In PLR 201538011, the Service ruled that a trust’s income is excludable under Code Section 115, which provides that gross income does not include income derived from any public utility or the exercise of any essential governmental function and accruing to a state or any political subdivision thereof. Here, the Service concluded that, because the income of the Trust derives from the exercise of an essential governmental function and will accrue to a state or a political subdivision thereof, the Trust’s income was excludable from gross income under IRC section 115(1).

In PLR 201538011, the trust’s assets were to be used for the exclusive purpose of providing incentive benefit payments to active and former volunteer firefighters and their eligible beneficiaries under the terms of the Trust, along with certain reasonable and necessary expenses.

Posted by Lewis J. Saret, Co-General Editor, Wealth Strategies Journal.