Machine gun ban upheld by federal appeals court

[barnbwt]

Except for the part where you can have multiple trustees; that's why it's confusing to me, since multiple people cannot simultaneously "hold" something, and that's where the trust comes in. I agree that one-man trusts (like mine) push & honestly do cross the line to being one and the same with personal possession with extra paperwork, but for a "family" trust with multiple trustees, I fail to see how the individuals & not the trust itself hold the possessions. I thought that was the entire point, that because you need the other trustees' to be in agreement about the assets' management, the beneficiaries & individual trustees are severed from personal possession (extending to liability).

So if I have a Trust in the Caymans, why do "my" assets-in-its-name's income not count as my own for tax purposes (or do they count as personal income for your Mitt Romneys out there, and I'm just badly misunderstanding that implications of that old chestnut)? All the individual filing a Form 1 is doing is filing their taxes, all a trustee producing an NFA item is doing is administering the trust's assets like a wealth manager; why are the two activities treated so differently? The court opinion seems to repeatedly fall back onto "because machineguns/felons," but I'd like to think they tried harder than that, especially since felons aren't even at issue here (in both the case of Hollis & now that 41F is supposedly vetting trustees)

TCB

 

[Frank Ettin]

Except for the part where you can have multiple trustees; that's why it's confusing to me,....

A lot is going to be confusing to you, because you haven't spent a semester in law school studying trusts, and that would in any case just be scratching the surface. This is not the place to try to get a basic education in the law of trusts.

Beyond that, there are a variety of ways property can be owned jointly by more than one person. And if there are multiple trustees, the relationships of the trustees to each other, the relationships of the trustees to the beneficiary or beneficiaries, and the respective interests and responsibilities of the trustees with regard to the trust res (the property held in trust) will need to be defined in the trust document.

....So if I have a Trust in the Caymans, why do "my" assets-in-its-name's income not count as my own for tax purposes (or do they count as personal income for your Mitt Romneys out there, and I'm just badly misunderstanding that implications of that old chestnut)?...

Taxation of income generated by property held in trust is addressed specifically and in detail by statute. There are also detailed accounting rules. If you have trouble sleeping tonight, this 310 page pdf might help: Accounting and Reporting for Estates and Trusts.

See also 26 USC Part I for statues relating to the taxation of trust income.

A basic principle of trust taxation and trust accounting is that while the trustee is legal owner, he doesn't have beneficial use of the assets. And as a fiduciary, it would be improper for the trustee to commingle assets he holds in trust with his personal assets. So investment gains, losses, income and expenses with regard to trust assets need to be accounted for separately from the trustee's personal gains, losses, income and expenses.