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Trusts

A trust is an agreement for one party to care for the assets of another party for the benefit of a third party. In essence, a trust is a business agreement. The person creating or the original owner of the assets is referred to as the Grantor. The party that will take care of the assets is known as the Trustee. The third party to receive the benefits is referred to as the Beneficiary.

Business Trusts

Terminology / By David J Hoare MSA / 12/21/2016 02/27/2022

The common law definition of a business is an investment of capital or property by individuals which creates the means to carry on towards the goal of generating a profit. Every state recognizes different legal formats to conduct business. The simplest and most common is the sole proprietorship. Other forms include partnerships, limited liability company and of course corporation status (S-Corporation is a federal tax option of a corporation). However, two states actually recognize another legal format – business trusts.

Replacement Reserves- Understanding the Fundamentals

REITs Pool, Investment Fund / By David J Hoare MSA / 04/09/2016 02/05/2022

Long and short term housing rental businesses use a financial operations tool to maintain, repair and upgrade the physical facilities. This tool is known as replacement reserves in the real estate industry. In almost all cases it is a contractual agreement requirement between the mortgage lender and the borrower.

Dividends and Distributions – Use in the Proper Context

Report Analysis - How to Read the Statements / By David J Hoare MSA / 04/29/2014 02/25/2022

Dividends and distributions refer to the payment of cash to investors. Why are there two separate terms? Well, the term is tied back to the type of entity that makes the payment. Simply stated, regular corporations, i.e. C-Corporations as identified in the Internal Revenue Code use the term ‘Dividends’ and S-Corporations (Small Business Corporations) use the term ‘Distributions’. In addition to S-Corporations, other closely held business use the term ‘Distributions’ to identify amounts disbursed to the respective owners or beneficiaries. These forms of entities include Partnerships, Limited Liability Corporations, Trusts and Estates.

Although it appears relatively simple at first, it is slightly more involved than this and this article addresses the proper definition and context use when using these two similar terms. In addition, there are more differences between the two terms than just the source of the payment. For a full and detailed understanding of the terms, continue reading.

Form 1041 – Income Tax Return for Estates

Specialty Taxes / By David J Hoare MSA / 03/05/2013 03/01/2022

When an individual passes away, his/her will or trust identifies a representative to administer his/her estate. This representative is referred to as the executor (male) or executrix (female) and is generally approved or assigned by the local circuit court. The Internal Revenue Service tasks this representative to file a final personal return and information returns until the estate is completely transferred to the heirs.

What is a K-1?

Income Taxes / By David J Hoare MSA / 02/14/2013 03/01/2022

A K-1 is a reporting tool to the Internal Revenue Service. It is used by Partnerships, S-Corporations and Trusts to report the taxpayer’s share of income, deductions, and credits. A K-1 is similar to Form W-2 or 1099 in that the information provided informs the taxpayer of what has been reported to the Internal Revenue Service.

What are Trusts?

Legal, Specialty Taxes / By David J Hoare MSA / 01/03/2013 03/01/2022

A trust is an agreement for one party to care for the assets of another party for the benefit of a third party. In essence, it is a business agreement. The person creating or the original owner of the assets is referred to as the Grantor. The party that will take care of the assets is known as the Trustee. The third party to receive the benefits is referred to as the Beneficiary.