During much of the 20th century the tax laws and state regulations strongly favored corporate structures.
The business is to be held and managed for the benefit of persons who hold transferable certificates issued by the trustees showing the shares into which the beneficial interest in the property is divided.
This method of transacting business in commercial enterprises originated in Massachusetts as a result of negative laws prohibiting the development of real estate without a special act of the legislature or in other words, without "permission" of the state .
This particular definition is found on page 1684 and it states this:TRUST ESTATE AS BUSINESS COMPANIES.
A practice originating in Massachusetts of vesting a business or certain real estate in a group of trustees, who manage it for the benefit of the beneficial owners; the ownership of the latter is evidenced by negotiable (or transferable) shares.
424, it was held that such a trust was not within the corporation tax provisions of the tariff act of Aug. 5 1909 See also Zonne v. Minneapolis Syndicate, 31 S. Ct. 361, 220 U.S. 187, 55 L. Ed.
The regulations require that trusts operating a trade or business be treated as a corporation, partnership, or sole proprietorship, if the grantor (also known as a "settlor" or "trustor"), beneficiary, or fiduciary (also known as a "trustee") materially participates in the operations or daily management of the business.