IRS Rules on Non-Zero Inclusion Ratio

The IRS issued a ruling concerning trusts and the non-zero inclusion ration on May 30. The IRS ruled that the proposed modification of a Trust to the upper limit of discretionary spending will neither cause the Trust to have a non-zero inclusion ratio nor will it mean distributions from the Trust will be subject to the generation-skipping transfer tax. Also, Trusts will not have a non-zero inclusion ratio from a change in trust stius, or from the proposed increase in the number of trustees or the segregation of trustee responsibilities.

Section 2601 of the Internal Revenue Code deals with generation-skipping transfer tax.

Posted by Shannon Morris, Associate Editor, Wealth Strategies Journal