Sale of QSBS from IDGT to Grantor

Technical topics regarding tax preparation.
#1
gregmey  
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25-Mar-2015 11:12am
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Los Angeles
How is the sale of QSBS from an Intentionally Defective Grantor Trust to the grantor treated? There is an LLC which has four IDGT's as members. The client is the grantor for all of the IDGT's so they pay the tax for all of the income in the LLC.

The final remaining assets in the LLC is QSBS which was purchased in 2015. They want to close up the LLC and are planning to purchase the QSBS from the LLC at an arms length transaction.

Since the grantor pays all the taxes related to the intentionally defective trust is the sale (assuming it is arms length) ignored and the QSBS holding period and basis transferred to the grantor or would this invalidate the QSBS benefits?
 

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