Form 1040NR for Foreign Trusts: Income Tax Reporting for Foreign Non-Grantor Trusts

Special DNI Calculations for Foreign Trusts, Tax on Trust Accumulations, and Coordinating With Other Foreign Reporting Requirements

Recording of a 110-minute CPE webinar with Q&A

Conducted on Wednesday, July 19, 2017
Recorded event now available

This webinar 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.


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 FDAP income and income effectively connected with a U.S. trade or business (ECI). 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: DNI 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.

Listen as our experienced panel provides a thorough and practical guide to the rules for determining when a foreign trust needs to file a 1040NR return and the adjustments necessary to accurately report foreign trust income.


  1. Residence and classification rules for foreign trusts
    1. “Control test”
    2. “Court test”
    3. Grantor vs. non-grantor trusts and U.S. tax reporting rules for FDAP and ECI
    4. Reporting foreign non-grantor trusts on Form 1040NR
  2. Differences in DNI calculations between domestic and foreign trusts
  3. Trust accumulation calculations and tax impact on undistributed income
  4. Adjustments to Form 1040NR to conform to trust accounting rules
  5. Coordinating Form 1040NR with other foreign information reporting requirements
    1. Withholding obligations and Form W-8BEN
    2. Form 3520 for distributions
    3. FATCA reporting


The panel will discuss these and other important topics:

  • What foreign trusts must be reported on Form 1040NR Income Tax Return?
  • What are the differences in DNI calculations between foreign and domestic trusts?
  • What are the modifications needed on Form 1040NR to report foreign trust FDAP income and ECI?

Learning Objectives

After completing this course, you will be able to:

  • Determine foreign non-grantor and grantor trusts that must be reported as foreign individuals for income tax reporting purposes
  • Recognize the rules for determining residence and classification of foreign trusts
  • Discern the difference in DNI calculation and treatment between domestic and foreign trusts
  • Identify adjustments for trust accounting that must be made in reporting a foreign trust on a Form 1040NR


Jack Brister, TEP, Partner
International Wealth Tax Advisors, New York

Mr. Brister specializes in U.S. tax planning and compliance for non-U.S. families with international wealth and asset protection structures which include foreign trusts, estates and foundations that have a U.S. connection, as well as foreign companies wanting to do business in the U.S. He also specializes in foreign investment in U.S. real property, and other U.S. assets, pre-immigration tax planning, U.S. expatriation matters, U.S. persons in receipt of foreign gifts and inheritances, foreign accounts and assets compliance, offshore voluntary disclosures, FATCA registration, executives working and living abroad and annual reporting. He has been widely published, in addition to speaking at numerous international engagements.

Lucy S. Lee, Partner
Akin Gump Strauss Hauer & Feld, Washington, D.C.

Ms. Lee focuses her practice on international tax and estate planning for individuals and families. She represents high net worth and global clients on a wide range of sophisticated matters, including inbound and outbound investments (including anti-deferral regimes and tax treaties), family wealth preservation, succession planning (including use of domestic and foreign trusts), tax compliance in the cross-border context, and pre-immigration tax and expatriation tax planning. She also advises funds and foreign financial institutions on U.S. tax and compliance (including FATCA), and represents taxpayers in administrative controversies with the IRS and in competent authority proceedings.

Lawrence M. Lipoff, CPA, TEP, CEBS, Director
CohnReznick, New York

With more than 30 years of experience, Mr. Lipoff specializes in the delivery of domestic and international private client services to enable high net worth individuals and families to maximize their new or generational wealth. He provides strategic advice to his clients and their closely-held businesses in the areas of income tax planning and compliance, estate planning and administration services, consultation regarding formation of family trusts and philanthropic structures. He is a frequent lecturer and author of articles published through professional forums on topics that include preparation of 1040/1041 & 706/709 returns, IRA/pension distribution, domestic and international asset protection, business succession, generation-skipping transfers, S corporation and fiduciary taxation including foreign trusts, alternative minimum tax, Chapter 14, family limited partnerships, international estate planning and administration, grantor charitable lead trusts, captive insurance companies, private placement life insurance and carried interest estate planning for private equity and hedge fund principals.

Nina Krauthamer, Member
Ruchelman PLLC, New York

Ms. Krauthamer focuses her practice on federal, state and international tax matters involving high net worth individuals, public and private companies and not-for-profit organizations. She regularly advises foreign individuals and companies on U.S. tax matters, including planning for investment in U.S. real estate. She reviews complex corporate mergers and acquisitions, and structures partnerships, joint ventures and limited liability companies in both the domestic and cross-border contexts.

EA Credit

Enrolled Agent credit processing is available for an additional fee per person.

EA Processing $5.00


Recorded Event

Includes full event recording plus handouts.

Note: Self-study CPE and EA credits are not offered on recorded events.

Recorded Webinar Download $147.00

How does this work?

Recorded Audio Download (MP3) $147.00

How does this work?


National Registry of CPE Sponsors

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website:

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).

Program Materials

Requires Adobe Reader 8 or later. Download Acrobat FREE.

Program Materials

Requires Adobe Reader 8 or later. Download Acrobat FREE.

or call 1-800-926-7926

CPE Credit

Strafford is a NASBA CPE sponsor and our live webinars qualify for CPE credits. They offer you a high quality, cost effective, and convenient CPE option, with no lost travel time or expenses.

or call 1-800-926-7926

EA Credit

Strafford is an IRS approved continuing education provider and this course is approved for 2 enrolled agent (EA) credit hours.

or call 1-800-926-7926

Customer Reviews

I appreciated the flow of the information offered and the ease at which I could follow the handouts.

Larry Bruck

WISS & Company

Excellent seminar! It was efficient and the important topics were covered at just the right pace; no time was wasted covering information that the participants already knew.

Rhonda G. Williams, CPA

Barraclough & Associates

I purchased the conference a few minutes after it began and the customer service rep was very helpful and got me signed up and logged into the conference very quickly.

Joanna Johnston

Savas Greene & Company

I liked the fact that there was more than one person presenting the material. It's nice to hear multiple perspectives.

Matt Bristow

Cover & Rossiter

I liked the concentration on specific issues and examples.

Edita Rimalovsky

Komisar Brady & Co.

or call 1-800-926-7926

Our Guarantee

Strafford webinars are backed by our 100% Unconditional Money-Back Guarantee: if you are not satisfied with any of our products, simply let us know and get a full refund. For more information regarding complaints and refunds, please contact us at 1-800-926-7926 ext 10. Complaints regarding this program can be submitted via the course evaluation found in the “Thank you” e-mail at the end of the course.