Each of the DBSI Liquidating Trust and the DBSI Real Estate Liquidating Trust will be required to file federal income tax returns on IRS Form 1041 as a grantor trust and report, but not pay tax on, its respective tax items of income, gain, loss deductions and credits (the “Tax Items”). Each beneficiary will be required to report his, her, or its proportionate share of such Tax Items on his, her, or its federal income tax return, and pay any resulting federal income tax liability, regardless of whether the Trustee distributes sufficient cash to fund the tax. The Trustee will endeavor to distribute excess cash annually but makes no guaranty as to the timing or amount of cash distributions. In conjunction with the filing of IRS Form 1041 for each taxable year, the Trustee will issue you a “grantor letter” showing you your proportionate share of Tax Items of the Liquidating Trust.
IRS Circular 230 Disclaimer: To ensure compliance with IRS Circular 230, any U.S. federal tax advice provided in this communication is not intended or written to be used, and it cannot be used by the recipient or any other taxpayer (i) for the purpose of avoiding tax penalties that may be imposed on the recipient or any other taxpayer, or (ii) in promoting, marketing or recommending to another party a partnership or other entity, investment plan, arrangement or other transaction addressed herein.
THE FOREGOING DISCUSSION IS INTENDED ONLY AS A SUMMARY OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES, AND IS NOT A SUBSTITUTE FOR CAREFUL TAX PLANNING WITH A TAX PROFESSIONAL. THE ABOVE DISCUSSION IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT TAX ADVICE. THE TAX CONSEQUENCES ARE IN MANY CASES UNCERTAIN AND MAY VARY DEPENDING ON A BENEFICIARY’S PARTICULAR CIRCUMSTANCES. BENEFICIARIES ARE URGED TO CONSULT THEIR OWN TAX ADVISORS ABOUT THE FEDERAL, STATE, LOCAL, FOREIGN, AND OTHER TAX CONSEQUENCES.