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Tag Archive for Section 684

Foreign Trusts and Installment Sales

Introduction

A United States Settlor of an irrevocable Foreign Trust having a United States beneficiary is deemed to be the owner of the Foreign Trust. Subject to statutory exceptions, the Settlor is the taxable party regardless of whether the Settlor has released all dominion and control of the trust assets by an irrevocable transfer and the right to alter, amend, or modify the trust document. This is the income tax treatment of a United States Settlor by Section 679 of the Code. (1) Because the Settlor is treated as the owner of the trust assets, the transfer of appreciated assets to a Foreign Trust does not occasion a taxable event as contemplated by Section 684 of the Code. Read more

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