Client owns 4% of a rental property in her name. Her 3 siblings each have a 4% ownership. The remaining 80% is owned by an Irrevocable Trust, with each of the 4 siblings having a 20% beneficial share. To qualify for active participation a taxpayer has to have at least a 10% ownership. For this test does my client have a 4% or 24% ownership?
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If I had to GUESS, I would say only 4%.
In my mind, an irrevocable trust is it's own entity-like thing, and the taxpayer doesn't "own" 20% of the trust, they are the beneficiary (and maybe trustee).
Again, that is only a GUESS. -
There is 4% missing somewhere. You sure they don't each have 5% individually? 80% + 20% = 100%.Comment
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Answers
Sorry I rounded incorrectly.
The answer is there is an attribution rule which allows the 20% to be added to the 4%.Comment
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