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Non-grantor trusts to be regulated by IRS
The IRS and Treasury Department have joined forces to issue regulation regarding non-grantor trusts which have been used by wealthy people to avoid the property tax deduction cap in the new tax reform law.
In Notice 2018-61, the IRS and Treasury say they plan to release regulations to provide clarification on the effect of section 67(g) of the tax code on the deductibility of certain expenses described in section 67(b) and (e) that are incurred by estates and non-grantor trusts.
One way some wealthy peeople are getting around the new law is by setting up limited liability companies for their residences in high-tax states such as here in New York and then transferring interests in them to separate trusts set up in low-tax states like Alaska, where each trust can claim up to a $10,000 deduction for property taxes.
Four northeastern states have sued the govt over the new law as we wrote about here: 4 Northeastern states sue Trump administration.
New York, NY 10007