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SINCE the inception of the income tax in 1913 the taxation of trust
income has been an ever-vexing problem. Under the first income tax law
a trust was not treated as a separate taxable entity. The Act levied a
tax on the net income of all individuals, but merely required fiduciaries
to file "a return of the net income of the person for whom they act,
subject to this tax, coming into their custody" and to withhold the
normal tax. Because of the lack of a taxable entity against which the
tax could be levied, income collected by a trustee and held for the benefit
of unborn or unascertained persons escaped the tax.

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trust income, tax