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CFC/PFIC Attribution Through Foreign Trusts

Attribution Rules, Tax Implications, and Reporting (Under New Proposed Regulations)

A live 110-minute CPE webinar with interactive Q&A

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Wednesday, July 24, 2024

1:00pm-2:50pm EDT, 10:00am-11:50am PDT

Early Registration Discount Deadline, Friday, June 28, 2024

or call 1-800-926-7926

This webinar will explain the rules under which the ownership of foreign corporations owned by foreign nongrantor trusts may be attributed to the US beneficiaries of those trusts, as well as the potential tax payment and reporting obligations of those US beneficiaries. In particular, the panel will provide a timely analysis of the newly-released proposed Treasury regulations, Transactions With Foreign Trusts and Information Reporting on Transactions With Foreign Trusts and Large Foreign Gifts (REG-124850-08). These complex rules will be illustrated by case studies. The panel will also offer concrete advice on avoiding pitfalls and planning proactively to optimize taxation and reporting.

Description

Under the foreign corporation anti-deferral regime, US shareholders of foreign corporations may be subject to US tax on a look-thru basis (in the case of controlled foreign corporations, or CFCs) or may be subject to punitive taxation and an interest charge upon a realization event (in the case of passive foreign investment companies, or PFICs).

Under the foreign trust anti-deferral regime, US beneficiaries of a foreign nongrantor trust can be subject to the throwback tax rules when they receive “accumulation distributions” from the trust. The imposition of throwback tax and an interest charge can be harsh and, in some cases, confiscatory.

These two anti-deferral regimes each pose severe challenges to taxpayers and their advisors. The combination of them is a minefield full of traps for the unwary. Foreign corporations owned by a foreign nongrantor trust can be treated as owned, indirectly or constructively, by its US beneficiaries, resulting in punitive US taxation and reporting obligations for those beneficiaries. In an extreme scenario, a US beneficiary of a foreign trust may have the obligation to pay US income tax with respect to the trust’s foreign investments even though the US beneficiary may never receive any distribution from the trust.

In today’s globalized world, advisors can add much value to their clients by helping them navigate this minefield.

Listen as our panel of foreign trust and international tax experts breaks down the complexities of these anti-deferral rules for trust and estate practitioners.

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Outline

  1. Foreign corporation anti-deferral regimes (CFCs and PFICs) – an overview
  2. Foreign trust anti-deferral regime (throwback tax) – an overview
  3. CFC/PFIC attribution through foreign nongrantor trusts – taxation and reporting
  4. Proposed regulations on foreign trust reporting
  5. Case studies

Benefits

The panel will cover these and other critical issues:

  • Determining CFC/PFIC direct, indirect and constructive ownership in general
  • Determining CFC/PFIC attribution to US beneficiaries of foreign nongrantor trusts
  • Determining US beneficiaries’ tax payment and reporting obligations when they are attributed CFC/PFIC interests through foreign nongrantor trusts
  • Identifying legal uncertainties and proactively optimizing clients’ US tax and reporting position
  • Tax compliance issues

Faculty

Lipoff, Lawrence
Lawrence M. Lipoff, CPA, TEP, CEBS

Director
CohnReznick

With more than 30 years of experience, Mr. Lipoff specializes in the delivery of domestic and international private...  |  Read More

Zhou, Shudan
Shudan Zhou

Partner
Norton Rose Fulbright US

Ms. Zhou focuses her practice on counseling high net worth individuals, trustees, and financial institutions on the...  |  Read More

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