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International Tax Blog - New and Interesting International Tax Issues

International PLRs of the 45th week of 2012


This week the IRS published the following Private Letter Rulings relating to international taxation.

PLR 201245003: A Mexican fideicomiso (or Mexican Land Trust) was not a trust for U.S. tax purposes.

PLR 201245006 - Foreign trust treated as grantor trust.  Following the death of a nonresident alien taxpayer/grantor of a foreign trust, the basis of the property held in the trust will be the fair market value of the property at the date of taxpayer’s death under Code §1014(a).  Code §672(f) will not prevent taxpayer from being treated as the owner of the trust.  The taxpayer will be treated as the owner of the trust under Code §677(a).  The trustees of the trust are required are to pay all of the income of trust to the taxpayer during his lifetime and may, in the trustees’ absolute discretion, pay principal of trust to the taxpayer.  Upon the death of the taxpayer, any income of the trust and any corpus remaining in the trust are to be paid or transferred to or in trust for one or more of taxpayer’s issue in such proportions as the taxpayer may appoint by deed or will. In default of appointment, corpus and accumulated income will be held in further trust for the benefit of the taxpayer’s issue.  During the taxpayer’s lifetime no adverse party within the meaning of Code §672(a) is eligible to serve as trustee.

Tags: 6048 Foreign Trusts, Authority - PLRs / CCAs