Rev. Rul. 63-178

Several inquiries have been presented to the Internal Revenue Service relative to the use of identifying numbers on returns and related documents filed in connection with the management of certain trusts and agencies.

Section 1.6109-1 of the Income Tax Regulations requires the use of identifying numbers for Federal tax purposes on certain returns, statements, and other documents filed for any period commencing after December 31, 1961.

The identifying number prescribed for use by a trust, partnership, corporation, or any person other than an individual is the employer identification number. See section 1.6109-1 of the regulations.

The specific questions presented to the Service and the answers thereto are as follows:

Question 1: A bank operates a common trust fund which meets the requirements of section 584 of the Internal Revenue Code of 1954. It files an information return, Form 1065, U.S. Partnership Return of Income, to show the income distribution to each of the participating accounts. What identifying numbers should be shown on the return ?

Answer: The employer identification number assigned to the common trust fund should be shown on page one of the Form 1065. See section 1.6109-1(b)(1)(iii) of the regulations. The identifying number of each participating trust should be shown on schedule K of the Form 1065. See section 1.6109-1(b)(2)(i) of the regulations.

Question 2: If a bank or trust company holds property for its custodian accounts and, with respect to such property, receives interest or dividends payable to it without further designation as to the individual, trust, estate, ward, etc., what identifying number should be furnished to the payor of the interest or dividend? The interest and dividends are subject to reporting under sections 6042 and 6049 of the Code.

Answer: The bank or trust company is acting in the capacity of a nominee and, as such, is required to furnish its own identifying number to the payer of the income. As a nominee, the bank or trust company must generally file information returns, Form 1087, Ownership Certificate-Dividends on Stock, disclosing the actual owners of the income received from personal property held by it as nominee. See section 1.6042-2(a)(1)(ii) and section 1.6049-1(a)(1)(ii) of the regulations.

Question 3: If a bank or trust company uses a nominee partnership to hold stock for its trust accounts and to distribute to such accounts dividends received from corporations, must the nominee have an identifying number of its own?

Answer: Yes. As record owner of the stock, the nominee must secure and furnish its identifying number to the corporations paying dividends of $10 or more. See section 1.6109-1(b)(2)(vi), Example 8, of the regulations. Each nominee partnership is a separate entity and must have its own identifying number. This is true also of a nominee which is a so-called partnership which is not required to file a partnership return. See Revenue Ruling 55-606, C.B. 1955-2, 489. The nominee will be required to file information returns, Forms 1087, Ownership Certificate-Dividends on Stock, disclosing the actual owners of the income received from personal property held by it as nominee.

Question 4: Are all trusts required to obtain identifying numbers?

Answer: For the purpose of identifying numbers, a trust exists where property is held by a trustee for the benefit of one or more beneficiaries under such conditions that a trust would be recognized by the law of the jurisdiction under which it was created. An employer identification number is needed for each such trust.

Question 5: The trustee of a revocable trust files a blank Form 1041 to which is attached a separate statement showing items of income and deductions attributable to the trust and treated as owned by the grantor. Should he trustee obtain an identifying number for the revocable trust?

Answer: In the case of a revocable trust recognized as a trust under state law, both the employer identification number of the trust and the account number of the individual grantor should be included in the return or statement required under the provisions of section 1.671-4 of the regulations. Where a so-called trust is not recognized as sucb under state law, only the account number of the grantor need be shown on his individual income tax return. See section 1.6109-1(b)(2)(vi), Example 4, of the regulations.

Question 6: Under the terms of a decedent's will, two trusts, A and B , are co-mingled for administration. For tax purposes, two separate returns are required to be filed on Forms 1041, the only distinction between the two returns being the designation of Trust A or Trust B . Should a separate employer identification number be requested for each trust?

Answer: Yes. See answer to question 4, above.

Question 7: Does a foreign trust need an employer identification number?

Answer: Yes, if it is engaged in trade or business within the United States and would be recognized as a trust under the law under which it was created.