Illinois insurance claim attorney insurance claim denial fault based insurance FMLA personal injury lawyer dealing with problem employees Palatine Attorney car collision landlord tenant law Illinois small business Schaumburg wrongful death attorney insurance claim dispute attorney Illinois traffic laws estate planning attorney Crystal Lake car accident lawyer Inverness elder law lawyer healthcare claims denied insurance claims filing a medical malpractice claim traumatic brain injuries expungement Crystal Lake employment lawyer BUI landlord criminal defense drunk driving license suspension commercial leases Chicago attorney unpaid overtime DUI attorney underinsured motorist Illinois boating accident lawyer Policy Cancellation Mount Prospect wills and trusts lawyers Rolling Meadows real estate attorney Illinois wills and trusts attorneys Des Plaines civil attorney Crystal Lake accident attorney Crystal Lake employment law attorney head on collisions Illinois corporate lawyer sole proprietorship personal injury claims employment contract, employment law, employment at-will, Deer Park employment law attorneys, contract, ACA murder defense real estate zoning insurance claim denials Crystal Lake medical malpractice attorneys Rolling Meadows insurance dispute lawyers, insurance dispute Illinois insurance attorney pregnant women Illinois construction accident attorney Illinois insurance claims lawyers Illinois Trust Code traffic offenses real estate lawyer insurance denial appeals social media after death forming a corporation in Illinois murder charges traffic violations defense Buffalo Grove car accident lawyer estate tax Illinois Wage Payment and Collection Act Schaumburg criminal attorney GM ignition switches Arlington Heights TBI attorney Crystal Lake tax lawyer icy parking lots automated cars product liability field sobriety test estate planning, digital assets, Revised Uniform Fiduciary Access to Digital Assets Act, Illinois digital assets, Illinois estate planning, Schaumburg insurance lawyers Buffalo Grove corporate attorney dram shop law modern family estate planning construction accidents Schaumburg Arlington Heights car crash attorneys fiduciary rule delay denied insurance claim living trust auto accidents Schaumburg estate attorney Palatine corporate attorney trust payments Illinois driving without license blended families pedestrian accidents Rolling Meadows corporate law

Archive