QUALIFIED SUBCHAPTER S-CORP TRUST (QSST)
Back to GlossaryDefinition
A trust that is allowed to own stock in S-Corporations.
Summary
A Qualified Subchapter S-Corp Trust (QSST) is a special type of trust that meets specific IRS requirements, allowing it to hold stock in S-Corporations while maintaining the S-Corp's tax-advantaged status. Unlike regular trusts that would disqualify S-Corp status, a QSST can be a shareholder because it meets strict criteria: it must have only one income beneficiary during the beneficiary's lifetime, distribute all income annually to that beneficiary, and meet other technical requirements. This structure allows families to use trusts for estate planning while preserving the benefits of S-Corp ownership.
Usage Context
Understanding QSSTs is crucial when studying S-Corporation shareholder restrictions, estate planning strategies, and business succession planning in tax or business law courses.
Common Confusions
- Thinking any trust can own S-Corp stock without consequences
- Confusing QSST with ESBT (Electing Small Business Trust)
- Believing the trust itself pays taxes on S-Corp income
- Assuming QSSTs can accumulate income without distribution
- Not understanding the one-beneficiary-at-a-time requirement
