Federal Pure Trust or Business Trust

Federal Pure Trust or Business Trust

Is a Business Trust of Federal Pure Trust, used for conducting business, subject to Federal Income Tax.


Tough to know what type of trust you are speaking about. I really need more information. The term "Federal Pure Trust" is not a common trust term, it is not a term in tax literature. Some states have business trusts that accomplish certain legal purposes, but are flow through (not taxed) for tax purposes. That doesn't mean that they save tax, just that the owners of the trust, not the trust, pay the tax.

It might be that the trust names you are using are from a marketing or other type of plan or promotional material (i.e. that they are names given to a particular trust or plan by the person preparing or selling them). Try to provide some more information and we'll help if we can.

Final word of caution, if someone is telling you about a trust that has a trademarked or unique name, and they cannot describe in in generic tax or legal terms (e.g., a "wealth replacement trust" is a basic insurance trust used typically when someone gives up assets to a charitable remainder trust), be careful.

Hey, one final...final word, be careful because if it is some type of trust tax scheme, it might just be the type of transaction that is on IRS list of tax shelter transactions to audit.

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