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Banking Law
Copyright 2017, Matthew Bender & Company, Inc., a member of the LexisNexis Group.

3-66 Banking Law 66.syn


Common Trust Funds and Financial Asset Securitization Trusts (FASITs)


Professor Dennis Lassila;Kenneth M. Lapine, Esq., Partner, Roetzel Andress, Cleveland, Ohio;Burton V. McCullough, Esq., Los Angeles, California;Paul S. Pilecki, Esq., Partner, Winston & Strawn, Washington, D.C.;Harold Weisblatt, Esq., Murrieta, California

Chapter Summary


A common trust fund contains monies that a bank holds as a fiduciary or a custodian. Such a fund is not subject to federal income tax. This chapter provides examples of instances where banks have been found to be maintaining common trust funds. Further, it discusses the IRS guidelines that common trust funds must observe to qualify for exemption, as well as the regulations that the Comptroller of the Currency has issued that contain the requirements for common trust funds that national banks establish. Additionally, this chapter addresses the tax treatment of common trust funds, including the computation of common trust fund taxable income, gains and losses, withdrawals, mergers of common trust funds, divisions of common trust funds, transfers of fund assets to regulated investment companies, and common trust fund income tax filing requirements.

This chapter also covers financial asset securitization trusts (FASITs), which are statutory nontaxable entities that facilitate the securitization of many debt obligations banks can offer, including credit card receivables, home equity loans, and auto loans. This chapter discusses the conditions an entity must meet to qualify as an FASIT, the anti-abuse rules related to FASITs and their related requirements, the tax treatment of FASITs, the taxation of holders of FASIT ownership interests, the taxation of holders of FASIT regular interests, transfers to FASITs, and the valuation of FASIT assets.

Banking Law provides an in-depth analysis of all aspects of banking law and includes detailed discussions of the statutes and regulations governing banks and other financial intermediaries. It covers the organization, operation, examination, regulation, powers, and liquidation of commercial banks; the legal requirements regarding structural changes; the operations of commercial banks; the examination of commercial banks by federal regulatory agencies; and the impact of the federal income tax and the security laws on banks. It consolidates this vast body of law into one comprehensive treatise that is an essential tool for the banking law practitioner.


Banking law,common trust fund,Internal Revenue Service Guidelines for common trust funds,IRS guidelines for common trust funds,Comptroller of the Currency,national bank common trust finds,tax treatment of common trust funds,financial asset securitization trusts,FASIT,credit care receivables,home equity loans,auto loans,taxation of FASIT,transfers to FASIT,valuation of FASIT assets


For discussion of the taxation of banks and tax accounting methods, see Chapter 61.

For discussion of the tax treatment of bank income and the tax treatment of bank expenses, see Chapters 62 and 63, respectively.

For treatment of issues related to trust investment services, including bank trust department trading activities and the regulatory structure over bank services, see Chapter 97.


For discussion of secured lending transactions, specialized collateral and reorganizations, and other legal and financial issues, including loan workouts, see CommercialFinance Guide (Matthew Bender).

For analysis of commercial loan documentation and the innovations occurring in institutional lending, see Commercial Loan Documentation Guide (Matthew Bender).

For discussion of the controlling law and expert analysis of letters of credit, see Letters of Credit (Matthew Bender).
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