Many clients think the foreign trust tax and reporting rules can be circumvented by using non-U.S. persons as nominees. But the United States has rules to prevent potential abuse of tax law by U.S. persons who receive indirect transfers from foreign trusts: the inbound intermediary rule of Internal Revenue Code Section 643(h).1 Indeed, even innocent clients can be caught in this rule's web. And the Internal Revenue Service is looking hard for culprits — because officials believe it's common ...

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