Since the Revenue Act of 1916, the trust has been deemed a separate entity for income taxation purposes. Congress has thus sanctioned the use of the trust as a tax savings device. Under present law, a grantor may place cash or other income producing property in trust, thereby excluding the resulting income from his own tax liability. If the income is currently distributed to the beneficiary, the trust is treated as a conduit, and the beneficiary is taxed in the year of distribution. But where the income is accumulated, the tax is payable by the trust? When this "accumulation trust" is combined with a multiple trust plan, an approved tax savings instrument may become an improper income-splitting device. This combination and the resulting income tax consequences provide the subject matter of this note.
James H. Oeser,
Multiple Trusts and Income Tax Avoidance,
22 Vanderbilt Law Review
Available at: https://scholarship.law.vanderbilt.edu/vlr/vol22/iss5/7