RE: FW: Re:
my irs people , also now can't see substitution provision causing sales tax , as it could happen multiple times over the life of the trust, setllor could not be liable for sales tax , or is the trust the seller and the settlor the buyer?
so that the trust pays? then if leon wantss to substitutiie cash he pays. i am aware of 1031 but I spoke to a calif sales tax person and she said not under substruion provision. but could not point to authority either
understood, Im in search of authority, if he had put the art in day one, there wouldn't be a sales
tax. on contribution to the grat. would there have been on the pourover.? is there case law ,
? my accts agree with me, but i pay them . so i discount it
Can you find any authority under the NY sales tax law that;
A sale between a grantor trust and its grantor is either subject to or not subject to the sales tax. or
If a grantor retained annuity trust is funded with art and the annuity payments to the grantor are subsequently funded with interests in that same art that:
a. the transfer to the grantor annuity trust is either subject to or not subject to the sales tax
b. the annuity payments made with interests in the art are either subject to or not subject to the sales tax
I know there is authority that grantor retained annuity payments funded with real estate interests will be subject to the real property transfer tax.
If you don't know what a grantor retained annuity trust is you can call either me, Elyse or Amy and we'll explain it.
Carlyn S. McCaffrey I Partner McDermott Will & Emery LLP 1340 Madison Avenue, New York, NY 10173
Here's a thought from Amy Heller, one of my partners.
Carlyn S. McCaffrey | Partner
McDermott Will & Emery LLP | 340 Madison Avenue, New York, NY 10173
Can you put the art and possible some liquid assets in an LIC?
Amy E. Heller McDermott Will & Emery LLP 1340 Madison Avenue. New York. NY 10173
Sale or exchange is a term used in tax law to refer to a transaction in which value is received, triggering a gain or loss for income tax purposes. A sale or exchange is distinguished from inheritance, gifts, or other transactions in property which do not result in a calculable gain or loss.
The term "sale or exchange" is a term used in the federal income tax law to refer to such a transaction. There's no identical description in the NYS sales tax law.
Mark, Please email us the basic definition of a sale for purposes of the NYS sales tax law.
Carlyn S. McCaffrey | Partner
McDermott Will & Emery LLP | 340 Madison Avenue, New York, NY 10173
ok, however nystate follows most definitions from federal , talk tomorrrw , sorry to torture you
- the person who pays the sales tax is the person who is acquiring the tangible personal property, i.e., the paintings. yes - it could happen multiple times just like it can happen with individuals. If, for example, I hold a painting for investment purposes and make a section 1031 exchange, I pay sales tax. If I make a second 1031 exchange, I pay another sales tax, etc.
Carlyn S. McCaffrey I Partner McDermott Will & Emery LLP 1340 Madison Avenue. New York. NY 10173
Yes - the trust pays and then leon would pay if he took it back.
- Remember when you're thinking about this issue that it's not really a substitution power. We refer to it as that but if you look at the trust language, you will see that that's not what it says. It says that the settlor has the power to reacquire and acquire trust property by substituting therefore other property of an equivalent value.
Carlyn S. McCaffrey | Partner
McDermott Will & Emery LLP | 340 Madison Avenue, New York, NY 10173
thanks, he is acting in only one capacity, settlor, a sale to a grantor trust usually involves either a third party trustee , or if not- if its the same person he is still a trustee, they can make the argument two seperate roles an distinct entities, even though disregarded for federal tax purposes
A lively exchange with you is never a torture.
Carlyn S. McCaffrey i Partner McDermott Will & Emery LLP 1340 Madison Avenue. New York, NY 10173
Yes - that 's the problem and that's the position that the state tax commission has taken in the real property transfer tax arena
Carlyn S. McCaffrey | Partner
McDermott Will & Emery LLP | 340 Madison Avenue. New York, NY 10173