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deedee7510 · Nov 22, 2010, 08:24 AM

The money that my husband and I am receiving for a gas lease is to be put right into my sons trust fund. What I need to know is, do I have to pay tax on the money received? If so how does that work? Any info would be greatly appreciated!

excon · Nov 22, 2010, 08:30 AM

Originally Posted by deedee7510

What I need to know is, do I have to pay tax on the money received? If so how does that work? Any info would be greatly appreciated!

Hello d:

It doesn't matter what you do with the money, you're going to have to pay income taxes on it. Maybe if you transferred the lease into your son's trust, he might be able to realize the income WITHOUT taxes...

In any case, you could visit a CPA. He could tell you how that works... Plus, he'd be able to DO it for you too. Certainly our resident tax experts will be along.. Hopefully, I'm not really, really wrong.

excon

deedee7510 · Nov 22, 2010, 08:36 AM

The money is going directly into the trust. And my son is only 6.

excon · Nov 22, 2010, 08:46 AM

Originally Posted by deedee7510

The money is going directly into the trust. And my son is only 6.

Hello again, d:

Does that mean the lease is in the name of the trust, or is that just the account it's deposited in? If it's in YOUR name, YOU will owe taxes on it. It doesn't matter how old your son is. If he receives income above a certain amount, he needs to pay taxes on it. The only consideration is how the trust is set up, and whether he can shelter ALL of the money. Those are questions for your CPA, and/or the person who set up the trust in the first place.

Again, hopefully, our tax experts can go into more detail with you.

excon

deedee7510 · Nov 22, 2010, 09:19 AM

By the way the lease is worded, my and my husbands names are on it, but so is the trust. So it has me very confused and my Tax preparer has never delt with this before. She is looking for answers as well.

AtlantaTaxExpert · Nov 22, 2010, 04:27 PM

The fact that your tax preparer could not give you an answer clearly shows that this is NOT a question to be answered on a forum of this nature.

Contact a competent enrolled agent or CPA who can properly research the question to give you an answer. It may cost you a few bucks to pay the research fee, but it is money well spent.

deedee7510 · Dec 6, 2010, 05:31 AM

I am sorry, but I have looked at all these other answers to these other questions, and the fact that Excon was the only one that was willing to help me, scares me. It seems a simple enough question compared to the many others I have seen, I basically would like to know who pays the tax, the trust or the parents? Or half and half?

excon · Dec 6, 2010, 05:55 AM

Originally Posted by deedee7510

I am sorry, but i have looked at all these other answers to these other questions, and the fact that Excon was the only one that was willing to help me, scares me.

Hello again, d:

Nahhh... Our tax expert helped. He told you, what I told you. You need to hire your own expert. I know, you THINK it's a simple question... But, apparently, it's NOT.

Look. My MAIN job here is distinguishing between those cases that people CAN handle on their own, and those that they can't. I'm all for doing stuff yourself, that CAN be done by yourself... But, the stuff you CAN'T do, you SHOULDN'T even attempt, because the costs of doing it WRONG well outweigh the cost of doing it right the first time.

Besides, it's like buying INSURANCE. IF the lawyer/CPA does it WRONG, you can sue him. If YOU do it wrong, you're just out a bunch of money... Plus, if you've been reading like you said, then you'd have found LOTS of people who are in BIG trouble, simply because they DIDN'T get legal advice when they should have...

excon

Fr_Chuck · Dec 6, 2010, 07:33 AM

Actually no it is complicated because the exact ( and I mean exact ) wording of the lease will decide who is the actual owner,

Also what type of trust, how it was set up and even where you are located makes a difference.

It is very possible that all of the money will be taxable,
( my opinion)
But also the part that the trust owns may not be, just the part that the you and wife owns could be taxable.

Is the trust set up as a income deferred funding, such as a retirement plan or will taxes be owed on all money taken from trust when they start to take it out.

Again, this is a very complicated issue