Taxation
Ca. Tax Lawyer VOLUME 34, 2025 ANNUAL ISSUE
Content
- 2024-2025 California Lawyers Association Tax Section Executive Committee
- 2025 Annual Award Winners
- By the Tax Section Members
- Ctl Prize For Excellence In Writing
- Editors' Note: a New Way Forward
- From the Chief Counsels
- Government Contributions To Capital May Still Qualify For Exclusion From State Income Tax
- High Liability
- Inside This Issue
- Local Tax Sharing Agreements: a Constitutional Critique
- Managing Ftb Audits of International Taxpayers
- Message From the Chair
- Minutes From the 2025 Meeting of Eagle Lodge West
- Rational Basis or Broad Discretion: Legal Standards Governing Cdtfa Interpretations
- Table of Contents
- California's Anti-ing Trust Statute Comes With Strange Drafting Choices, Planning Opportunities, Landmines, and Apparent Errors
CALIFORNIA’S ANTI-ING TRUST STATUTE COMES WITH STRANGE DRAFTING CHOICES, PLANNING OPPORTUNITIES, LANDMINES, AND APPARENT ERRORS
AUTHOR1
Mark Mullin
On July 10, 2023, California enacted SB-131.2 The bill implemented RTC § 17082 (retroactive to January 1, 2023), aiming to shut down the incomplete gift nongrantor (ING) trust technique. This technique was used by some California-resident high net worth individuals to reduce California income taxes on certain kinds of income (such as gain from most sales of corporate stock).
However, several strange decisions in RTC § 17082’s drafting permit interesting workarounds and create surprising traps. For example, certain IRC § 679 trusts might allow California-only ING trusts to still save state income taxes, many trusts may be "surprise" ING trusts, the charitable ING exception provided by RTC § 17082 might not work, and it’s not clear whether the statute makes ING trusts into true grantor trusts for California purposes.