Michael T. Donovan and Timothy G. Stewart Published in the Journal of Taxation

The July 2014 issues of The Journal of Taxation has published an article by Lewis Rice members Michael T. Donovan and Timothy G. Stewart. The article, "Material Participation by Trusts: Questions Remain after Frank Aragona Trust", examined the March 27 tax court decision in Frank Aragona Trust v. Commissioner.

Nongrantor trusts that own and operate real estate rental activities were given a boost by the U.S. Tax Court in the case, which overrode IRS opposition and held that the actions of the trustees could be taken into account for purposes of determining material participation under the passive loss rules. The new "net investment income" tax also could be affected by the court's decision. The article provides a discussion of the IRS's view of a trust's material participation in passive activities, the tax court's determination of trust material participation in the case, and the questions that remain following the court's decision.

Mike, Chairman of the Firm's Tax Department, has significant experience in all aspects of tax planning for partnerships and LLCs, corporations, real estate, REITs, and funds. He regularly advises clients in connection with merger and acquisition transactions, real estate projects, and complex partnership issues. Mike also counsels exempt organizations on issues relating to tax-exempt status, intermediate sanctions, and joint ventures with for-profit entities.

Tim is a certified public accountant as well as a licensed attorney at law. Prior to joining Lewis Rice, he spent many years providing client services in "Big 4" public accounting firms as well as working as an in-house tax attorney for a large St. Louis multinational corporation.


Throughout our Firm's history, Lewis Rice attorneys have made excellence the foundation of our practice. Founded in 1909, more than a century of service has given us the experience, resources and tools to serve our clients' dynamic needs. Our diverse team of more than 150 attorneys provides counsel and solutions for the challenges facing local, regional and national businesses, as well as individuals and families. Lewis Rice maintains offices in downtown St. Louis, suburban Town & Country and Washington, Missouri and Edwardsville, Illinois. We also have offices in downtown Kansas City, Missouri and suburban Overland Park, Kansas.

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