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When Foreign Trusts Are Non-GrantorWhen Foreign Trusts Are Non-Grantor
It's essential that practitioners know not only the fundamentals of U.S. federal income taxation of foreign non-grantor trusts and their beneficiaries, but also the ways to plan around the throwback tax that's imposed on distributions of accumulated income to the U.S. beneficiaries of these trusts. Of course, if you can't avoid the throwback tax, you're going to have to know how to calculate it. And
Amy P. Jetel
It's essential that practitioners know not only the fundamentals of U.S. federal income taxation of foreign non-grantor trusts and their beneficiaries, but also the ways to plan around the “throwback tax” that's imposed on distributions of accumulated income to the U.S. beneficiaries of these trusts. Of course, if you can't avoid the throwback tax, you're going to have to know how to calculate it. And advisors must be aware of the U.S. tax reporting requirements related to foreign non-grantor trusts.
The Rules
If a trust is classified as a non-grantor trust, it's a separate taxpayer that falls under the taxation regime of Subchapter J of the Internal Revenue Code. (These rules contrast to those applicable to a “grantor trust,” ...
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