This Strafford live webinar with Nina Krauthamer will provide tax advisers and compliance professionals with a thorough and practical guide for reporting foreign trusts with U.S. owners or other U.S. nexus on Form 1040NR.
Friends and clients of the Firm can receive a 50% discount by using the registration link at the bottom of this page.
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A complex challenge for U.S. tax advisers is navigating the tax reporting requirements involved when a foreign trust has a U.S. owner or U.S. tax nexus. Filing obligations vary depending on the residence and character of the foreign trust, and tax advisers must be able to identify the type and residence of a trust to ensure full compliance with U.S. tax rules and avoid costly penalties.
While U.S. beneficiaries of foreign trusts must file Form 3520 to report trust distributions or other foreign gifts, foreign trusts with U.S. nexus must also file an income tax return to report the trust’s U.S.-sourced F.D.A.P. income and income effectively connected with a U.S. trade or business ("E.C.I."). Unlike domestic trusts, a foreign non-grantor trust that does not meet either the “control test” or the “court test” is treated as a nonresident individual. These trusts must file Form 1040NR and modify the filing to conform to trust accounting rules.
Because foreign trusts are often structured differently than U.S. domestic trusts, tax advisers must determine the character of the foreign entity to ascertain its proper U.S. tax treatment. U.S. tax treatment of foreign trusts have several significant distinctions from taxation of domestic trusts: D.N.I. calculation rules are different for foreign trusts, and U.S. tax rules require calculation of income determined to be accumulated in the trust. This can trigger severe tax consequences on undistributed trust income for the trust.
This panel will provide tax advisers and compliance professionals with a thorough and practical guide for reporting foreign trusts with U.S. owners or other U.S. nexus on Form 1040NR. The panel will detail the events and transactions that require reporting, discuss filing obligations for owners and beneficiaries of foreign non-grantor trusts, review the form in depth, and help participants navigate seemingly contradictory form instructions.
The panel will discuss these and other important topics:
- What foreign trusts must be reported as nonresident individuals on a form 1040NR Income Tax Return?
- What are the differences in D.N.I. calculations between foreign and domestic trusts?
- How can the differing rules for capital gains inclusion in D.N.I. for foreign trusts impact tax calculations on undistributed income?
- What are the modifications needed on Form 1040NR to report foreign trust F.D.A.P. income and E.C.I.?
After the presentations, the panel will engage in a live question and answer session to answer your questions about these important issues directly.
CREDIT AVAILABLE
CPE 2.0 TaxationFriends and clients of the Firm can receive a 50% discount by using the above link.