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

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

Archive