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Is stock held by an employer in a rabbi trust treated as "outstanding" when applying the 30% rule under 1042?

Posted

Are you aware of any specific authority on this issue? The conclusion that the stock is outstanding would seem to run contrary to the idea that the grantor of the trust is the owner of the trust property.

I was thinking that this may be a state law issue.

Posted

I think that this issue surfaced in connection with the model rabbi trust developed by the IRS, and the IRS finally got comfortable with the fact that the shares are treated as outstanding. However, that was about 10 years ago, so my memory may be somewhat inaccurate.

Kirk Maldonado

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