A Nevada Qualifying Subchapter-S Revocable Trust Agreement, also known as an SST Agreement, is a legal document designed to allow a Subchapter-S Corporation (S-Corp) to hold shares of stock in a revocable trust without risking the loss of its S-Corp status. In Nevada, an SST Agreement follows the guidelines and regulations set forth by the Internal Revenue Service (IRS). By establishing an SST Agreement, an S-Corp can effectively transfer its stock ownership to a revocable trust without triggering any adverse tax consequences. There are several types of Nevada Qualifying Subchapter-S Revocable Trust Agreements available, which can provide flexibility and customization options based on specific needs. These include: 1. Standard Nevada SST Agreement: This is the most common type of SST Agreement used by S-Corps in Nevada. It includes standard provisions for trust management, stock transfers, beneficiary designations, and revocation options. 2. Irrevocable Nevada SST Agreement: This type of agreement is suitable for S-Corps looking to transfer their ownership to a revocable trust but with specific restrictions on revocation. Once established, it cannot be easily revoked or modified, providing a greater level of asset protection. 3. Nevada SST Agreement with Multiple Beneficiaries: If an S-Corp wishes to designate multiple beneficiaries for its stock ownership in a revocable trust, this type of agreement allows for the distribution of stock among different individuals or entities. 4. Nevada SST Agreement with Spendthrift Provisions: This agreement is designed to protect the trust assets from creditors by including spendthrift provisions. These provisions limit the ability of creditors to access the trust assets, ensuring their preservation for the beneficiaries. 5. Nevada SST Agreement with Generation-Skipping Transfer Tax Planning: This type of agreement incorporates provisions to minimize or eliminate the generation-skipping transfer tax (GATT) liability, which may arise when trust assets are transferred to grandchildren or subsequent generations. In conclusion, a Nevada Qualifying Subchapter-S Revocable Trust Agreement, or SST Agreement, is a legally binding document used by S-Corps in Nevada to transfer stock ownership to a revocable trust while maintaining their S-Corp status. Different types of SST Agreements offer various features and benefits, allowing for customization based on individual needs such as asset protection, multiple beneficiaries, spendthrift provisions, and generation-skipping transfer tax planning. Compliance with IRS regulations is essential when establishing these agreements to ensure proper tax treatment.
Nevada Qualifying Subchapter-S Revocable Trust Agreement
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How to fill out Qualifying Subchapter-S Revocable Trust Agreement?
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FAQ
As an initial matter, as long as the business owner is living, his or her revocable trust is treated as a grantor trust for income tax purposes, and as such, is an eligible S corporation shareholder.
Yes, the IRS allows the estate of a deceased shareholder to be an S-Corporation shareholder. Note the language deceased shareholder. This indicates, correctly, that an estate can step in and become an S-Corp shareholder when a typical shareholder dies.
The main difference between an ESBT and a QSST is that an ESBT may have multiple income beneficiaries, and the trust does not have to distribute all income. Unlike with the QSST, the trustee, rather than the beneficiary, must make the election.
A Qualified Subchapter S Trust, commonly referred to as a QSST Election, or a Q-Sub election, is a Qualified Subchapter S Subsidiary Election made on behalf of a trust that retains ownership as the shareholder of an S corporation, a corporation in the United States which votes to be taxed.
Since a revocable trust is not treated as separate from the grantor, it is an eligible S corporation shareholder while the grantor is alive.
A trust can hold stock in an S corp only if it (1) is treated as owned by its grantor for income tax purposes under us grantor trust rules, (2) was a grantor trust immediately before its grantor's death (the trust can be a shareholder only for two years from that date), (3) received stock from the will of a decedent (
You can put your S-Corp into your living trust by simply transferring your shares ownership to yourself as trustee of your living trust, but again, there are certain procedures that must be strictly followed....These trusts include:Electing small business trusts (ESBT)Grantor trusts.Qualified subchapter S trusts (QSST)
A qualified revocable trust (QRT) is any trust (or part of a trust) that was treated as owned by a decedent (on that decedent's date of death) by reason of a power to revoke that was exercisable by the decedent (without regard to whether the power was held by the decedent's spouse).
Three commonly used types of ongoing trusts qualify as S corporation shareholders: grantor trusts, qualified subchapter S trusts (QSSTs) and electing small business trusts (ESBTs).
Net investment income tax of a QSST 1411(a)(2)). The tax also applies to QSSTs to the extent the net investment income is retained in the trust. Although the S corporation income of a QSST is taxed to the individual income beneficiary, capital gain on the sale of the S corporation stock is taxed at the trust level.