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Abstract

The provisions of Section 671 to 678 of the Internal Revenue Code of 1954 prompt a re-examination of the tax consequences of so-called short term trusts and other trusts. It is believed that heretofore many competent lawyers have shied away from recommending to their clients the creation of short term trusts, largely because of the wide range of uncertainties surrounding the principles under which the grantors of such trusts have been taxable. To a considerable degree, many of these uncertain elements have been removed, and it behooves lawyers once more to re-examine the possibilities of income tax savings for their clients by the use of the short term trust and other trusts.

I. Preliminary Considerations … A. What Is a Short Term Trust? … B. Why a Short Term Trust? … C. Estate and Gift Tax Consequences of Short Term Trusts

II. Historical Background

III. The 1954 Code … A. Reversionary Interests … B. Power to Control Beneficial Enjoyment … C. Administrative Powers … D. Power to Revoke … E. Income for Benefit of Grantor … F. The Five-Year Throwback Rule … G. Portions of Trust … H. Person Other Than the Grantor Treated as Substantial Owner

Conclusion

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