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The Sham Trust Doctrine – When will a Court Disregard a Trust for Federal Tax Purposes?

In Economic Substance, Sham Trust, Trust by Jason FreemanLeave a Comment

When will a court disregard a trust for federal tax purposes?  The Tax Court’s recent opinion in Wegbreit v. Commissioner demonstrates the pitfalls when a court finds that a trust should be disregarded for tax purposes.   But first of all: What is a trust? A trust is an entity or relationship created and governed under state (or other) law. …