CEO 75-88 -- April 28, 1975

DISCLOSURE OF INCOME BY SOURCE

APPLICABILITY TO INCOME DERIVED FROM AN IRREVOCABLE TRUST

To: Michael S. Davis, Chief Assistant City Attorney, St. Petersburg

Prepared by: Carol Ann Turner

SUMMARY:

For purposes of s. 112.3145(1)(a), F. S. (1974 Supp.), relating to disclosure of secondary sources of income, a 50 percent co-beneficiary of an irrevocable real estate investment trust is deemed to own a "material interest" in a "business entity," as those terms are defined in subsections 112.312(2) and (5), F. S. Although that portion of the income which is earned through dividends or interest is exempt from disclosure, other income from the trust which constitutes 15 percent or more of the trust's gross income, provided it is not less than $1,500, must be disclosed on CE Form 1, the Statement of Financial Disclosure.

QUESTION:

Does the beneficiary of a trust own a material interest in such trust for purposes of disclosure pursuant to part III, Ch. 112, F. S. (1974 Supp.)?

Your question is answered in the affirmative.

You have informed us that Mrs. Mary Wyatt Allen, a member of the Environmental Development Commission of the City of St. Petersburg, is one of two equal beneficiaries of an irrevocable real estate investment trust which will terminate in 5 years. Income from the trust during the preceding taxable year provided Mrs. Allen with 10 percent or more of her gross income. The trust is therefore required to be listed as a primary source of income on p. 2 of CE Form 1, the Statement of Financial Disclosure.

For purposes of s. 112.3145(1)(a), supra, relating to disclosure of secondary sources of income, a 50 percent co-beneficiary of a trust is deemed to own a "material interest" in a "business entity," as those terms are defined in subsections 112.312(2) and (5), F. S. This position is predicated upon our view of a trust beneficiary's interest in the trust property as being "substantially equivalent to equitable ownership of the trust res." G. Bogert and G. Bogert, Law of Trusts, s. 37 (5th ed. 1973).

As the one-half equitable owner of the trust property, Mrs. Allen must disclose the source of all gross income of the trust which constitutes 15 percent or more of the trust's gross income for the preceding taxable year, provided such trust income is not less than $1500, in which case it need not be reported. It should also be noted that s. 112.3145(1)(a), F. S., excludes from disclosure provisions that portion of gross income earned through dividends or interest.