One Note Samba
On May 8, the IRS published proposed regulations that provide guidance regarding the information reporting of transactions with foreign trusts, the receipt of large foreign gifts and loans from, and uses of property of...more
Explaining a Foreign Trust in Easy-to-Understand Language - In this global economy, it’s becoming increasingly common for U.S. citizens and residents to have financial ties overseas. These financial ties often come in the...more
United States citizens and residents are often not aware of the myriad of foreign information return filing obligations that exist under federal tax laws. For example, buried within the Code are reporting obligations...more
Unlike most countries in the world, if you are a citizen or resident of the United States, the government gets to tax all of your worldwide income, regardless of where it's earned or where you live. And if the IRS decides...more
Are you concerned about the high IRS tax rates on a foreign trust? It is important to understand the tax and reporting consequences on this specific type of investment. It may very well be time to evaluate the net value of...more
The Continuing Saga of U.S. Tax Classification of Foreign Trusts and Related Penalty Issues - In Greek mythology, Cerberus, a three-headed dog, was known as the guardian of the underworld. In more recent literature, a...more
In the recent case of Rost v. United States, the Fifth Circuit analyzed whether a foreign entity should be classified as a foreign trust subject to IRS Form 3520 penalties. The case arose in the context of a Liechtenstein...more
Interests in or transactions with foreign trusts can cause headaches for federal income tax purposes. Depending on the interest or transactions at issue, U.S. citizens or residents may have to file a Form 3520, a Form...more
It is a fact that the phenomenon of human migration has been a major force in the history of the world. Indeed, among the themes that have remained constant during my years of practice, there are two that may be...more
Taxpayers have long utilized trust arrangements for the transfer of wealth to beneficiaries or for the protection of assets from creditors. Generally, there is nothing nefarious about these types of arrangements. Rather,...more
One of the most challenging aspects of assisting clients with international tax planning is determining the right entity to use for that client’s situation. Although the Internal Revenue Service (the “IRS”) simplified the...more
The 35% penalty under I.R.C. section 6677 for failing to report a distribution from a foreign trust applies against a person who is both the beneficiary and grantor/owner of a foreign trust. At least, that is now the rule...more
As many readers may know, Joseph Wilson (“Mr. Wilson”) was the settlor, tax owner, and beneficiary of a foreign trust. By virtue thereof, Mr. Wilson, as a U.S. citizen, had the requirement to file IRS Form 3520 and IRS Form...more
In a previous post, we discussed the tax implications for U.S. beneficiaries who receive a distribution from a foreign trust. That discussion assumed that the trust in question was, in fact, a foreign trust for U.S. federal...more
Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of November 2, 2020 – November 6, 2020... November 2, 2020: The IRS announced COVID-19-related...more
On August 28, the IRS announced that it would temporarily accept e-signatures on certain forms. Included among that initial list of forms was Form 8832, Entity Classification Election (commonly known as a “check-the-box”...more
Section 6048 of the Internal Revenue Code requires reporting of a U.S. citizen or resident alien’s (a) transfers to a foreign trust, (b) annual financial information related to the U.S. person’s interest in a foreign trust,...more
Depending upon how foreign real estate is owned and/or controlled, a number of different tax reporting regimes may be implicated. Each of these has its own corresponding penalties and generally applies to United States...more
A Foreign Trust can be a legitimate instrument for US Taxpayers that may have family members in foreign jurisdictions, have foreign business interests or are the beneficiaries of trusts created in other countries. ...more
Do you or did you have a wealthy relative from a different country? Did that relative make you a beneficiary of a non-U.S. trust? Lucky you. But beware that free wealth....more