Rev. Rul. 78-290

Advice has been requested whether, under the circumstances described below, a fund maintained by a national bank qualifies as a common trust fund within the meaning of section 584(a) of the Internal Revenue Code of 1954.

The bank, which is located in California, established a fund that it maintains exclusively for the collective investment and reinvestment of moneys contributed to the fund by the bank in its capacity as a trustee, executor, administrator, guardian, or custodian of accounts established pursuant to sections 1154-1165 of the California Civil Code (Deering 1971). The fund is maintained in conformity with the rules and regulations, prevailing from time to time, of the Comptroller of the Currency pertaining to the collective investment of trust funds by national banks.

Section 584(a)(1) of the Code provides, in part, that the term "common trust fund" means a fund maintained by a bank exclusively for the collective investment and reinvestment of moneys contributed thereto by the bank in its capacity (A) as a trustee, executor, administrator, or guardian, or (B) as a custodian of accounts that the Secretary determines are established pursuant to a state law that is substantially similar to the Uniform Gift to Minors Act as published by the American Law Institute, and with respect to which the bank establishes, to the satisfaction of the Secretary that it has duties and responsibilities similar to duties and responsibilities of a trustee or guardian.

Section 584(a)(2) of the Code provides that a fund, in order to qualify as a common trust fund, must be maintained by a bank in conformity with the rules and regulations, prevailing from time to time, of the Comptroller of the Currency pertaining to the collective investment of trust funds by national banks.

Sections 1154-1165 of the California Civil Code are substantially similar to the Uniform Gift to Minors Act as published by the American Law Institute, and the duties and responsibilities of the bank as a custodian of accounts are similar to the duties and responsibilities of a guardian under California law.

Accordingly, the fund qualifies as a common trust fund within the meaning of section 584(a) of the Code.