Passive Activity Loss Rules for Trusts Carrying on a Business

Abstract

<p>The striking increase in the use of trusts in recent years in owning farmland<strong>1 </strong>has focused attention on passive activity rules applicable to trusts particularly when the trust is used in farm and ranch estate (and business) planning if a business is carried on by the trust.<strong>2 </strong>A 2003 United States District Court case<strong>3 </strong>has cast a bright light on the fact that the Department of the Treasury has yet to issue regulations governing trusts in a setting where passive activity losses have been incurred.</p>