Reforming the Grantor Trust Rules

49 Pages Posted: 3 Aug 2014

Date Written: August 1, 2001


Few things in the Internal Revenue Code (Code) are as enduring as the grantor trust rules. Housed in Subpart E of Subchapter J of the Code, they are essentially the same rules that were instituted by the so-called Clifford trust regulations promulgated over a half-century age. In instances where the grantor trust rules apply, the Code ignores the separate existence of a trust. Items of income, deductions, and credits against tax are instead attributed to the grantor. Grantors are thus unable to deflect income away from themselves to others (such as a trust or a trust beneficiary) whose income is taxed at a lower marginal rate. The purpose of the grantor trust rules then, and their purpose now, is to safeguard the progressive rate structure of the income tax.

Keywords: Tax

JEL Classification: K34

Suggested Citation

Soled, Jay, Reforming the Grantor Trust Rules (August 1, 2001). Notre Dame Law Review, Vol. 76, p. 375, 2001, Available at SSRN:

Jay Soled (Contact Author)

Rutgers University ( email )

1 Washington Park
Newark, NJ 07901-1825
United States
(973) 353-1727 (Phone)

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