Abstract

Paper discusses the struggle in applying the passive loss rules to trusts and estates. It analyzes the limited guidance such as the Carter case and TAM 200733023. In light of this limited guidance it provides planning opportunities that may exist. It discusses that the passive loss rules are aimed at a single taxpayer while a trust acts as a hybrid.The problem in applying these rules is who does it apply to: trustee, beneficiary or the trust itself. Since there is conflicting answers to whom it applies this may under the right circumstances create planning opportunities.