Reit liquidating trust

However, a partner generally must recognize gain on the distribution of property (other than money) if the partner contributed appreciated property during the 7-year period before the distribution.

A partnership generally does not recognize gain or loss because of distributions it makes to partners.

The trustee takes control of the newly formed liquidating trust.

The role of the trustee of the liquidating trust is to administer and manage the liquidating trust, sell assets, pay creditors, resolve any claims and distribute any available funds to the beneficiaries of the trust.

A liquidating trust may also be an effective method for a fund manager to wind down a fund without having a significant role in the liquidation.

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Similarly, in the case of a liquidating distribution from a partnership, the business assets are deemed to have been distributed to the partners and transferred to the liquidating trust.Under Revenue Procedure 82-58, the IRS will issue a private letter ruling if 8 conditions are met.Such conditions include, among other things, that the primary purpose of the trust is liquidation of the assets with no objective of carrying on a trade or business and the trust agreement should contain a fixed or determinable termination date. A "business trust" should be considered instead of a liquidating trust if the purpose of the trust is to carry on a trade or business.A business trust is either treated as a corporation or partnership for federal income tax purposes.Since the business assets are deemed to have been distributed to the owners and then transferred to the liquidating trust, there will be an immediate recognition of a gain or loss from liquidation of the former business by the owners.

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