United States Taxation of Foreign Trusts (eBook)

This volume explains and comments upon the U.S. tax and reporting rules applicable to foreign trusts. These rules were most recently changed in 1996, with new regulations, revenue rulings and IRS Forms being issued on a regular basis since then. The rules in Subchapter J (Estates, Trusts, Beneficiaries, and Decedents) of the Internal Revenue Code of 1986, as amended, are discussed in detail. This discussion includes non-grantor trusts ("e;simple"e; and "e;complex"e; trusts) and grantor trusts. The complicated throwback rules that since 1997 principally apply to foreign trusts-no longer to most domestic U.S. trusts-and the interest charge on accumulation distributions are explained.The special rules applicable only to foreign trusts-such as, section 672(f) (barring the application of the normal grantor trust rules to certain foreign trusts), section 643(h) (relating to distributions by certain foreign trusts through nominees), and section 643(i) (relating to loans from foreign trusts)-are dealt with in detail.The information reporting and penalty provisions in sections 6048 (information with respect to certain foreign trusts) and 6677 (failure to file information with respect to certain foreign trusts) are highlighted. Also, the relevant IRS Forms that may have to be filed, including Forms 3520 and 3520-A, are provided and explained.Examples of common problems and suggested courses of action are given throughout. Insights into special issues, such as what happens when a grantor dies and various insurance products, are also provided.Compliance issues that may arise on IRS audit are examined.Persons that deal with foreign trusts in one way or another will find this volume uniquely helpful-including: settlors and beneficiaries, legal and accounting advisors, return preparers, trust officers, private bankers, and investment advisors.Professors and students both within and outside the United States will find that thesematerials serve as a uniquely comprehensive and informative introduction.