A simple pass through trust is selling its sole asset, resulting in a mid six figure capital gain. The trust will pay all taxes and will invest the remainder. All investment income will be distributed to the trust beneficiaries. Other deductions would be for yet unknown legal fees and possibly an income collection and distribution fee charged by a bank trust department should one be so engaged.
Queries:
- Is the capital gain subject to AMT? If so, how much of it and at what rate?
- I understand --perhaps incorrectly -- that AMT provides a credit for subsequent tax years with lower income. How would this affect the trust which will, in effect, have zero future net income after distributions to beneficiaries?
(Note: The trust document would not allow distribution of the sale proceeds to the beneficiaries.)
Thank you for your help Bill