I was starting to look into land trusts to see what could be gained from them, and I came across this: http://www.irs.gov/businesses/small/article/0,,id=106535,00.html Under section 9. Special Types of Trusts, it specifically mentions Illinois Land Trusts. Browsing thru out the other sections, there are many mentions of “transfer of personal property”, “transfer of family residence”, etc. Can somebody that is savvy with the law comment on what is being said here? Thanks.
What exactly is your question? This page describes various kinds of trusts and gives some tax consequences.
in many (most) cases, people employing Illinois Land Trust operate them as a disregarded tax entity. in plain english, that means the TaxMan get his “fair share” irrespective of the how title is held. There are reasons not to use them as a disregarded tax entity (such as having multiple non-related beneficaries) in which case I have just consider the trust as a partnership arrange and filed the appropriate 1065 and associated K-1 to the benficiaries.
I’m sure their are more elaborate ways to operate a trust and these are the type of things that I believe raises the hackals of the IRS. Taxation of trust can be extremely complex if one choses it to be.
Why aren’t you using form 1041 with the K-1’s?
What I’m wondering is whether the IRS is for or against these types of things?
The IRS isn’t against anything as long as you pay taxes according to the rules. If you use any of these trusts to avoid paying taxes, they will come after you and make an example of you. Trusts are used for estate planning and charitable giving. Business trusts have fallen out of use since the inception of the LLC, but are making a return in states with high costs for registering LLCs.
you are legally entitled to avoid paying any more taxes than the law requires.
you are not allowed to evade paying taxes that are required.
tax avoidance is your right
tax evasion is a crime