26 U.S. Code § 679 - Foreign trusts having one or more United States beneficiaries
A United States person who directly or indirectly transfers property to a foreign trust (other than a trust described in section 6048(a)(3)(B)(ii)) shall be treated as the owner for his taxable year of the portion of such trust attributable to such property if for such year there is a United States beneficiary of any portion of such trust.
Principal payments by the trust on any obligation referred to in subparagraph (A) shall be taken into account on and after the date of the payment in determining the portion of the trust attributable to the property transferred.
If a nonresident alien individual has a residency starting date within 5 years after directly or indirectly transferring property to a foreign trust, this section and section 6048 shall be applied as if such individual transferred to such trust on the residency starting date an amount equal to the portion of such trust attributable to the property transferred by such individual to such trust in such transfer.
For purposes of this section, undistributed net income for periods before such individual’s residency starting date shall be taken into account in determining the portion of the trust which is attributable to property transferred by such individual to such trust but shall not otherwise be taken into account.
A beneficiary shall not be treated as a United States person in applying this section with respect to any transfer of property to foreign trust if such beneficiary first became a United States person more than 5 years after the date of such transfer.
For purposes of paragraph (1)(A), if any United States person who directly or indirectly transfers property to the trust is directly or indirectly involved in any agreement or understanding (whether written, oral, or otherwise) that may result in the income or corpus of the trust being paid or accumulated to or for the benefit of a United States person, such agreement or understanding shall be treated as a term of the trust.
For purposes of this subsection, a loan of cash or marketable securities (or the use of any other trust property) directly or indirectly to or by any United States person (whether or not a beneficiary under the terms of the trust) shall be treated as paid or accumulated for the benefit of a United States person. The preceding sentence shall not apply to the extent that the United States person repays the loan at a market rate of interest (or pays the fair market value of the use of such property) within a reasonable period of time.
The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this section.
2010—Subsec. (c)(1). Pub. L. 111–147, § 531(a), inserted concluding provisions.
Subsec. (c)(4), (5). Pub. L. 111–147, § 531(b), (c), added pars. (4) and (5).
Subsec. (c)(6). Pub. L. 111–147, § 533(c), added par. (6).
Subsecs. (d), (e). Pub. L. 111–147, § 532(a), added subsec. (d) and redesignated former subsec. (d) as (e).
1998—Subsec. (a)(1). Pub. L. 105–206 provided that the amendment made by section 1903(b) of Pub. L. 104–188 shall be applied as if “or” in the material proposed to be stricken were capitalized. See 1996 Amendment note below.
1997—Subsec. (a)(3)(C)(ii), (iii). Pub. L. 105–34 inserted “, owner,” after “grantor”.
1996—Subsec. (a)(1). Pub. L. 104–188, § 1903(b), which directed that subsec. (a) of this section be amended by substituting “section 6048(a)(3)(B)(ii)” for “section 404(a)(4) or 404A”, was executed to par. (1) by making the substitution for “section 404(a)(4) Or section 404A” to reflect the probable intent of Congress. See 1998 Amendment note above.
Subsec. (a)(2)(B). Pub. L. 104–188, § 1903(a)(1), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: “Transfers where gain is recognized to transferor.—To any sale or exchange of the property at its fair market value in a transaction in which all of the gain to the transferor is realized at the time of the transfer and is recognized either at such time or is returned as provided in section 453.”
Subsec. (a)(3). Pub. L. 104–188, § 1903(a)(2), added par. (3).
Subsec. (a)(4), (5). Pub. L. 104–188, § 1903(c), added pars. (4) and (5).
Subsec. (c)(2)(A). Pub. L. 104–188, § 1903(e), amended subpar. (A) generally. Prior to amendment, subpar. (A) read as follows: “in the case of a foreign corporation, more than 50 percent of the total combined voting power of all classes of stock entitled to vote of such corporation is owned (within the meaning of section 958(a)) or is considered to be owned (within the meaning of section 958(b)) by United States shareholders (as defined in section 951(b)),”.
Subsec. (c)(3). Pub. L. 104–188, § 1903(d), added par. (3).
Subsec. (d). Pub. L. 104–188, § 1903(f), added subsec. (d).
1980—Subsec. (a)(1). Pub. L. 96–603 inserted “Or section 404A” after “section 404(a)(4)”.
Amendment by section 533(c) of Pub. L. 111–147 applicable to loans made, and uses of property, after Mar. 18, 2010, see section 533(e) of Pub. L. 111–147, set out as a note under section 643 of this title.
Amendment by section 6018 of Pub. L. 105–206 effective as if included in the provisions of the Small Business Job Protection Act of 1996, Pub. L. 104–188, to which such amendment relates, see section 6018(h) of Pub. L. 105–206, set out as a note under section 23 of this title.
Amendment by Pub. L. 105–34 effective as if included in the provisions of the Small Business Job Protection Act of 1996, Pub. L. 104–188, to which it relates, see section 1601(j) of Pub. L. 105–34, set out as a note under section 23 of this title.
Amendment by Pub. L. 96–603 applicable with respect to employer contributions or accruals for taxable years beginning after Dec. 31, 1979, election to apply amendments retroactively with respect to foreign subsidiaries, allowance or prior deductions in case of certain funded branch plans, and time and manner for making elections, see section 2(e) of Pub. L. 96–603, set out as an Effective Date note under section 404A of this title.
Written determinations for this section
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