EST2608. What The CPA Needs To Know About Foreign Trusts

This lecture focuses on the application of the U.S. tax laws as they relate to identifying a client's foreign versus domestic trust structure, and how to identify whether such trust is a grantor or nongrantor trust for U.S. tax purposes. Properly identifying a trust is essential to ensuring that the appropriate IRS forms are filed. Failure to do so could lead to various penalties.

This lecture outlines a roadmap from which to analyze trust deeds and discusses some of the key nuances in the grantor trust rules that cause the practitioner to reexamine the trust based on direct/indirect transfers to the trust or changes in the income tax residency of the relevant parties.

Learning Objectives:

• Recognize whether your client's entity qualifies as a trust for U.S. tax purposes.
• Identify the appropriate IRS classification for your client's trust to ensure proper compliance with IRS reporting obligations.