In that year, the blockbuster "check-the-box" federal tax regulations mercifully mitigated the stakes of a trust being considered a business trust (the regulations were so designated because they allowed lawyers to choose tax classification simply by in effect checking the box relating to the most desired tax classification. Ordinary trusts were classified and taxed like trusts.

Business trusts were considered a corporation or a partnership depending on whether the trust's legal characteristics more closely resembled those of a corporation or a partnership. 344 (1935), the Kintner regulations provided that trusts possessing three of four identified corporate criteria were taxable as corporations (free transferability of interests, limited liability, centralized management, and continuity of life).

On November 16, 2010, pursuant to the Plan of Dissolution, REMEC, Inc. Sackett, as Trustee, entered into a Liquidating Trust Agreement for the creation and operation of the REMEC Liquidating Trust.

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Effective October 1, 2012, the Trust made its sole (since its inception on January 1, 2011) and final liquidating distribution to the Beneficiaries in the total amount of $2,894,971.84, or $0.0964 per Beneficial Unit (each such unit being equal to one share of the former common stock of REMEC, Inc.).

With this final distribution, the Trust completed its sole purpose, which was to complete the winding-up of the affairs of REMEC, Inc.

Rather, under a default rule, all business trusts are considered either disregarded entities (one beneficiary) or partnerships (two or more beneficiaries). However, the trustee had no right to subdivide the tract or sell the lots. The Internal Revenue Service generally follows these distinctions (see Revenue Ruling 78-371, 1978-2 C. Later and more recent developments negate this impression and provide planning opportunities. The two settlors were also the initial beneficiaries but they soon gratuitously transferred the beneficial interests to other family members.

Those business trusts interested in being classified as a corporation for federal tax purposes may do so by filing an election to be taxed as a corporation. It's important to note that the trust is disregarded only for federal income tax purposes and not other state law purposes. 385 (1937), did the court determine that a trust lacked a business purpose. The land was transferred to the trust subject to a contract granting others the right to subdivide and sell. The Tax Court noted that the Morrissey standard requires that the beneficiaries be joined together in a common business effort.

Although disregarded entity status is not typical for a trust, the reporting status of such a trust is essentially that of a grantor trust where trust income is taxed directly to the sole beneficiary as if received directly by the beneficiary (see Treas. For example, the trust liability shield should apply to beneficiaries who do not improperly participate in the management of trust affairs and the trust would continue to be a separate legal entity for contract law purposes. The trust instrument specifically provided that the trustee was to have no management power over the affairs of the trust but was merely to hold title to the real estate transferred to it, and to collect and distribute proceeds from the sale of the lots. This in turn requires some concerted, purposeful and voluntary effort on the part of the beneficiaries to either "plan or join" a pre- existing business activity for the "purpose of sharing the fruits" of its business activities. 334 (1984)), some further act on their part is necessary to satisfy the "associates" requirement.

Partnership tax rules are different from normative taxation and some of the differences may create concerns. When the beneficiaries do not create the trust but receive their interests by gift (rather than by purchase, see Howard v. To apply this analysis, the Tax Court examined the trust instrument searching for a power of beneficiaries to share or influence the trustee's duties under the trust. 1207 (1986) and Field Service Advisory, 1993 Westlaw 1470195).

Lawyers with experience in these matters were occasionally able to draft trust instruments to make a business trust taxable as a partnership. Given that many lawyers considered it prudent for the trust instrument to grant the trustee the broadest possible powers to deal with trust property on behalf of the beneficiaries, the presence or absence of associates may be critical to the classification issue.

The check-the-box regulations carried forward the Kintner regulations theme that ordinary trusts were classified and taxed like trusts. These authorities analyze the trust instrument and the specific nature of the trust to determine whether the trustee has the broad power to conduct a business regardless of whether that power is exercised and regardless of the settlor's intent that the trust not be used to carry on a business. Unfortunately, as discussed below, once the business purpose standard is met, the associates standard is also very easy to satisfy.

Chapter 7: “Liquidation” , also known as “Liquidation,” is most commonly filed by the average consumer who is being smothered by overwhelming credit card debt, medical bills, or a has suffered a loss of employment or income.