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 note excluding this??? I guess I just have a hard time reading there instructions and what they mean. Thank you for your time, I appreciate your blogs and all your input! Would you reply on your blog to this?
Yes it is a trust distribution. Dumb result, right? Use your own property and have a trust distribution?
The bank that runs your fideicomiso does nothing, accepts responsibility for nothing, etc. This should more properly be ignored or treated as a nominee arrangement.
The IRS will be coming out with a pronouncement specifically about this. It will be coming in the “real soon now” time frame. My guess is you aren’t going to like what the IRS says.
Clean up your 3520 and 3520-A problems now.
Oh. And greetings from Kayenta, AZ. 🙂
Phil Hodgen
Philip D. W. Hodgen is the principal attorney of HodgenLaw PC, an international tax law firm based in Pasadena, California. He earned his undergraduate degree from Claremont McKenna College and his law degree from the School of Law at the University of California, Los Angeles. He then went on to earn a Master of Laws degree with a specialty in taxation from the University of San Diego School of Law. Admitted to the California bar in 1982, Phil spent nine years in law firms and with a large U.S. bank before starting his own firm in 1991.
Phil is a past chair of the International Tax Committee of the State Bar of California's Tax Section and was a member of the Executive Committee of the State Bar of California's Tax Section for 2004-2007. Phil frequently speaks on a variety of international tax, trust and estate topics to attorneys, accountants, and real estate professionals.
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Tax laws change over time, and the information in this post above may be less accurate today than it was at the time of the last revision. This post is not tax advice for your specific situation. Please contact an international tax professional to get personalized advice for your situation.
