March 14, 2018

Stitching Shadows in Neverland: A Counterpart Basis Analysis Applied to Disregarded Promissory Notes and Assets Owned in Grantor Trusts

By Carl King and John Hodnette

For over 30 years, estate planners have used grantor trusts as an essential component of their clients’ planning. Commonly, clients loan funds to grantor trusts, or they finance installment sales of assets to those trusts. Those transactions are disregarded for income tax purposes: the grantor trust is a disregarded entity, and the note receivable is a disregarded asset.

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