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Use Nongrantor Trusts to Bypass the SALT Deduction Limit

February 11, 2020
by Merline & Meacham, PA
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Nongrantor trusts may ease the tax bite of the $10,000 federal limit on state and local (SALT) deductions. A nongrantor trust is a discrete legal entity that files its own tax returns and claims its own deductions. The idea behind the strategy is to divide real estate that’s subject to more than $10,000 in property taxes among several trusts, each of which enjoys its own SALT deduction up to $10,000. Each trust must generate sufficient income against which to offset the deduction. Be aware that multiple trusts may be treated as a single trust if they have “substantially the same grantor or grantors and substantially the same primary beneficiary or beneficiaries.” Contact us to learn more.

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    • Our Firm
    • Practice Areas
      • Business Entities
      • Charitable Planning
      • Employee Benefits/ERISA
      • Estate and Gift Taxes
      • Estate Planning
      • Income Tax Law
      • Mergers and Acquisitions
      • Non-Profit/Tax Exempt
      • Probate/Estate Admin.
      • Tax Controversies
      • Wills and Trusts
    • Attorneys
      • Robert E. August
      • Jonathan R. Colao
      • Phillip J. Martin
      • Keith G. Meacham
      • W. Verne McGough, Jr.
      • Andrew D. Merline
      • David A. Merline, Jr.
      • Marie Monroe
      • J. Aaron Nelson, Jr.
      • Douglas B. O’Neal
      • David M. Thompson
    • Firm News
    • Resources