-
The
Unincorporated Business
Organization
Trust or UBO
Want to secure your assets? Need more privacy in
your business? Are you looking for ease of set-up, operation and
affordability? Then this trust may be for you.
This package contains everything you need to
quickly and easily create your own Unincorporated Business Organization
Trust. Operate this trust as you would any other business organization.
All forms and
instructions supplied - just fill in the blanks. This Business Trust
has successfully weathered two out of two IRS audits! Protect your
assets from the moochers and looters.
30 day money back guarantee on your investment in this
trust package
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here for the trust discussion forum.
Maybe it's Time for an Unincorporated
Business Trust!
What in the world is a Business Trust, you may ask. Well,
before we answer that question directly, maybe you should also ask
yourself: “Just how do I preserve my privacy, protect my assets against
judgments and lawsuits and significantly reduce income taxes but not be
exposed to the inherent risks of a sole proprietorship, partnership,
corporation or other legislatively created business entity?"
A Business Trust can and does accomplish all of these factors.
But...again, what is a Business Trust?
A Business Trust is recognized by the Internal
Revenue Service and the courts as a U. B. O. (Unincorporated
Business Organization).
A Business Trust (U. B. O.) is a powerful entity by which
individuals may combine their resources to operate a business for
profit without the inherent liabilities of a partnership or the double
taxation of corporations.
The U. B. O. is an organization created and managed by
''trustees” for the benefit and profit of persons who hold or may
acquire transferable Trust certificates. Similar to stock certificates
of a corporation, Trust certificates provide individual holders
evidence of interest in the Trust estate (assets/income).
A U. B. O. is often called a “Common-law Trust" but this
phrase is not descriptive of any of the peculiar characteristics of
such organizations. The basis for the terminology "Common-law Trust" is
that they are created under the common law of contracts and do not
depend upon any statute for its existence. See the United States
Constitution, Article 1 Sec. 10, Clause 1.
As indicated by its name, a Business Trust is an estate
adapted to business or commercial activities. Reduced to its bare
essentials the U. B. O. consists of some form of capital vested in
trustees who manage the entity profitably for Trust certificate holders.
A U.B.O. is created when one or more persons transfer the
legal title in property to trustees, with power vested in the latter to
manage and control the property and business and to pay the profits of
the enterprise to the creators of the Trust or their successors.
In its typical and characteristic form the U. B. O. is brought
into being by two basic documents: a Declaration of Trust and a Trust
Indenture. These two documents make all the provisions of who is who
and who is responsible for what, relative to the Trust activities.
The U. B. O. which had its beginnings in England in the 18th
Century, adapts the ordinary trust to the new purpose of carrying on a
business.
Two of the most famous early business Trusts in England were
Lloyds of London (1811) and the London Stock Exchange (1802). An
explanation of their function, under the Common-law of England, can be
found in Smith v. Anderson, 15 Chancery Division 247 (1880).
The Business Trust made its debut in Massachusetts in 1827. As
a result, a U.S. Business Trust today is often called a "Massachusetts
Trust" in legal circles. The U.S. Supreme Court defined the
Massachusetts Trust as a form of business organization, common in
Massachusetts consisting essentially of an arrangement whereby property
is conveyed to trustees: in accordance with terms of the Trust. The
business is to be held and managed for the benefit of persons who hold
transferable certificates issued by the trustees showing the shares
into which the beneficial interest in the property is divided. [Hecht
v. Malley, 265 U.S. 144 (1924)] [446 U.S. 458, 469]
This U. B. O. method of transacting business in commercial
enterprises originated in Massachusetts as a result of negative laws
prohibiting the development of real estate without a special act of the
legislature or in other words, without "permission" of the State . So,
the Business Trust was created under Common-law right to contract to
obtain legislatively constructed business organizations advantages but
without having to gain "permission" to enter into a business activity
and suffer under the burdens and restrictions that are placed on
"statutorily constructed organizations".
During the last century and through the mid years of this
century the tax laws and State regulations strongly favored corporate
structures, detrimental and restrictive changes in these laws in the
past 10-l5 years have resulted in the resurgence of the use of the U.
B. O. For example, in 1985 the Scudder Capital Growth Fund, Inc. and
Kemper Money Market Fund, Inc. changed their forms of organization from
corporate to a Business Trust Organization.
There are nine basic advantages of operating a
business as a U. B. O. which cause it to operate lawfully.
1) The U. B. O. is formed by contract between the parties
setting forth the purposes, terms and conditions.
2 ) The U. B. O. is a legal entity and an artificial individual, with
rights almost equal to a natural person (a human being), able to own
property and conduct business like a natural person. It is irrevocable
and no one has any reversionary right to its assets.
3) The U. B. O.'s assets are owned and its business activities managed
by the trustees who accept such responsibility as fiduciaries on behalf
of the beneficiaries.
4) The beneficial interests are divided into Capital Units, evidenced
by the issuance of Trust certificates, conveying to the holder the
limited rights to receive their pro-rate share of any distributions of
income or assets that may be made by the trustees.
5) The Capital Units, are personal property which convey neither legal
title to the property nor any voice in the management of the business
or the selection of trustees.
6) The U. B. O. is subject to taxation on its distributable net income.
The beneficiaries are only taxed on what they receive.
7) The assets of the U. B. O. are never subject to probate or estate
tax because, as an artificial person, it never dies. Unlike a will, the
U. B. O. is set up in contemplation of life, not death.
8) The Capital Units become void upon the death of the holder and,
thus, have no value to be subject to estate tax or probate.
9) The life of the U. B. O. can be extended as deemed advisable or
terminated at any time by the trustees in accordance with the Trust
Indenture (contract).
Since the Trust Indenture is a contract between the creator
and the trustee, the indenture controls the activities, powers and
responsibilities of those who administer the Trust. No one has legal
authority to change it's provisions except those so authorized by the
indenture. Foremost among the advantages of trustee-ship over the
standard legal devices is its flexibility.
The document creating the Trust is the law of the Trust, not
statutes created by the State.
Courts have long since
supported the principal of the trustees carrying out the terms of their
Trust contract and agreement. Also, Trust property cannot be
held under attachment nor sold upon execution, for the trustees
personal debts. Personal liability of a trustee cannot be enforced
against the Trust property. If the trustee personally owned any amounts
of beneficial interest, these Units of Beneficial Interest (Trust
Certificates) can be attached.
This doctrine is supported in the case of United States
National Bank of Omaha v. Andres Kaminski (Civil Action NO 77 Cv. 1830,
District Court of Jefferson County, Colorado, June 16, 1980), the Bank
alleged that Kaminski owed them $20,000. When he had no personal assets
to seize after they obtained a judgment, they tried to seize the assets
of his Trust he had set up several years earlier. The Bank’s action
failed and they were unable to penetrate the Trust.
Beneficiaries cannot be held liable for debts incurred by the
Trust. "If, in fact, a true Trust has been created (and this is very
important, i.e. the Trust must correctly be written and executed), the
certificate holders are not personally liable on the obligations
incurred by the trustees or managing agents appointed by the trustees.
Exposure to liability and potential law suits is one of those
worries most of us lay awake at night thinking about. Especially if we
have a business where liability potential is omnipresent.
The past several years has seen the rise of multitudinous
bankruptcies being filed. Even many of the long thought of stalwarts of
American industry have gone bankrupt. More than we care to count. Big
ones (including a big 8 accounting firm) and little ones like those of
us who make up 90% of America’s gross national product.
10 BIG
ADVANTAGES OF A BUSINESS TRUST
Although businesses are organized as corporations,
partnerships or sole proprietorships, one even better way to organize a
business is as an Unincorporated Business Organization Trust.
"A business or common-law trust, commonly known as a
Massachusetts trust, is a form of business organization consisting
essentially of an arrangement whereby property is conveyed to trustees,
in accordance with the terms of an instrument of trust, to be held and
managed for the benefit of such persons as may from time to time be
holders of transferable certificates issued by the trustees showing the
shares into which the beneficial interest is divided, which
certificates entitle the holders to share ratably in the income of the
property, and on termination of the trust, in the proceeds thereof.”
[Corpus Juris Secondum 12A 495.]
"The essential attribute of a business trust is that
the property is placed in the hands of trustees who manage and deal
with it for the use and benefit of the beneficiaries." Enochs
& Plowers v. Roell, 154 So. 299, 170 Miss 44.
The U.S. Supreme Court recognized the existence of business
trusts and explained their advantages in the case Morrissey v.
Commissioner of Internal Revenue, 56 S. Ct. 289, 296 U.S. 344, 80 L.Ed.
263.
Common law trusts are not new. Some major US businesses that
were originally organized as common law trusts include: American
Express, Pepperell Manufacturing, Massachusetts Electric, Chicago
Elevated Railroad and Associated Simmons Hardware.
The common law trust is created by a private, written
contract. A trust contract is basically created by two or more
individuals: trustor or grantor and trustee. The trustor or grantor
(the owner of the assets being transferred into the trust), makes an
offer to the trustee to manage the trust. The trustor exchanges his or
her assets (such as business interests, real estate, stocks and bonds)
to the trustee for Certificates of Capital Units (personal property
similar to shares of stock in a corporation).
Open
Bank Account w/o SSN#
The advantages of a business trust far exceed the
benefits of a corporation.
- ADVANTAGE No. 1. Because the corporation is created by the
state as a privilege, corporate benefits may be diminished, limited or
eliminated by the state government, whereas business trusts, or
unincorporated business organization's (UBO) existence and operation
are controlled by its contract, not by state corporation law.
ADVANTAGE No. 2. The state charges incorporation fees and
ongoing annual fees. The UBO, as a privately created entity, does not
have these expenses.
ADVANTAGE No. 3. A corporation (expect for a Subchapter S
corporation that is taxed as a partnership) can be subject to double
taxation (income taxes on corporate profits (unless zeroed out), then
income taxes on dividends paid now or in the future from those profits
to shareholders). In contrast, a UBO does not pay income taxes on its
profits if it must distribute all of its net income to its
beneficiaries - thereby escaping taxation as a simple trust.
ADVANTAGE No. 4. Likewise, capital gains taxes may be
entirely avoided by a UBO that sells assets at a profit if the trust
contract specifies that all net trust income is to be distributed
annually to the certificate holders (beneficiaries) who will be the
ones to report the capital gains as taxable income and pay any due
taxes.
ADVANTAGE No. 5. Corporate officers and directors (and
sometimes shareholder names) and financial dealings are a matter of
public record and detailed annual reports. UBO affairs are private and
not a matter of public record.
ADVANTAGE No. 6. The avoidance of probate administration is
one major advantage of a UBO. If one's assets are all owned by one or
more trusts, at one's death, there are no assets in the deceased
person's name to go through probate. The trustees and successor
beneficiaries continue the uninterrupted administration and benefit of
the trust assets and income.
ADVANTAGE No. 7. Because the UBO assets do not go through
probate, a UBO cannot be challenged by persons falsely claiming to be
heirs or creditors of the deceased person.
ADVANTAGE No. 8. Assets can often be protected against
creditors while beneficiaries are alive because the UBO holds legal
title to the trust assets with the result that beneficiaries cannot
have their shares of capital units attached by creditors if the trust
has valid spendthrift clauses.
ADVANTAGE No. 9. Like the initial funding of a new
corporation, there is no income or transfer (gift) tax to put initial
assets into a business trust (structured to be like a corporation in
the initial funding process) because the transferor of the assets
receives back a proportionate share of the Certificates of capital
Units.
ADVANTAGE No. 10. Whereas corporate stock owned by a
stockholder is liable for death taxes (to the extent the value exceeds
exemptions and deductions), the assets to a properly structured, funded
and administered asset preservation trust will not be part of the
grantor who originally funded the trust when the trustor/grantor dies.
The
Unincorporated Business Organization Trust
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Purchase of this item (#R1601) extends copyright
permission to create one additional UBO trust organization with the
original Unincorporated Business Organization Trust package which
granted permission to create only one UBO. You may purchase as many
additional copyright permissions (this catalog item) as you wish. One
permission extension allows creation of one new additional UBO using
the same blank forms contained in the original UBO package. Your online
catalog purchase invoice should be retained in your records as
verification of this purchase. Item# R1601 $49.00
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This UBO is a do-it-yourself
pure trust. Free yourself from bureaucracies, licences, fees, moochers
and looters. Liberate your creativity to build your wealth. This trust
documentation contains everything you need to create your own
Unincorporated Business Organization. All necessary forms are supplied
- just fill in the blanks. To date this Business Trust has successfully
weathered two out of two IRS audits!!! It is the same trust used by the
super-rich and those who wish to keep what is theirs private and secure.
Is the UBO Trust Legal?
One of the common questions arising in the formation of
Common Law trusts surrounds its legality. The enclosed legal citations
are some important cases validating the common law, contractual
company, pure Unincorporated Business Organization Trust entity.
ARTICLE 1, SECTION 10 of the United States
Constitution....
"No state shall pass any law impairing the
obligation of contracts."
CONFIRMING THE TRUST CONTRACT
A) Certificate holders are devoid of legal rights, have no
officers, are and must remain forever mute as to the selection,
approval or disapproval of the trustees and their methods of conduct of
business affairs would make the trustee absolute owner.
Bourchard v. First People's trust, 253 Mas 351, 148 NE 895.
B) Right to Contract
Schumman-Heink v. Folsom, 159 NE 250 (1927)
C) United States Supreme Court has long held and recognized
that freedom to make contracts and have them enforced by the courts is
a part of the bundle of rights protected by the "due process" clauses
of both the Fifth and Fourteenth Amendments.
Paterson v. Bank Eudora (1903) 190 US 169, 47 L Ed 1002, 23 S
Ct 821
Muller v. Oregon, 208 US 412, 52 L Ed 551, 38 S Ct 324 1908
v. U.S. 157 US 160, 39 L Ed 657, 15 S Ct 586 (1895)
D) The trust contract is established by private parties, for
personal purposes, is not registered with the state corporation
commissioner to comply with statutes relating to incorporating and does
not invalidate the trust organization.
Hodgkiss v. Northland Petroleum Consolidated, 104 Mont 328.
67, P 2d 811
E) Certificate holders of a Trust Contract enjoy an even
greater immunity from personal liability than is accorded to
stockholders of corporations.
Goldwater v. Oltman, 210 Cal 408, 292 P624, 71 ALR 871
F) One of the main objectives of a trust contract is to
obtain most of the advantages of corporations, but with freedom from
the burdens, restrictions, and regulations generally imposed upon them.
Ashworth v. Hagen Estates 165 Va 151, 181 SE 381
G) The United States Supreme Court has acknowledged the Trust
contract as a "pure or true" trust, citing the Hecht case in Navarro v.
Lee.
Hecht v. Malley 265 US 144 (1924) Navarro v. Lee 446 US 458
(1980)
H) Business trusts are found in Corpus Juris Secundum and
American Jurisprudence, 2d.
I) Business trusts are recognized under the term "common law
trust"
88 American Law Reports 3d 704, citing Schumann-Heink v.
Folsom 328 III 321, 159 NE 250, 50 ALR 485 (1927)
J) A Trust is one of several juridical devices whereby one
person is enabled to deal with property for the benefit of another
person.
Restatement of the Law of Trusts, 2d Introduction Note, Pa. 1
K) Any law or procedure materially affecting contract rights
necessarily impairs the obligation of the contract upon which right is
founded and is, therefore, violative of the United States Constitution.
Smith v. Morse 2 CA 524
L) The creation of a Pure Trust is not subject to legislative
control. The United States Supreme Court holds that trust relationship
comes under the realm of equity, based upon common law, and is not
subject to legislative restrictions as are corporations and other
organizations created by legislative authority.
Eliot v. Freeman 220 US 178
M) The creator of a Pure Trust may mold and give it any shape
he chooses, and he chooses, and he or the trustees may provide for the
appointment of a successor or successors to the trustee or trustees,
upon such terms as he may choose to impose.
Shaw v. Pine 12 Allen (Mass) 293; also in Harwood vs. Tracy,
118 Mo. 631, 24 SW 214
N) The court will support the trustees in carrying out the
terms of their Trust contract and agreement.
Clews v. Jamison, 182 US 461, 21 S. Ct. 845
O) Trust property cannot be held under attachment nor sold
upon execution, for the trustees' personal debts. Personal liability of
a trustee cannot be enforced against the trust property.
Mayo v. Moritz, 24 N. E. 1083 (1890)
P) If the Trustee owned personally any amounts of beneficial
interest, these Certificate Units can be attached.
Hussey v. Arnold 70 N.E. 87 (1904)
CONTRACT TRUST RECOGNIZED BY IRS
A) Internal Revenue Regulations acknowledgement of contract
Trust Organization.
IRS Regulations 301, 7701 4 (b) Berry v. McCourt 204 NE 2d
235, 240
B) An "exchange" is a reciprocal transfer of property as
distinguished from the transfer of property for a money or
consideration only.
TR 118, S. 39.112 (a) 1(e)
C) The owner of Beneficial Certificates is not an owner as a
stockholder is an owner; the Certificate Holders have no ownership
whatever in property held by the Contract Trust, nor do they have any
voice or control over the Trustees.
Becker v. St. Louis Union Trust Co. 296 US 48, 50; 80L ED
35:56 S CT 78
D) "The Internal Revenue Code classifies a Trust as an
'individual' for tax purposes." Trusts are included with persons and
"individuals'" in Section 1 which lists entities which are subject to
tax. Also Section 3(b)(2) refers to Trusts as individuals. Also the tax
forms for trusts clearly illustrate they are not to be Corporations,
partnerships, etc.
"A trust certificate, while valuable, has 'no determinable
value' when exchanged for assets, and thus there is no taxable event
because of this exchange, as determined by the U.S. Supreme Court."
Burenett v. Logan 283 U.S. 404), also (Stern v. C.I.R., 747 F. 2d 555
(1984)
NO GIFT OR ESTATE TAXES
A) Certificates have no ascertainable "Fair Market Value",
and have minimal value to someone else. Bad bargains do not result in
taxable gifts. Contract Trust in a genuine business transaction.
Estate of Anderson V. Commissioner of Internal Revenue. 8 Tax
Court 706.721
B) Rationale of federal estate tax is not a levy on property
of the estate but on its transfer at death.
Second National Bank of Newhaven v. U.S. 422 F 2d 49 (1970)
NO GIFT OR ESTATE TAXES
A) If a bona fide transfer, sale or exchange is made at arm's
length in the ordinary course of business, the transaction will be
assumed to be for consideration and not gratuitous. A consideration
that is not reducible to a value in money or money's worth, i.e., love
and affection or promise or marriage, is to be wholly disregarded and
considered totally gratuitous.
Internal Revenue Service "Federal Estate and Gift Taxation
Publication" #488
B) The Unites States Circuit Court of Appeals for the First
Circuit has long held that full and adequate consideration is met by
issuance of trust certificate units in exchange for real and personal
property invested in a "pure" trust organization.
Carpenter v. White, CIR, 80 F 2d 145
C) The measure of the gain ... of an exchange is the
difference between the (adjusted) cost ... basis of the property
transferred ... and the fair market value of the property ... received.
Internal Revenue Code 1001 (a), (b) Parrington v. Attorney
General, LR. H. L. l00. 122
D) No "Equitable Construction" of a tax statute. Code must be
strictly construed. Gain [is] measured from fair market value of
property received.
U.S. v. Merriam, 263 US 179 (1923)
Commissioner v. Harrelson 282 US 55 (1930) Gould v. Gould US
151
E) The "fair market value" is the price at which the property
would change hands between a willing buyer and a willing seller,
neither being under any compulsion to buy or sell, and both having
knowledge of all the relevant facts. It may not be determined by a
forced sales price, nor is it to be determined by the sale price of the
item in a market other than that in which such item is most commonly
sold to the public.
Federal Estate and Gift taxation, Publication No. 448
Davis v. U.S. (1961) 287 F 2d 168, 82 S Ct. 805 affirmed in
part and reversed in part on other grounds, 370 US 65, 82 S Ct 1190, 8
L Ed 335, Rehearing denied 371 VS 854 , 83 S. Ct 14, 15.F)
F) IRC Section 1001 (b) requires that the capital gain be
measured by "the fair market value" of the property received (emphasis
added) by the taxpayer, not by the fair market value transferred by the
taxpayer in exchange for the property received. To say that the fair
market value of the property received is the same as the fair market
value of the property given up not only ignores realities, but is the
use of a formula which is radically different from the recognized
formula approved by the courts for determining fair market value.
Commissioner v. Marshman 279 F 2d 27, Cert. den. 364 US 918,
8 S Ct 282, 286; 5 L Ed 2d 259.
Maxfied v. U.S. 152 F 2d 593, Cert. den. 2 Cases 327 US 791,
66 S Ct 821.9
G) This definition primarily benefits the Treasury in estate
tax situations. However, IRS may not have one definition for "fair
market value" at one time when it is beneficial, and a different one
for another time when the benefit goes to the taxpayer. The IRS is
obliged to keep their conclusion that the fair market value of valuable
beneficial units cannot be determined in any forum other than a
voluntary sale.
The IRS may not force a sale to determine price where the
item displays an inherent yet unsettled value. They may also not force
the beneficial units to be sold in a market other than that in which
such certificates may commonly be sold to the public. In addition, when
the Treasury says "public", they mean at retail rather than wholesale.
The value of the above definition is evident in the point that the
client may plan affairs around hard and fast rules not subject to
change.
Federal Estate and Gift Taxation, Publication No. 448, p. 39
Burnett v. Logan, 283 US 404, 51 S Ct. 75 LED 1143 (1931)
H) Interests which terminate "on" or "before" death are not a
proper subject of the Federal Estate Tax.
Knowlton v. Moore, 178 US 41, 20 S Ct 747, 44 L Ed 969
(1900): YMCA V. Davis. 264 US 47 (1924), 44 S Ct 291, 68 LED 564:
Goodman v. Grander, 243 F 2d 264 (1957): Babb v. US 349 F Supp 792
(1972)
I) Because Code Sec. 644 does not provide a method for
determining the basis of property transferred (into a trust), Code Sec.
2516 of the gift tax provisions controls. Under Code Sec. 2516, the
distribution of (property) was deemed to be a transfer for full and
adequate consideration --. Accordingly, the trust's basis in the
(property) was its fair market value on the date of transfer ---."
(St. Joseph Bank and Trust Co., Ca-7, 83-2 USTC 9586.) - (907
CCH - Standard Federal Tax Reports 46, 191.)
CONTRACT TRUST AS A LEGAL ENTITY
A) The Contract Trust owns the property and is a distinct
legal entity. Beneficial Certificate Holders are not treated as
co-owners of trust property.
National City Finance v. Lewis (Cal App) 3P 2d 316 (Rehearing
denied) 4P2d 163: Beilin v. Krenn & Dato 350 III 284, 183 NE
330:
Hemphil v. Orloff 238 Mich 508, 213 NW 867, 58 ALR 507, aid
277 US
537, 72 L Ed 978. 48 S Ct 577, Annotation 156 ALR 32.
Goldwater v.
Oltman, 210 Cal 408: 292 P 624
B) The Contract Trust does not escape the necessity of having
substance and business motives. "Sham" transactions , having no
economic effect other than the creation of income tax losses, cannot be
recognized for tax purposes.
Thompson v. Commissioner. 631 F 2d 642. 646 (1980) Cert.
Denied 452 US 961 (1981) Edwards v. Commissioner. 415 F 2d 578, 582
Lewis and Talor, Inc. v. Commissioner, 447 F 2d 1074 (1971)
C) The fact that transactions of business are so arranged
that tax consequences are highly favorable (or altogether avoid taxes)
affords no license to the government to recast it into a mold or less
advantage.
Gyro Engineering, Inc. v US. F 2d 578, 582 Peter Pan
Seafoods, Inc. V. US 417 F 2d 670
D) "It (Pure Trust) is established by legal precedent that
pure trusts are lawful, Valid Business Organizations."
Baker vx. Stern 58 A.L.R. 462
E) "Trust or trust estate is a legal entity for most all
purposes as are common law trust."
Burnett vs. Smith 240 S.W. 1007 (1922)
LEGAL AND EQUITABLE TITLE HELD BY CONTRACT TRUST
A) Legal and equitable title held by contract trust.
Hecht v. Malley US 144.68 L Ed 949, 44 Ct. 462
Williams v. Milton 215 MASS 2. 102 NE 355
Goldwater v. Oltman, 210 CA 148, 292 P624. 71 ALR 871
Schumann-Heink v. Folsom 328 III 321. 159 NE 250, 58 ALR 485
B) When legal and equitable title, possession and control of
property are legally and irrevocably passed from the Trustor
(contracting investor) to himself as Trustee in
legal contemplation, it is as though the trustee receiving
the conveyance is another
person.
Com. of Internal Revenue v. St. Louis Union Trust Co., 296 US
48, 50 (1935)
C) Property invested in the Contract Trust Organization must
be fixed and irrevocable. Thus the Trustor (contracting investor) may
legally be recognized as a different person even when de facto he/she
may be the same human being. Trusteeship is a position created by
parties at arm's length which when established is an office to be
occupied by any qualified person.
Becker, Collector Internal Revenue v. St. Louis Union Trust
Co.
296 Us 48, 50. 50: 80 L ED 35 56 S Ct 78.
D) Genuine contractual obligations control the substance.
Estate of Hilt N. Goodwyn, T.C. Memo 1976-238
E) Trustees of the Contractual Trust have the exclusive power
to interpret or construe the intent and direction of the Trust
Indenture.
Cohen v. US Trust Securities Corporation, 40 NE 2d 282
F) Statutes may authorize limited liability of partnerships
and corporations, but those statutes do not by implication prohibit the
creation of Contract Trusts to enjoy similar immunity by virtue of the
Common Law.
Goldwater v. Oltman, 292 P 624. 71 ALR 871 Annotation
G) In tax context, "Associated" relates to a joint action and
interest of the stock holders and their directors. Contract Trust
Trustees and Beneficiaries are not
associated in a joint action.
Elm Street Realty Trust, 76 TC No 68 (1981): Morrissey v.
CIR, 296 US 34 (1935); Crocker v. Malley, 249 US 223 (1919); Internal
Revenue Regulations 301.7701-1, 2 (a) (2); Schumann Heink v. Folsom.
159 NE 250, annotation 58 ALR 485; Hecht v. Malley, 265 US 144
H) IRS Regulations state the term "Person" includes an
"Unincorporated Organization or Group".
Internal Revenue Regulations 301.7701-1 (a) Internal Revenue
Ruling 73-254
I) It is whether the entities were taxable as associations
with the corporation rates applied, or as trusts (with the conduit
method applied).
Commissioner v. Brouillard, 70 F 2d 154, 157, Cert. denied 293
US 574 No. 152
J) The United States Supreme Court articulated what has
become recognized as the standard for determining whether an entity
will be taxed as a corporation or as a trust by saying that its the
nature of the entity's dominant functions and attributes which
determines whether it is an association for tax purposes.
The system and course of procedure approximates much more
closely that of an ordinary partnership among personal friends reposing
"full confidence" (Pure trust thus a Contract Trust) in each other. The
resemblances predominate strongly in favor of a trusts, not
associations.
Commissioner of Internal Revenue v. Brouillard. Same v.
Shepherd Syndicate, and Same v. Pryor & Lockhart Development
Co., 70 F 2d 154 Cert. den. 293 US 574 No. 152. Hemphil v. Orloff, 277
US 537, 48 S Ct 277, 72 L Ed 978 cited Ibid.
FOREIGN CONDUIT (FOREIGN STRUCTURE), MISCELLANEOUS
A) (A) Foreign Trust (is a trust) the income of which, from
sources without the United States which is not effectively connected
with the conduct of a trade or business within the United States, is
not includable in gross income under subtitle A (Income Taxes).
Internal Revenue Code Sec. 7701 (a) (31)
B) Since 1967 the Internal Revenue Code has actually provided
that a blanket exception from federal gift taxation is provided for all
gifts made by nonresident alien of intangible property even though the
situs or location of that intangible property is within the United
States.
IRC Sec 2501 (a) (2). All intangibles include stock, bonds,
funds, notes or other certificates of indebtedness (not Federal Reserve
Notes "green backs" or US currency, or checks drawn on US banks -- IRR
Sec. 25.2511-3 (b) (4) (IV), bank accounts, or US government bonds,
etc.)
ADDITIONAL LEGAL OPINIONS
"Dignity of contract cannot be set aside because a tax
benefit results either by design or accident."
Edwards v. Commissioner, 415 F 2d 578, 582, 10th Cir. (1969).
"A Pure Trust is not illegal if formed for the express
purpose of avoiding taxation."
Weeks vs. Sibley, (D.C.) 269 F. 155
"U. S. taxpayers may also use tax havens for tax planning
reasons. Some transactions conducted through tax havens have a
beneficial tax result for U.S. Taxpayers that is completely within the
letter of the U.S. tax laws."
Federal Tax Guide Reports in official IRS agent's manual
Each taxpayer in our country has the perfect right to do
everything within his or her power to legally reduce his or her
liability to the least legal limit that can be reached.
The government does not contend that the trusts were not
valid legal entities, from the people who set them up or from those who
held certificate units.
U.S. v. Brownlee
The validity and capacity of these contractual companies has
been recognized in other "sister states" and would refer your
attention, in this regard, to State v. Cosgrove, 210 P. 393 (Supreme
Court of Idaho, 1922) and Pacific American Realty Trust v. Lanc Tot,
381 P. 2d 123 (Supreme Court of Washington, 1963).
In the celebrated case of United States v. Dahlstrom, 713 F.
2d 1423 (C. A.9, 1983) before the United States Court of Appeals for
the Ninth Circuit. The opinion, decided August 24, 1983, ....dealt a
death blow to I.R.S. hopes of utilizing mis-information schemes to
terrorize average taxpayers with the spectre of criminal liability and
deter them from engaging in creative tax planning.
A trust can be a separate, legal profit making, business
entity. When trust income is accumulated or distributed at the sole
discretion of the Fiduciary (the Board of Trustees), net income so held
and accumulated is taxable to the trust. Only the income that is
distributed to the beneficiaries is taxable to them. In one case, the
IRS claimed that the trust was an association taxable as a corporation.
The then Board of Tax Appeals held that the trust was not an
association, and, thus, not so taxable. It also held that income earned
by the trust in any given year, not distributed, as is the case with
incorporated businesses.
Buitar Family Trust Estate v. Commissioner 72 F 2d 544 (1934)
And, most important of all, the contractual companies are not
trusts under the Code -- for trusts, by their very definition, at
common law, require a division or split of title (legal and equitable)
between the trustees, serving on the corpus of the trust, and the
beneficiaries.
Everything you need to create your own Unincorporated
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The
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allows creation of one new additional UBO using the same blank forms
contained in the original UBO package. Your online catalog purchase
invoice should be retained in your records as verification of this
purchase. Item# R1601 $49.00
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