馃攳
IRC Section 679 - How a Foreign Grantor Trust Impacts an Investment or Liquidity Event. - YouTube
Channel: Asena Family Office
[1]
Hi, guys, Peter Harper, the managing
director and CEO of Asena Advisors.
[4]
For those of you that are not familiar
with, the business we're a multifamily office and
[8]
we advise foreign families and individuals on
US-based direct investment and mergers and
[13]
acquisitions. So the start of the year,
we're always talking to our clients about
[21]
prospective investments, prospective deals, and we're
looking at these structures to
[27]
ensure that there are no impediments or
negative parts of their structure that could
[33]
create an adverse outcome
from a tax perspective.
[41]
A part of our practices are substantially
oriented to an Australian client base within
[45]
Australia. There is a very heavy focus
around utilising forms of discretionary trusts as
[53]
investment vehicles.
[55]
And these forms of trust are also quite similar
to the forms of trust that you would see
[61]
in most offshore locations the Cayman Islands,
BVI, Cook Islands, Nevis, that they have
[70]
very similar structures, trustee, appointed
protector, discretionary beneficiaries and a
[76]
fair bit of flexibility for the trustee to
determine how income gains and investments are
[83]
made. These factors are very important because the
US has a set of anti avoidance rules
[94]
that can can look through foreign and
domestic trusts, ignore the ability for
[103]
discretion when it comes to distribution, and
automatically attribute incoming gains to a
[110]
particular beneficiary in the US.
[114]
So what we're doing, whether it's folks that are
moving to the US for the first time or
[120]
folks that have been they've come from a foreign
country to the US and are looking at
[126]
liquidity events, we are analyzing trustees
first to determine in financial statements,
[135]
first to determine whether we think we have a
US grantor - is there someone who is the
[139]
American taxpayer to create or settle
the trust directly or indirectly?
[147]
And then then we're looking to see whether
under code Section six seventy-one through six
[154]
seventy-nine, the terms of the trust to draft it
in such a way that we have either have
[159]
a - we do have a ground trust attributable
to the guarantor or whether someone other than
[166]
the grantor again, a US taxpayer could be
deemed to be the owner under another provision
[172]
of the grantor trust rules.
[176]
And this is a this is an extremely
critical function, because if attribution does occur,
[183]
you can have this funky outcome where
you you're distributing income in the foreign
[188]
country that's being subject to tax.
[192]
And then there's attribution in the US that's
also making the same transaction subject to
[198]
tax. And because the the initial distribution
and the attribution will go to different
[203]
people, you're not getting matching
of foreign tax credits.
[208]
And you're you're it's
resulting in double tax.
[211]
This is this is only this can even be worse
if you've got a you're in a high state tax
[217]
jurisdiction like California.
[219]
So if you're new to the country, you're
or you're prepping for a liquidity event, get
[227]
across your trustee, and understand if you have
a grantor, understand if you have a
[233]
grantor trust or if it's or someone other than
the grantor that is a US person is an
[238]
owner, and then make sure you're properly
modeling your situation to understand whether
[245]
it's any adjustments to to
maximize your tax returns.
[255]
Next week and over the over the next six
weeks we are actually going to dig into specific
[262]
detail around the individual sections, how that
can and the circumstances in which those
[269]
sections can make a foreign
trust or grantor trust.
[274]
So please tune into that.
Most Recent Videos:
You can go back to the homepage right here: Homepage