Regulations on Trusts, Investment Tax in ‘Infancy,' IRS Official Says

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Sept. 23 —  The Internal Revenue Service is just beginning to clarify a three-decade muddle about trusts that has been aggravated by the onset of the 3.8 percent net investment tax, an agency official said.

Adrienne M. Mikolashek, an attorney with the IRS Passthroughs and Special Industries division of the Office of Chief Counsel, said at a panel discussion Sept. 23 that the agency has begun crafting regulations to spell out the conditions under which a trust is considered to have “materially participated” in underlying real estate activities—a designation the IRS has never formally defined since the 1986 tax overhaul and which would spare trusts the excise tax that went into effect for tax year 2013.