The U.S. Supreme Court decided Kaestner regarding a state's ability to impose income taxation on a trust. We will discuss the holding and its context when trusts hold business interests. Recent regulations and rulings regarding S corporation ownership are worth noting. Finally, basis step-up is becoming more important than estate tax planning for many taxpayers; we will discuss trust modifications (including a possible formula general power of appointment) and other tools.

You will learn:

  • What Kaestner did and didn't do regarding the constitutional limits imposed on state income taxation of trusts.
  • How state income taxation of business operations and sales of businesses affect trusts that own businesses.
  • How the government protects against revenue loss from recent changes expanding who beneficiaries of trusts owning S corporations can be.
  • When shareholder agreements governing sales of S corporation are or are not likely to violate the single class of stock rules, contrasting two 2019 private letter rulings.
  • Various strategies to plan basis when a beneficiary dies.
  • How one might consider including a formula general power of appointment to maximize basis step-up.
  • Whether a trust modification may trigger gift/estate/GST tax consequences.


Approved for 1.8 hours of general credit in Missouri
Approved for 1.5 hours of general credit in Illinois and California


Steve Gorin

*Please note that this is a 90-minute webinar

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