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

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

Archive