By letter dated December 21, 1982, the Internal Revenue Service held that the portion of the proceeds from the sale of the Corporation which was deposited with Banks A and B in various escrow accounts did not constitute a trust within the meaning of U.S. Treas. Reg. § 301.7701-4(a). U.S. Treas. Reg. § 301.7701-4(a) provides that, "generally speaking, an arrangement will be treated as a trust under the Code if it can be shown that the purpose of the arrangement is to vest in trustees responsibility for the protection and conservation of property for beneficiaries who cannot share in the discharge of this responsibility and, therefore, are not associates in a joint enterprise for the conduct of business for profit."
Further, the Internal Revenue Service held that because the escrow accounts were not trusts, the accounts did not come within the scope of Code Section 6012 and no federal income tax returns needed to be filed on behalf of them. The Service cited Section 6012(a)(4) of the Code which provides that returns of income taxes shall be made by "every trust having for the taxable year any taxable income, or having gross income of $600 or over, regardless of the amount of taxable income."
Yes, this is just one case and example, but just saying...
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