Treatment as shareholder Sample Clauses

Treatment as shareholder. (i) The income beneficiary who makes the QSST election and is treated (for pur- poses of section 678(a)) as the owner of that portion of the trust that consists of S corporation stock is treated as the shareholder for purposes of sections 1361(b)(1), 1366, 1367, and 1368. (ii) If, upon the death of an income beneficiary, the trust continues in ex- istence, continues to hold S corpora- tion stock but no longer satisfies the QSST requirements, is not a qualified subpart E trust, and does not qualify as an ESBT, then, solely for purposes of section 1361(b)(1), as of the date of the income beneficiary’s death, the estate of that income beneficiary is treated as the shareholder of the S corporation with respect to which the income bene- ficiary made the QSST election. The estate ordinarily will cease to be treat- ed as the shareholder for purposes of section 1361(b)(1) upon the earlier of the transfer of that stock by the trust or the expiration of the 2-year period beginning on the day of the income beneficiary’s death. During the period that the estate is treated as the share- holder for purposes of section 1361(b)(1), the trust is treated as the shareholder for purposes of sections 1366, 1367, and 1368. If, after the 2-year period, the trust continues to hold S corporation stock and does not otherwise qualify as a permitted shareholder, the corpora- tion’s S election terminates. If the ter- mination is inadvertent, the corpora- tion may request relief under section 1362(f).

Treatment as shareholder. (i) The income beneficiary who makes the QSST election and is treated (for pur- poses of section 678(a)) as the owner of that portion of the trust that consists of S corporation stock is treated as the shareholder for purposes of sections 1361(b)(1), 1366, 1367, and 1368. (ii) If, upon the death of an income beneficiary, the trust continues in ex- istence, continues to hold S corpora- tion stock but no longer satisfies the QSST requirements, and is not a quali- fied subpart E trust, then, solely for purposes of section 1361(b)(1), as of the date of the income beneficiary’s death, the estate of that income beneficiary is treated as the shareholder of the S cor- poration with respect to which the in- come beneficiary made the QSST elec- tion. The estate ordinarily will cease to be treated as the shareholder for purposes of section 1361(b)(1) upon the earlier of the transfer of that stock by the trust or the expiration of the 60- day period beginning on the day of the income beneficiary’s death. However, if the entire corpus of the trust is includ- ible in the gross estate of that income beneficiary, the estate will cease to be treated as the shareholder for purposes of section 1361(b)(1) upon the earlier of the transfer of that stock by the trust or the expiration of the 2-year period beginning on the day of the income beneficiary’s death. For the purpose of determining whether the entire trust corpus is includible in the gross estate of the income beneficiary, any commu- nity property interest in the trust held by the income beneficiary’s spouse which arises by reason of applicable U.S. state law is disregarded. During the period that the estate is treated as the shareholder for purposes of section 1361(b)(1), the trust is treated as the shareholder for purposes of sections 1366, 1367, and 1368. If, after the 60-day period, or the 2-year period, if applica- ble, the trust continues to hold S cor- poration stock, the corporation’s S election terminates. If the termination is inadvertent, the corporation may re- quest relief under section 1362(f).