Liquidating trust grantor letter colton haynes and zachary quinto dating
The trust will be considered a liquidating trust with the primary purpose of liquidating its assets.
Should the purpose of the entity change, such as to carry on a for-profit business, then the entity will no longer be considered a liquidating trust.
The objective of a liquidating trust is to help expedite the liquidation of the entity, and allow the owners to recognize gain or loss and to receive proceeds in an orderly manner.
In addition, it may be prudent for the fund manager to set aside certain cash reserves before making final distributions to the fund owners.
It may take several years for such assets to be converted into cash.
Such assets may consist of securities that are illiquid or have certain restrictions or monies held in escrow where it will take several years for the conditions to be met for release of such funds.
A business trust is either treated as a corporation or partnership for federal income tax purposes.
Thus, the partner's basis in the property can never be greater than the partner's basis in the partnership.The fair value of the contribution to the liquidating trust would represent the new owner's basis in the liquidating trust.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.The remaining assets and liabilities are transferred into the newly formed trust and the former owners of the liquidating fund become unit holders or beneficiaries of the trust.
The newly formed trust is governed by a trust agreement executed between the former fund and the trustees before liquidation of the fund.
Upon the deemed contribution of the assets to the liquidating trust, the trust will have the same adjusted bases in its assets as the partners had in those assets immediately prior to the transfer to the trust.