then, on the date of such reduction, the employment of such employee shall be deemed terminated with respect to such estate, trust, or beneficiary to the extent of the actual reduction in such estate's, trust's, or beneficiary's proportionate interest in the income of the estate or trust. (For example, if $100 of WIN expenses were apportioned to a beneficiary and if his proportionate interest in the income of the estate or trust is reduced from 60 percent to 30 percent (that is, 50 percent of his original interest), then the employment of the employee to which such WIN expenses relates shall be deemed terminated as to that beneficiary to the extent of $50.) Accordingly, a recapture determination shall be made with respect to such estate, trust, or beneficiary. For purposes of such recapture determination the period of employment of any employee or employees with respect to whom WIN expenses were paid or incurred shall be the period beginning with the initial date of employment (as defined in paragraph (c)(1) of § 1.50A-3 ) with respect to the estate or trust and ending with the date on which such reduction occurs.
Period ending Dec. 31, 1972 | |
Total WIN expenses for the taxable year | $60,000 |
XYZ Trust ($30,000/$60,000) | 30,000 |
Beneficiary A ($30,000/$60,000) | 30,000 |
Assuming that during 1972 beneficiary A did not directly incur any WIN expenses and that he did not own any interest in other estates, trusts, electing small business corporations, or partnerships incurring WIN expenses, the WIN expenses incurred by XYZ Trust and by beneficiary A are $30,000 each. For the taxable year 1972, XYZ Trust and beneficiary A each had a credit earned of $6,000. Each credit earned was allowed under section 40 as a credit against the liability for tax.
Period ending Dec. 31, 1972 | |
Total WIN expenses for the taxable year | $60,000 |
XYZ Trust ($30,000/$60,000) | 30,000 |
Beneficiary A ($15,000/$60,000) | 15,000 |
Beneficiary B ($15,000/$60,000) | 15,000 |
26 C.F.R. §1.50A-6