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The Uniform Basis Rules And Terminating Interests In Trusts Early, F. Ladson Boyle, Howard M. Zaritsky, D. Ryan Wallace

Faculty Publications

The resolution of income tax issues that may arise for trust beneficiaries who dispose of temporal interests in trusts remains relatively obscure. Additional issues exist for subsequent interest holders; the methods that the Code and Regulations prescribe for establishing, maintaining, and potentially recovering basis for successor owners of interests in a trust are not well developed.

In some instances, the trust instrument creating a temporal interest will supply a suitable path for early termination and distribution of assets. In those cases, Sub-chapter J of the Code typically governs the transaction and provides that terminating the trust and distributing its assets …