The answer is no. The income does not get taxed twice. ESBTs pay tax at the trust level. After paying tax, the income is effectively added to principal. Therefore, the son in this case is effectively receiving distributions of principal and not income.
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Matthew E. Rappaport, Esq., LL.M.
(516) 558-3377
mer@merlawfirm.com
Original Message:
Sent: 09-13-2016 13:32
From: Ronald Seroda
Subject: Electing Small Business Trust
A client of mine gave 29% of his S Corp. stock to an Electing Small Business Trust whose son is the beneficiary. The son The trust has to be tax on the income that flow through to the trust. My question is does the son also have to pay tax on the income?
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Ronald Seroda
Ronald Serroda PC
Dix Hills NY
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