Don't Mess With Taxes

Updated Nov. 2, 2019

Is this how you're feeling today after losing an hour of sleep to the shift to Daylight Saving Time? I'm right there with you.

GIF via PR's Tumblrdome

Daylight Saving Time (DST), which most of us in the United States switched to overnight by moving our clocks one hour forward, ostensibly was created to make better use of daylight. Basically, for the next seven and half months we'll get more daylight in the evening when we are home from work and/or school.

But the annual adjustment of an hour's loss of sleep is difficult for a lot a folks. Every year as I struggle to re-acclimate myself to getting up before the sun is fully out, I think about how I might have preferred Ben Franklin's curtains tax over his originally humorous suggestion of time shifting.

Time, taxes and trusts: Long-time readers know that, regular as clockwork, I look on this weekend for ways to link taxes to DST. This year's connection is not tied to the actual time change, but the acronym.

In addition to denoting Daylight Saving (singular) Time, DST in the financial and tax worlds stands for Delaware Statutory Trust.

Since trusts can be complicated, I defer to the American Bar Association's (ABA) discussion of this particular financial vehicle:

The Delaware Statutory Trust is used in a variety of transactions and structures. Delaware Statutory Trusts are used as vehicles for investment, as legal entities for the conduct of business, and as special purpose entities for the holding of title to assets. The flexibility of the Act as to the operation, management and activities of the trust and the limited liability granted to beneficial owners have made Delaware Statutory Trusts the perfect vehicle for a diverse range of business transactions. …

Delaware Statutory Trusts also are used in connection with tax matters. Delaware Statutory Trusts are used to serve as the entity to hold title to real estate and to qualify as a "real estate investment trust" for tax purposes. Additionally, Delaware Statutory Trusts are utilized as entities to hold title to real estate for purposes of investment and the tax advantages afforded in 1031 exchanges. With respect to transfer taxes, Delaware Statutory Trusts are employed in some jurisdictions to reduce transfer taxes associated with transfers of title.

"When used appropriately, the Delaware Statutory Trust is an effective entity for its flexibility and liability protection," says Kevin Kennedy, an attorney in the Phoenix, Arizona, office of Kyler Kohler Ostermiller & Sorensen LLP, at the firm's web page.

But Kennedy also notes that while a DST is a "powerful business structure and may be appropriate for structured finance transactions and other financial transactions, this might only true in Delaware or another state that has adopted its own statutes which create a statutory trust."

More DST from the ABA: If you're awake enough, you also can read more about DSTs, the tax-related trust versions, in these ABA articles:

• Delaware Insider: Don't Let the Name Fool You: Delaware Statutory Trusts are Controlled by Contract  
• Delaware Alternative Entities The Benefits and Burdens of Contractual Flexibility
• Entity Lifecycles: An Overview of the Statutory Requirements Relating to the Formation, Maintenance, and Termination of Delaware Corporations, Limited Liability Companies, and Statutory Trusts
• Getting the right fit: What is the right kind of "entity" for any particular financing transaction?

Get help for complicated tax moves: OK, I see your sleep-deprived eyelids are starting to droop even more. So rather than delve further into an esoteric tax law with a convenient-for-today shorthand name, I'll stop here.

But let me make two points.

First, there are a lot of special tax laws for specific situations.

That leads to my second point: Get good professional tax help from someone well-versed in your individual tax and financial needs. You have lots of options. You also need to be sure to check out any potential tax adviser thoroughly.

Sleepy time: Finally, let me leave you with more cute critters who share your (and my!) need for a bit more shut-eye.

Source: slothville.tumblr.com   

Source: icanhas.cheezburger.com

Source: tumblr.4gifs.com via Giphy

You also might find these items of interest: 

• New tax law restricts 1031 exchanges to real property
• Ghost preparers are among continuing scary tax scams
• Abusive trusts and tax shelters again make the 2019 list of IRS's Dirty Dozen tax scams

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