Rev. Rul. 79-43

ISSUE

Does a fund maintained by a national bank qualify as a common trust fund within the meaning of section 584(a) of the Internal Revenue Code of 1954 under the circumstances described below?

FACTS

A national bank, which is located in Michigan, established and maintains a fund 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 section 27.3178 (241.21-241.31) of the Michigan Statutes Annotated (Callaghan 1962). 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.

LAW AND ANALYSIS

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.

Section 27.3178 (241.21-241.31) of the Michigan Statutes Annotated is 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 Michigan law.

HOLDING

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