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First consideration is given to the consequences of business trust classification followed by a consideration of the rules used to determine whether a trust will be considered a business trust.
The applicable legal standard distinguishing an ordinary trust from a business trust has remained relatively static (albeit vague) since the ancient origins of our federal tax system.
These authorities analyze the trust instrument and the specific nature of the trust to determine whether the trustee has the broad power to conduct a business regardless of whether that power is exercised and regardless of the settlor's intent that the trust not be used to carry on a business.
Unfortunately, as discussed below, once the business purpose standard is met, the associates standard is also very easy to satisfy.
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No doubt this is attributable to the fact that after that date, a failed liquidating trust will merely be treated as an unincorporated business entity and thus as a partnership (two or more beneficiaries) or disregarded entity (grantor trust status if single beneficiary).