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Accounting for Segregated Amounts - Split Interest Trust

A trust that has segregated amounts must sepa­rately account for the income, deductions, and other items attributable to each segregated amount in the books of account and separately account to each of the beneficiaries of the trust.

Separate accounting will be made according to the method regularly employed by the trust, if the method is reasonable. In all other cases, it will be made in a manner that, in the opinion of the Internal Revenue Service, is reasonable.

A method of separate accounting will be con­sidered regularly employed by a trust when the method has been consistently followed in earlier tax years or when a trust that has never before kept segregated amounts begins a reasonable method of separate accounting for its segre­gated amounts and consistently follows such method in the future. The trust will keep perma­nent records and other data relating to the segregated amounts as are necessary to enable the IRS to determine the correctness of the methods used to segregate these amounts.

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Page Last Reviewed or Updated: 14-Mar-2014