- 11 - Petitioners assert that the personal expenses that were paid from the trust bank account were accounted for as a distribution and that only the legitimate business expenses were deducted. Even so, the Morrows had the ability to control fully the trust’s activities and trust assets for their own benefit because no independent trustee had any meaningful control over the management of the trust. No one other than the Morrows held any meaningful economic interest in the trust because, under the terms of the trust agreement, Charlotte Morrow was the named beneficiary and Peter Morrow was the successor beneficiary of the income and principal of the trust. Petitioners argue that the Morrows achieved benefits from operating their sole proprietorship within a trust and not forming a corporation because: (1) The trust could protect the business assets from their personal liabilities and conversely protect their personal assets from liabilities arising from the business operations; (2) the trust could avoid the State franchise tax imposed on the profits of a corporation, which would have been approximately $1,105; (3) the trust would not have to pay the State incorporation filing fee of $300; and (4) the trust did not have to maintain corporate formalities, such as shareholder minutes.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 Next
Last modified: May 25, 2011