Tax reporting liquidating trust
Tax reporting liquidating trust -
A disputed ownership fund is treated as a C corporation for purposes of subtitle F of the Internal Revenue Code, and the administrator of the fund must obtain an employer identification number for the fund, make all required income tax and information returns, and deposit all tax payments.
A disputed ownership fund taxable as a qualified settlement fund under this section is subject to all the provisions contained in § 1.468B-2, except that the rules contained in paragraphs (c)(3), (4), and (c)(5)(i) of this section apply in lieu of the rules in § 1.468B-2(b)(1), (d), (e), (f) and (j).
The trustee of a liquidating trust established pursuant to a plan confirmed by the court in a case under title 11 of the United States Code may, in the liquidating trust's first taxable year, elect to treat an escrow account, trust, or fund that holds assets of the liquidating trust that are subject to disputed claims as a disputed ownership fund.
Pursuant to this election, creditors holding disputed claims are not treated as transferors of the money or property transferred to the disputed ownership fund.
A trustee makes the election by attaching a statement to the timely filed Federal income tax return of the disputed ownership fund for the taxable year for which the election becomes effective.
The election statement must include a statement that the trustee will treat the escrow account, trust, or fund as a disputed ownership fund and must include a legend, “§ 1.468B-9(c) Election,” at the top of the page.
The election may be revoked only upon consent of the Commissioner by private letter ruling.
In general, a disputed ownership fund does not include an amount in income on account of a transfer of disputed property to the disputed ownership fund.However, the accrual or receipt of income from the disputed property in a disputed ownership fund is not a transfer of disputed property to the fund.Is not a qualified settlement fund under § 1.468B-1, a bankruptcy estate (or part thereof) resulting from the commencement of a case under title 11 of the United States Code, or a liquidating trust under § 301.7701-4(d) of this chapter (except as provided in paragraph (c)(2)(ii) of this section); means a person designated as such by a court having jurisdiction over a disputed ownership fund, however, if no person is designated, the administrator is the escrow agent, escrow holder, trustee, receiver, or other person responsible for administering the fund; means a person who claims ownership of, in whole or in part, or a legal or equitable interest in, money or property immediately before and immediately after that property is transferred to a disputed ownership fund; means a transferor that claims ownership of, in whole or in part, or a legal or equitable interest in, the disputed property immediately before and immediately after that property is transferred to the disputed ownership fund.Because a transferor-claimant is both a transferor and a claimant, generally the terms also include a transferor-claimant.See paragraph (d) of this section for rules applicable only to transferors that are not transferor-claimants and paragraph (e) of this section for rules applicable only to transferors that are also transferor-claimants.For Federal income tax purposes, a disputed ownership fund is treated as the owner of all assets that it holds.