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 Rev. Rul. 65-90

1965-1 C.B. 428

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Rev. Rul. 65-90

Section 1371 of the Internal Revenue Code of 1954, relating to the definition of a small business corporation, provides, among other things, that, in order to qualify as a small business corporation under that section, a corporation may not have as a shareholder a person (other than an estate) who is not an individual. Section 1.1371-1(d) of the Income Tax Regulations provides, in part, that persons for whom stock in a corporation is held by a nominee, agent, guardian, or custodian will generally be considered shareholders of the corporation. Section 1.641(b)-2(b) of the regulations provides, in part, that the estate of an infant, incompetent, or other person under a disability, or, in general, of an individual or corporation in receivership or bankruptcy is not a taxable entity separate from the person for whom the fiduciary is acting, in that respect differing from the estate of a deceased person. Thus, the estate of a decedent is the only estate which may be recognized as a taxable entity.

Held, the term "estate," as used in section 1371 of the Code, contemplates only estates of deceased individuals during the period of administration or settlement.