(C) ProPublica.
This unaltered story was originally published at ProPublica.org. [1]
Licensed under creative commons by-nc-nd/3.0 [2]
South Dakota’s tax avoidance schemes represent federalism at its worst
Author Name, ProPublica
2021-10-07 00:00:00
Possibly the most pernicious of these state-sanctioned tax-avoidance strategies is one engineered by Nevada. Known as the Nevada incomplete-gift nongrantor trust (NING), this vehicle allows an out-of-state resident to set up a trust in Nevada that will be treated as a “nongrantor trust” for income tax purposes — meaning that it reports and pays tax separately from its owner. Normally, a gift to a nongrantor trust would trigger a 40 percent federal gift tax, but NINGs are structured to avoid that result under federal law. The upshot is that residents of high-tax states such as California — which has a top state income tax rate of 13.3 percent — can transfer stocks and other investment assets to NINGs and avoid state income tax on dividends and gains, all without any negative federal gift tax consequences. (Delaware, South Dakota and Wyoming now offer similar trusts, known as DINGs, SDINGs and WINGs.)
[END]
[1] URL:
https://www.washingtonpost.com/outlook/2021/10/07/tax-shelters-states-pandora/
[2] URL:
https://creativecommons.org/licenses/by-nc-nd/3.0/us/
URL:
https://www.propublica.org/steal-our-stories
ProPublica via Magical.Fish Gopher News Feeds:
gopher://magical.fish/1/feeds/news/propublica/
