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The Evolving Landscape of State Income Taxation of TrustsThe Evolving Landscape of State Income Taxation of Trusts

Three recent cases have successfully challenged the constitutional foundation on which many tax regimes are based

14 Min Read
The Evolving Landscape of State Income Taxation of Trusts

Trusts serve an integral role in the administration of family wealth. Relatively stable state tax systems have long provided for the collection of trust income taxes. However, taxpayers in three recent cases have successfully challenged the constitutional foundation on which the state income taxation of many trusts is based. While these are positive developments from a tax planning perspective, trustees now face difficult tax compliance and reporting issues in carrying out fiduciary obligations. Trustees, beneficiaries and their advisors should carefully consider action that could substantially reduce state income tax obligations.

 

Trust Income Taxation

Increasing tax rates and enhanced enforcement efforts have placed a premium on the juri...

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About the Authors

James H. Cundiff

James H. Cundiff is a partner in the Private Client Group at McDermott Will & Emery LLP.