The term qualified subchapter s trust refers to one of the two trusts that can hold subchapter s corporation stock. Income tax return for an s corporation shows all the income for the year and then splits it among all the shareholders on schedule k 1.

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Qualified subchapter s trusts are oftentimes used by donors to plan for the eventual transfer of subchapter s stock to a single heir after their death.

Qualified subchapter s trust. The qsst may be useful for estate planning purposes. Article 3 of the form is designed to satisfy this and all of the other statutory requirements of a qualified subchapter s trust qsst. Abstract qualified subchapter s trusts qssts can provide tax payers with substantial income tax and estate tax savings.

Qualified subchapter s trusts qssts in a subchapter s corporation the shareholders not the corporation pay the income tax on income the corporation earns. And all of the trust s accounting income must either be required by the terms of the trust instrument to be distributed or actually be distributed to the income beneficiary at least annually. In order to be so qualified the income beneficiary of the trust must be the sole trust beneficiary entitled to all of the trust income currently.

1361 d 3 for a trust to qualify as a qsst its terms must require that during the life of the current income beneficiary the trust will have only one income beneficiary. It is eligible to hold stock in an s corporation and under the s corporation rules it is treated as a subpart e trust sec. Qssts are different than other other s corporation trusts in that the beneficiary is usually someone other than the grantor of their estate.

One of these the qualified subchapter s trust qsst is modeled after the grantor trust. The corporate income tax return form 1120s u s.