138-Masterclass on 529 Plans a.k.a. Qualified Tuition Programs - Part 1
Radical Personal Finance
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Is the Michigan Education Trust Subject to Federal Taxation?
The michigan education trust was created as a corporation, and that therefore, its income was subject to federal taxation. The way it would have worked is that the purchasers of the contract were not going to be taxed on the accruing value of the contract until the funds had been distributed. So they would pay annually the tax on the growth of the funds. About 55 thousand people immediately signed up for the programme. And the trust paid each year federal income tax on its investment earnings. But in may of 19 90, the trust sued the i r s seeking a refund of of their payments. It wasn't clear in the tax code at that time. Well, a lot of other
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