§671 — Trust income, deductions, and credits attributable to grantors and others as substantial owners

We disagree with petitioner that subpart E was not meant to apply to the facts at hand.

Section 671 provides that if a grantor or other person is treated as the owner of any portion of a trust, there shall then be included in computing the taxable income and credits of the grantor or the other person those items of income, deductions, and credits against tax of the trust which are attributable to that por

Governing Framework Section 671 provides that where a grantor ofa trust or another person is treated as the owner ofany portion ofa trust, "there shall then be included in computing [its] * * * taxable income and credits * * * those items ofincome, deductions, and credits against tax ofthe trust which are attributable to that portion ofth

Section 671 provides that when the grantor is treated as the owner of any portion of a trust, the grantor's taxable income and credits are computed taking into account those items of the trust's income, deductions, and credits attributable to the portion of the trust that the grantor is treated as owning.

Section 671 provides that the deemed owner of the trust, rather than the trust, is currently taxed on the trust’s income. The grantor is considered the owner of the trust or of a portion of the trust “if he has retained any interest which might, without the approval or consent of an adverse party, enable him to have the income from that portion dis

iod 1987 to 1989. Exhs. 9110 (TACI ledger for 1986), 9111 (Kanter ledger for 1987, Bates No. 000106), 9114. Respondent determined in the notice of deficiency issued to the Kanters for 1987 that the Bea Ritch Trusts were Kanter’s grantor trusts under section 671. Respondent further determined that, as such, all or portions of the following items constituted taxable income, losses, or deductions of Kanter: (1) $1,094,896 135 The foregoing suggests that, as of Jan. 1, 1986, Kanter owed approximatel

iod 1987 to 1989. Exhs. 9110 (TACI ledger for 1986), 9111 (Kanter ledger for 1987, Bates No. 000106), 9114. Respondent determined in the notice of deficiency issued to the Kanters for 1987 that the Bea Ritch Trusts were Kanter’s grantor trusts under section 671. Respondent further determined that, as such, all or portions of the following items constituted taxable income, losses, or deductions of Kanter: (1) $1,094,896 135 The foregoing suggests that, as of Jan. 1, 1986, Kanter owed approximatel

iod 1987 to 1989. Exhs. 9110 (TACI ledger for 1986), 9111 (Kanter ledger for 1987, Bates No. 000106), 9114. Respondent determined in the notice of deficiency issued to the Kanters for 1987 that the Bea Ritch Trusts were Kanter’s grantor trusts under section 671. Respondent further determined that, as such, all or portions of the following items constituted taxable income, losses, or deductions of Kanter: (1) $1,094,896 135 The foregoing suggests that, as of Jan. 1, 1986, Kanter owed approximatel

iod 1987 to 1989. Exhs. 9110 (TACI ledger for 1986), 9111 (Kanter ledger for 1987, Bates No. 000106), 9114. Respondent determined in the notice of deficiency issued to the Kanters for 1987 that the Bea Ritch Trusts were Kanter’s grantor trusts under section 671. Respondent further determined that, as such, all or portions of the following items constituted taxable income, losses, or deductions of Kanter: (1) $1,094,896 135 The foregoing suggests that, as of Jan. 1, 1986, Kanter owed approximatel

iod 1987 to 1989. Exhs. 9110 (TACI ledger for 1986), 9111 (Kanter ledger for 1987, Bates No. 000106), 9114. Respondent determined in the notice of deficiency issued to the Kanters for 1987 that the Bea Ritch Trusts were Kanter’s grantor trusts under section 671. Respondent further determined that, as such, all or portions of the following items constituted taxable income, losses, or deductions of Kanter: (1) $1,094,896 135 The foregoing suggests that, as of Jan. 1, 1986, Kanter owed approximatel

Section 671 provides that the grantor is taxable on the income attributable to any portion of the trusts for which he is treated as the owner under subpart E of the Code. The grantor is not necessarily the grantor named in the trust instrument. For income tax purposes, the grantor may be the person who funds the trust. Bixby v. Commissioner, 58 T.C

Section 671 provides that the grantor is taxable on the income attributable to any portion of the trusts for which he is treated as the owner under subpart E of the Code. The grantor is not necessarily the grantor named in the trust instrument. For income tax purposes, the grantor may be the person who funds the trust. Bixby v. Commissioner, 58 T.C

Section 671 provides that the grantor is taxable on the income attributable to any portion of the trusts for which he is treated as the owner under subpart E of the Code. The grantor is not necessarily the grantor named in the trust instrument. For income tax purposes, the grantor may be the person who funds the trust. Bixby v. Commissioner, 58 T.C

Section 671 provides that the grantor is taxable on the income attributable to any portion of the trusts for which he is treated as the owner under subpart E of the Code. The grantor is not necessarily the grantor named in the trust instrument. For income tax purposes, the grantor may be the person who funds the trust. Bixby v. Commissioner, 58 T.C

Section 671 provides that the grantor is taxable on the income attributable to any portion of the trusts for which he is treated as the owner under subpart E of the Code. The grantor is not necessarily the grantor named in the trust instrument. For income tax purposes, the grantor may be the person who funds the trust. Bixby v. Commissioner, 58 T.C

Section 671 provides that the grantor is taxable on the income attributable to any portion of the trusts for which he is treated as the owner under subpart E of the Code. The grantor is not necessarily the grantor named in the trust instrument. For income tax purposes, the grantor may be the person who funds the trust. Bixby v. Commissioner, 58 T.C

Section 671 provides that the grantor is taxable on the income attributable to any portion of the trusts for which he is treated as the owner under subpart E of the Code. The grantor is not necessarily the grantor named in the trust instrument. For income tax purposes, the grantor may be the person who funds the trust. Bixby v. Commissioner, 58 T.C

Section 671 provides that the grantor is taxable on the income attributable to any portion of the trusts for which he is treated as the owner under subpart E of the Code. The grantor is not necessarily the grantor named in the trust instrument. For income tax purposes, the grantor may be the person who funds the trust. Bixby v. Commissioner, 58 T.C

Section 671 provides that the grantor is taxable on the income attributable to any portion of the trusts for which he is treated as the owner under subpart E of the Code. The grantor is not necessarily the grantor named in the trust instrument. For income tax purposes, the grantor may be the person who funds the trust. Bixby v. Commissioner, 58 T.C

Section 671 provides that the grantor is taxable on the income attributable to any portion of the trusts for which he is treated as the owner under subpart E of the Code. The grantor is not necessarily the grantor named in the trust instrument. For income tax purposes, the grantor may be the person who funds the trust. Bixby v. Commissioner, 58 T.C

Section 671 provides that the grantor is taxable on the income attributable to any portion of the trusts for which he is treated as the owner under subpart E of the Code. The grantor is not necessarily the grantor named in the trust instrument. For income tax purposes, the grantor may be the person who funds the trust. Bixby v. Commissioner, 58 T.C

Section 671 provides that the grantor is taxable on the income attributable to any portion of the trusts for which he is treated as the owner under subpart E of the Code. The grantor is not necessarily the grantor named in the trust instrument. For income tax purposes, the grantor may be the person who funds the trust. Bixby v. Commissioner, 58 T.C

Section 671 provides that the grantor is taxable on the income attributable to any portion of the trusts for which he is treated as the owner under subpart E of the Code. The grantor is not necessarily the grantor named in the trust instrument. For income tax purposes, the grantor may be the person who funds the trust. Bixby v. Commissioner, 58 T.C

Section 671 provides that the grantor is taxable on the income attributable to any portion of the trusts for which he is treated as the owner under subpart E of the Code. The grantor is not necessarily the grantor named in the trust instrument. For income tax purposes, the grantor may be the person who funds the trust. Bixby v. Commissioner, 58 T.C

Section 671 provides that the grantor is taxable on the income attributable to any portion of the trusts for which he is treated as the owner under subpart E of the Code. The grantor is not necessarily the grantor named in the trust instrument. For income tax purposes, the grantor may be the person who funds the trust. Bixby v. Commissioner, 58 T.C

Section 671 provides that the grantor is taxable on the income attributable to any portion of the trusts for which he is treated as the owner under subpart E of the Code. The grantor is not necessarily the grantor named in the trust instrument. For income tax purposes, the grantor may be the person who funds the trust. Bixby v. Commissioner, 58 T.C

Section 671 provides that the grantor is taxable on the income attributable to any portion of the trusts for which he is treated as the owner under subpart E of the Code. The grantor is not necessarily the grantor named in the trust instrument. For income tax purposes, the grantor may be the person who funds the trust. Bixby v. Commissioner, 58 T.C

Section 671 provides that the grantor is taxable on the income attributable to any portion of the trusts for which he is treated as the owner under subpart E of the Code. The grantor is not necessarily the grantor named in the trust instrument. For income tax purposes, the grantor may be the person who funds the trust. Bixby v. Commissioner, 58 T.C

Section 671 provides that the grantor is taxable on the income attributable to any portion of the trusts for which he is treated as the owner under subpart E of the Code. The grantor is not necessarily the grantor named in the trust instrument. For income tax purposes, the grantor may be the person who funds the trust. Bixby v. Commissioner, 58 T.C

Section 671 provides that the grantor is taxable on the income attributable to any portion of the trusts for which he is treated as the owner under subpart E of the Code. The grantor is not necessarily the grantor named in the trust instrument. For income tax purposes, the grantor may be the person who funds the trust. Bixby v. Commissioner, 58 T.C

Section 671 provides that the grantor is taxable on the income attributable to any portion of the trusts for which he is treated as the owner under subpart E of the Code. The grantor is not necessarily the grantor named in the trust instrument. For income tax purposes, the grantor may be the person who funds the trust. Bixby v. Commissioner, 58 T.C

Section 671 provides that the grantor is taxable on the income attributable to any portion of the trusts for which he is treated as the owner under subpart E of the Code. The grantor is not necessarily the grantor named in the trust instrument. For income tax purposes, the grantor may be the person who funds the trust. Bixby v. Commissioner, 58 T.C

Section 671 provides that the grantor is taxable on the income attributable to any portion of the trusts for which he is treated as the owner under subpart E of the Code. The grantor is not necessarily the grantor named in the trust instrument. For income tax purposes, the grantor may be the person who funds the trust. Bixby v. Commissioner, 58 T.C

Section 671 provides that the grantor is taxable on the income attributable to any portion of the trusts for which he is treated as the owner under subpart E of the Code. The grantor is not necessarily the grantor named in the trust instrument. For income tax purposes, the grantor may be the person who funds the trust. Bixby v. Commissioner, 58 T.C

Section 671 provides that the grantor is taxable on the income attributable to any portion of the trusts for which he is treated as the owner under subpart E of the Code. The grantor is not necessarily the grantor named in the trust instrument. For income tax purposes, the grantor may be the person who funds the trust. Bixby v. Commissioner, 58 T.C

Section 671 provides that the grantor is taxable on the income attributable to any portion of the trusts for which he is treated as the owner under subpart E of the Code. The grantor is not necessarily the grantor named in the trust instrument. For income tax purposes, the grantor may be the person who funds the trust. Bixby v. Commissioner, 58 T.C

Section 671 provides that the grantor is taxable on the income attributable to any portion of the trusts for which he is treated as the owner under subpart E of the Code. The grantor is not necessarily the grantor named in the trust instrument. For income tax purposes, the grantor may be the person who funds the trust. Bixby v. Commissioner, 58 T.C

Section 671 provides that the grantor is taxable on the income attributable to any portion of the trusts for which he is treated as the owner under subpart E of the Code. The grantor is not necessarily the grantor named in the trust instrument. For income tax purposes, the grantor may be the person who funds the trust. Bixby v. Commissioner, 58 T.C

However, such treatment is inconsistent with the stipulation of facts, in which petitioner agreed not only that the trust "is a grantor trust", but further, in apparent reliance upon section 671, that "each item of income and expense [of the trust] is reported individually by the grantor".

Section 671 provides that when the grantor is treated as the owner of any portion of a trust, the grantor's taxable income and credits are computed taking into account those items of the trust's income, deductions, and credits attributable to the portion of the trust that the grantor is treated as owning. Section 677(a) provides that the grantor is

Section 671 provides that when the grantor is treated as the owner of any portion of a trust, the grantor's taxable income and credits are computed taking into account those items of the trust's income, deductions, and credits attributable to the portion of the trust that the grantor is treated as owning. Section 677(a) provides that the grantor is

And Treasury Regulation § 301.6231(c)-6(a) provides that partnership items of a partner whose income is determined by an indirect method of proof be treated as nonpartnership items.

uch property, the Code ‘looks through’ the trust form and deems such grantor or other person to be the owner of the trust property and attributes the trust income to such person.” Estate of O’Connor v. Commissioner, 69 T.C. 165, 174 (1977); see also I.R.C. § 671. A person other than the grantor shall be treated as the owner of any portion of a trust with respect to which that person has a power exercisable solely by himself to vest the corpus or the income therefrom in himself. I.R.C. § 678(a)(1

As relevant here, a grantor trust may be treated as a shareholder of an S corporation under section 1361(c)(2)(A)(i).6 Under section 671, the deemed owners of a grantor trust are taxable on the trust’s income attributable to them.

The GST Trust was a grantor trust, see §§ 671–678, and this gain was likewise reported on the joint return filed by Mr.

The GST Trust was a grantor trust, see §§ 671–678, and this gain was likewise reported on the joint return filed by Mr.

The GST Trust was a grantor trust, see §§ 671–678, and this gain was likewise reported on the joint return filed by Mr.

Under section 671, petitioner is required to report all tax consequences ofthe Trust's activities on his personal Federal tax return. The Trust document indicates that petitioner has no control over the trustee and cannot force the trustee to make distributions or investments. Petitioner contends that as a beneficiary ofthe Trust he does not hold a prope

- 6 - [*6] Shortly after the closing Messrs. Bercy and Levitt each disbursed $50,000 to Girari. Each disbursed another $50,000 to Girari a month or so later. Although the loan was secured by Girari's assets, the lenders neglected to file financing statements with the California secretary ofstate to perfect their security interests. C. Re

Each loan had a 5.88% interest rate and a note secured by the partnership's assets, but neither Maurice nor Mr. Cafritz was personally liable on the notes. Out ofthese debt proceeds Mar-Cal, Mayfair, and Brinkley in June 2009 made debt-financed distributions to Maurice of$10,854,950, $4,790,857, and $6,413,684, respectively. The

orate return for any ofthe 1990 to 2004 tax years, or for that matter any returns for any ofhis trusts, (Zeus Trust, T.F. Trust, and the Family Trust) for the years at issue. (While Dr. Reynoso wouldn't have had to file a return for a grantor trust, sec. 671;4 see also Gould v. Commissioner, 139 T.C. 418, 435 (2012), af[d, 552 F. App'x 250 (4th Cir. 2014), he did claim at least once that the T.F. Trust was an irrevocable trust; ifthis were true, it should have filed a return, see, e.g., Kalapodi

I understand that the power granted in this Section will cause the income ofmy trust to be taxed to me under certain provisions ofSection 671 - 677 ofthe Internal Revenue Code.

301.7701-2(c)(2), Proced. & Admin. Regs. - 4 - [*4] 752 and therefore had no effect on outside basis. The result was a large, artificial increase in outside basis. On December 31, 1998, after closing the short sale transactions, Mr. Jump and the Jump Trust (through Gateway Grain and Omaha Pump) transferred their American Boat partne

Under section 671, the grantor ofa grantortrust is treated "as the owner ofthe trust assets, thus making the trust assets taxable to the grantor, until those trust assets are distributed to the grantee." Resolution Trust Corp. v. MacKenzie, 60 F.3d 972, 976-977 (2d Cir. 1995). A grantor trust is disregarded as a separate taxable entity to the extent ofth

Section 671 and the provisions that follow it lay out the rules for when a taxpayer is treated as the owner ofa trust.¹¹ Iftreated as the owner ofthe 8Sec. 170(f)(8)(A). 9Sec. 170(f)(8)(B). ¹°Sec. 170(f)(8)(C). ¹¹Secs. 671-679. _ 9 _ [*9] trust, the Kalapodises might have been entitled to report the tax attributes of the trust on their personal re

Hence, the investor could partake in the receivables’ built-in losses. Mr. Rogers also hoped that the main and subtrusts would qualify as trusts under the check-the-box regulations. See sec. 301.7701-4, Proced. & Admin. Regs. But Federal law determines how an entity organized under State law is taxed. Moline Props., Inc. v. Commissioner,

table contribution deductions subject to the limit tions of section 170(b) (1) and 9Mr. Milenski's license to practice real estate appraisal was suspended by the State of olorado on May 1, 2008, "FOR OVERVALUING conservation easements". Pursuant to sec. 671, al of the income, deductions, and credits against tax attributab e to the Delmar L. Holmes Trust and the Patricia A. Holmes Trust are reported on the Holmeses' individual Federal income tax eturns. - 16 - (2), carrying the remainder forward.

rs cannot, as a basis for collateral estoppel, rely on the bankruptcy court's findings that the MCLT was a grantor trust since its finding, in that respect, did not survive the Supreme Court's reversal ofthe Court ofAppeals." (b) Grantor Trust Rules Section 671 prpvides that, where the grantor or another person is treated as the owner ofany por ion ofa trust, he shall compute his taxable income and credits by taking into account "those items ofincome, deductions, and credits against tax ofthe tr

671; see also Blum v. Commissioner . T.C. Memo. 2012-16. Accordingly, petitioner and the Reddam Trust are coterminous for purposes ofthis opinion. We will refer to both the Reddam Trust and petitioner as "petitioner" (continued...) - 8 - On May 19, 1999 petitioner executed an engagement letter with KPMG related to the OPIS strategy. In the le

table contribution deductions subject to the limit tions of section 170(b) (1) and 9Mr. Milenski's license to practice real estate appraisal was suspended by the State of olorado on May 1, 2008, "FOR OVERVALUING conservation easements". Pursuant to sec. 671, al of the income, deductions, and credits against tax attributab e to the Delmar L. Holmes Trust and the Patricia A. Holmes Trust are reported on the Holmeses' individual Federal income tax eturns. - 16 - (2), carrying the remainder forward.

Trust Fund Recovery Penalty Section 6672 (a) provides that any person required to withhold and pay over any tax who willfully fails to do so is liable for a TFRP.

ts when made because a rabbi trust, which is in essence a grantor trust, is merely a set-aside of funds by the grantor/employer who is entitled to deductions only as the funds are distributed or made available to the beneficiary/employee. See, e.g., sec. 671; Accardi v. IT Litig. Trust (In re IT Group, Inc.), 448 F.3d 661, 665 (3d Cir. 2006). SBE's deduction of its payments to U.S. leasing company - for deposit in the HD Vest account for the years in which those payments were made is not at issu

The trust agreement further provides that the'trustee is not obligated to file any Federal income tax returns or schedules on behalf of the Essex Drive Trust notwithstanding " section 671 of the * * * [I .R.C.] of 1954 or any other applicable regulations ."6 The trust agreement further provides that a beneficiary "has only an interest in t

.) - 15 - grantor,or another person is treated under-subpart E (section 671 and following) as the owner of any portion .of a trust, there are included in computing his tax liability those items of income, deduction, and credit against tax attributable-to or-included in that portion ." Sec .

ch Drexel had been interested in financing an acquisition . Somerville S Trust and Certain Other Entities That It Owne d During each of the years at issue, Mr . Ackerman was treated as the owner of Somerville S Trust, a so-called grantor trust under section 671 . For all relevant taxable years of petition- ers, all of the income, deductions, and credits of Somerville S Trust were includible in the computation of their taxable income and credits . During each of the years at issue, Mr . Lerner wa

“When a grantor or another person is treated under subpart E (section 671 and following) as the owner of any portion of a trust, there are included in computing his tax liability those items of income, deduction, and credit against tax attributable to or included in that portion.” Sec.

the Aegis Company, Court Cases and legal opinions regarding IRS Notice 97- 24. Mr. Richardson provided a report from the Aegis Company that addressed each paragraph of IRS Notice 97-24 in which it was pointed out that Notice 97-24 was concerned with I.R.C. Sec 671-679 as it pertains to grantor trusts and that when a person attempts to apply business trust procedures of tax reduction to an “ordinary trust” the trust is labeled by the IRS as an “abusive trust”. The report concluded that 97-24 is n

the Aegis Company, Court Cases and legal opinions regarding IRS Notice 97- 24. Mr. Richardson provided a report from the Aegis Company that addressed each paragraph of IRS Notice 97-24 in which it was pointed out that Notice 97-24 was concerned with I.R.C. Sec 671-679 as it pertains to grantor trusts and that when a person attempts to apply business trust procedures of tax reduction to an “ordinary trust” the trust is labeled by the IRS as an “abusive trust”. The report concluded that 97-24 is n

The grantor trust is not taxed on the income that is taxable to the grantor. Id. For purposes of the grantor trust provisions, a grantor includes any person to the extent that person either creates a trust or gratuitously transfers property, directly or indirectly, to a trust. Sec. 1.671-2(e)(1), Income Tax Regs. If one person creates or

The grantor trust is not taxed on the income that is taxable to the grantor. Id. For purposes of the grantor trust provisions, a grantor includes any person to the extent that person either creates a trust or gratuitously transfers property, directly or indirectly, to a trust. Sec. 1.671-2(e)(1), Income Tax Regs. If one person creates or

The grantor trust is not taxed on the income that is taxable to the grantor. Id. For purposes of the grantor trust provisions, a grantor includes any person to the extent that person either creates a trust or gratuitously transfers property, directly or indirectly, to a trust. Sec. 1.671-2(e)(1), Income Tax Regs. If one person creates or

stances, the statutory grantor trust provisions, sections 671–679, treat the grantor of the trust and, sometimes, a third party, as the substantial owner of all or part of the trust. Trust income is taxed to the substantial owner under the rules of section 671. Because the conditions imposed by each of the grantor trust provisions are independent of those imposed by the others, the grantor can avoid taxation only if (1) he does not possess a disqualifying reversionary interest, sec. 673, (2) the

es, the statutory grantor trust provisions (secs. 671 through 679) treat the grantor of the trust and, sometimes, a third party, as the substantial owner of all or part of the trust. Trust income is taxed to the substantial owner under the rules of section 671. Because the conditions imposed by each of the grantor trust provisions are independent of those imposed by the others, the grantor can avoid taxation only if (1) he does not possess a disqualifying reversionary interest (sec. 673), (2) th

stances, the statutory grantor trust provisions, sections 671–679, treat the grantor of the trust and, sometimes, a third party, as the substantial owner of all or part of the trust. Trust income is taxed to the substantial owner under the rules of section 671. Because the conditions imposed by each of the grantor trust provisions are independent of those imposed by the others, the grantor can avoid taxation only if (1) he does not possess a disqualifying reversionary interest, sec. 673, (2) the

stances, the statutory grantor trust provisions, sections 671–679, treat the grantor of the trust and, sometimes, a third party, as the substantial owner of all or part of the trust. Trust income is taxed to the substantial owner under the rules of section 671. Because the conditions imposed by each of the grantor trust provisions are independent of those imposed by the others, the grantor can avoid taxation only if (1) he does not possess a disqualifying reversionary interest, sec. 673, (2) the

stances, the statutory grantor trust provisions, sections 671–679, treat the grantor of the trust and, sometimes, a third party, as the substantial owner of all or part of the trust. Trust income is taxed to the substantial owner under the rules of section 671. Because the conditions imposed by each of the grantor trust provisions are independent of those imposed by the others, the grantor can avoid taxation only if (1) he does not possess a disqualifying reversionary interest, sec. 673; (2) the

stances, the statutory grantor trust provisions, sections 671–679, treat the grantor of the trust and, sometimes, a third party, as the substantial owner of all or part of the trust. Trust income is taxed to the substantial owner under the rules of section 671. Because the conditions imposed by each of the grantor trust provisions are independent of those imposed by the others, the grantor can avoid taxation only if (1) he does not possess a disqualifying reversionary interest, sec. 673, (2) the

ancy by the entirety); Edmonds v. 12 This is in contrast to secs. 671-679, found in subpart E of subchapter J (concerning the income tax treatment of grantor trusts), which are expressly granted the attribute of exclusiveness by the last sentence of sec. 671. See H. Rept. 1337 83d Cong., 2d Sess. A212 (1954); sec. 1.671-1(c), Income Tax Regs. 13 Secs. 661 and 662 also do not govern situations in which those sections conflict with more specific Code sections in subchapter J, such as section 691,

grantor trust at that time. Even if it later became a split-interest trust, petitioner would not be entitled to the charitable deduction carryovers in question. As the Trust's grantor, the Code required Mr. Stussy to report its tax attributes, see sec. 671; see also sec. 1.671- 2(c), Income Tax Regs., one of which pertained to the charitable contribution. It is undisputed that the Code gave Mr. Stussy the right to deduct the charitable contribution subject to the percentage limitations set fort

An item of income, deduction, or credit included in computing a 2Petitioner does not explain the increase in income from the gain on disposition of the asset but, apparently, it is related to the change in the depreciation deduction. -4- grantor's taxable income and credits is treated as if the grantor had received or paid it directly. S