Tax & trusts


Distributions from foreign grantor trusts and U.S. paperwork

This is a Form 3520 “research in a box” blog post for you, BP. Because you asked. And because you subscribed to the Jell-O Shots newsletter mailing list. References Forms: 3520, 3520-A Entity: Foreign Grantor Trust Code Sections: 6048, 6677 Administrivia: Notice 97-34, if you care. Facts A foreign grantor trust exists, created by a […]

Is an ISA a foreign trust?

Yesterday and today I have had an interesting email exchange with three tax practitioners about Individual Savings Accounts from the U.K. I will call this type of account an ISA (pronounced “Ice-uh”), because that’s how I say it out loud. I won’t identify them by name unless they want to be identified. (Email me and […]

Step up in basis for nonresident’s assets in irrevocable trust

What “basis” is One of the continuing mysteries of life involves the concept of “basis”. Think of basis as your acquisition cost. This is essential in calculating your capital gain tax after selling an asset. Capital gain is the difference between the sale price and your acquisition cost. The higher your basis — or acquisition […]

Calculate tax on distributions from foreign trusts using the default method

[Written on December 20, 2011.] Warning Shots, Pre-Emptive Strikes, and Other Cautions to Internet Scholars You’d be a damn fool to rely on this as legal advice. I’ve been wrong many times before, and this might be wrong, too. Go hire some smart tax lawyer or tax accountant to figure out what’s going on with […]

Fideicomiso question and Form 3520

An inquiry from a reader: Mr. Hodgen, After the release of both IRS forms 3520 & 3520-A instructions, is there a conclusion that a grantor of a trust using their own property (fideicomiso) has to treat the uncompensated use of trust property as a loan/distribution? After reading both forms instructions there appeared to be a […]

Form 3520-A filing deadline is March 15, 2011

WARNING (05 September 2013): I changed my mind. I think an ISA is not a foreign trust. Go read that blog post and tell me if you agree or not. As always, this is a reminder to not believe anything you read on the internet. For those of you who must file Form 3520-A, a […]

EB-5 Visa Seminar 21 October 2010 — I’m Speaking

I am going to be a speaker at a session tomorrow morning in downtown Los Angeles organized by Angeline Chen.  This is for the EB-5 visa (“Invest a bunch of money, get a green card”).  I will be talking about tax stuff, as usual.  I will post my handout in a separate blog post.  I’m […]

New foreign trust tax rules, Part 9 – conclusion

This is the final installment in my overview of the HIRE Act and its provisions affecting foreign trusts.  Previous installments are here:  Part 1 – Overview, Part 2 – Using Trust Property For Free, Part 3 – expanding the grantor trust rules, Part 4 – new presumptions for discretionary trusts, Part 5 – Letters of Wishes are useless, Part 6 – all […]

New foreign trust tax rules, Part 8 – bigger penalties

This is the final episode of my leisurely tour through the new foreign trust tax rules.  In case you missed one of the earlier episodes, find them here:  Part 1 – Overview, Part 2 – Using Trust Property For Free, Part 3 – expanding the grantor trust rules, Part 4 – new presumptions for discretionary trusts, Part 5 – Letters […]