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Strategies & Market Trends : IRS, Tax related strategies--Traders -- Ignore unavailable to you. Want to Upgrade?

To: ROB who wrote (52)	2/16/1998 10:13:00 PM
From: Colin Cody	Read Replies (2) \| Respond to of 1383

ROB, You have certainly done some homework on this issue and after reading those two IRS responses, I will clarify / adjust what I stated to you earlier. . You will note that I hinted earlier on that what I suspected the 2nd letter you posted might say (the one with the Calif CPA). . Please review Revenue Ruling 75-257 which addresses the issue head-on. I quote "An individual grantor who transferred his personal residence, rental property, and income producing securities... in exchange for units of beneficial interest.... is considered the owner... [such] assignment to the trust... is ineffective to shift his tax burden to the trust" . i.e. the TRUST for IRS purposes is NOT A TAX PAYING ENTITY. Therefore I agree 100% with the IRS for lecturing to the CPA (who SHOULD have known better!!) that a Pure Trust does NOT get a Taxpayer ID #. They do not exist for tax purposes, PERIOD. . If you take that letter from the IRS to the Calif CPA and draw the conclusion that the PURE TRUST does not pay taxes, I AGREE. . BUT If you somehow STRETCH THIS to take that letter from the IRS to the Calif CPA to draw some crazy conclusion that the PURE TRUST RELEIVES THE GRANTOR FROM THE LIABILITY OF PAYING TAXES - YOU ARE DEAD WRONG, My Friend! . Now onto YOUR IRS letter. You told the IRS you made a mistake in applying for the TIN. The IRS replied that they terminated the TIN, at your request. AS SUCH, per YOUR VOLUNTARY STATEMENTS, you do not need to file, ASSUMING you stated the correct information. . The IRS just parroted back to you what you said. AND I AGREE WITH YOU. You have NO REASON TO FILE FORM 1041. Your Trust likely owes NO TAXES. You and the IRS and I have no quarrel over this issue. Your PURE TRUST likely OWES ZERO TAX, and does NOT need to file form 1041. . Now as they say, "what does THAT have to do with the cost of bread?" WHO CARES if that PURE TRUST needs to file and pay taxes or not?? What you SHOULD CARE ABOUT is do YOU PERSONALLY have a filing requirement. . ROB, I assure you, from what you've posted here, you have the same requirement to file with or without that PURE TRUST you paid $1,000 to form. . Consider it an expensive education, and clean up your past delinquent filings before too much more time goes by and the problem compounds itself. . If Several YEARS have past, and if MUCH $$$ is due, you might do well to retain a good Tax Attorney experienced with CID investigations, to interface between you and the Service. . Good Luck to you. . Colin