830 CMR 62.00: INCOME TAX
830 CMR 62.00 is amended by adding the following section:
830 CMR 62.8.1: Fixed Investment Trusts
(1) General. For purposes of Massachusetts taxation:
(a) A fixed investment trust, as that term is defined in 830 CMR 62.8.1, is not, as an entity, engaged in any business, activity or transaction for purposes of M.G.L. c. 62, § 8(a). The trust exists to hold title to trust property on behalf of holders of beneficial interests.
(b) The corpus of the trust shall not be treated as owned by the trust. Each holder of a beneficial interest in the trust shall be treated as the owner, pro rata of an undivided interest in the trust property. Each person receiving a beneficial interest in the trust shall be treated as receiving an undivided interest in the trust property, and each person transferring a beneficial interest in the trust shall be treated as transferring an undivided interest in the trust property.
(c) The items of income, deduction and credits against tax that are attributable to the trust property shall not be taken into account in computing the income taxable to the trust but shall be taken into account in computing the taxable income and credits against tax of the holders of beneficial interests. Earnings from or on account of the trust property shall not be deemed to have been received by the trust. Income shall be taxed to the holders of beneficial interests at the times the income would be taxed if the holders of beneficial interests held the trust property directly.
(2) Definition.
Fixed investment trust. For purposes of 830 CMR 62.8.1, the term fixed investment trust shall mean a trust of the type commonly known as a fixed investment trust, an "investment" trust within the meaning of 26 C.F.R. § 301-7701-4(c), which is classified as a trust for federal income tax purposes under that regulation.
(3) Interpretation of Regulation.
(a) In interpreting 830 CMR 62.8.1, the Department of Revenue will follow federal regulations, and revenue rulings published in the Internal Revenue Bulletin, that clarify the circumstances under which a trust is an "investment" trust within the meaning of 26 C.F.R. § 301-7701-4(c), which is classified as a trust for federal income tax purposes under that regulation. In addition, in determining whether a trust is an "investment" trust within the meaning of 26 C.F.R. § 301-7701-4(c), which is classified as a trust for federal income tax purposes under that regulation, the Department will rely on a federal private letter ruling which is binding on the Internal Revenue Service with respect to that trust. Because applicable federal authorities provide adequate guidance to taxpayers, the Department will not rule whether a trust is an "investment" trust within the meaning of 26 C.F.R. § 301-7701-4(c), which is classified as a trust for federal income tax purposes under that regulations.
(b) 830 CMR 62.8.1, concerns only those entities qualifying as fixed investment trusts under 830 CMR 62.8.1(2). This regulation is intended to create no implications concerning the tax treatment of any other entities.
(4) Persons Performing Services in Connection With Fixed Investment Trusts. Individuals, corporations, partnerships, trusts, and other entities performing services in connection with fixed investment trusts, including but not limited to trustees, paying and collection agents, investment advisors, and brokers, are considered to be earning income from their activities in their own capacities. Income earned by an individual, corporation, partnership, trust, or other entity in connection with a fixed investment trust shall be subject to Massachusetts taxation or shall be apportioned to Massachusetts for purposes of taxation, according to the rules of taxation and apportionment ordinarily applicable to the entity under the Massachusetts General Laws and applicable regulations.
REGULATORY HISTORY
Date of Promulgation: 5/15/86