Loading ...
Sorry, an error occurred while loading the content.

Query re: forms required for foreign trust and other entities

Expand Messages
  • Vernon K. Jacobs
    QUESTION: What forms are required when setting up a foreign trust and which forms are needed after the trust is established? Also what forms are needed to set
    Message 1 of 1 , Feb 8, 2008
    View Source
    • 0 Attachment
      QUESTION: What forms are required when setting up a foreign trust and
      which forms are needed after the trust is established? Also what forms
      are needed to set up a foreign limited liability or corporation owned
      by the trust and which forms have to be filed thereafter? Are there
      any special forms required for a Panama Private Interest Foundation?

      REPLY: I've noticed that different lawyers seem to require different
      forms. The following are the ones that I encourage my clients to file.

      Form SS-4 Taxpayer I.D. number (You have to call the IRS at the number
      in the instructions.)

      Form 56 - Notice Concerning Fiduciary Relationship

      On or before March 15th, Form 3520-A must be filed or an extension must
      be requested with Form 7004. Until the IRS revises their instructions
      or until they create a new form for foreign trusts, it's my opinion
      that Form 1041 (summary) and 1040-NR (summary) need to be filed with
      the Form 3520-A but some advisors would not file either or both of
      these. Form 3520 is due with your income tax return, including any
      extensions of time to file.

      If you (or your trust) form a foreign LLC or IBC or corporation and
      want to treat that entity as a disregarded entity (one owner) or
      partnership (multiple owners), you first need to secure a tax ID
      number by calling the IRS at the number in the instructions to the
      Form SS-4. Then you should file Form 8832 within 75 days of forming
      and funding the LLC/IBC/Corp. (Caution: If you form a foreign
      corporation and want to treat it as a disregarded entity or foreign
      partnership, you need to check the back of the instructions to Form
      8832 to be sure the entity is eligible to make the election.)

      Then either Form 8858 (single owner) or Form 8865 (multiple owners)
      would need to be filed with your U.S. income tax return.

      If you or your trust choose to form a foreign corporation, IBC or
      limited liability company without making an election to treat the
      entity as either a disregarded entity or foreign partnership, then you
      would need to file a Form 5471 and Form 926 with your U.S. income tax
      return. If the foreign corporation engages in business in the U.S., it
      may need to file a Form 1120-F (or an extension on Form 7004) on or
      before March 15th. (In some cases, a foreign corporation with U.S.
      source income doesn't need to file until June 15th.)

      As for a Panama Foundation, the required forms will depend on whether
      the foundation resembles a trust or a corporation. For a more detailed
      explanation of my views on these foundations see
      http://www.offshorepress.com/offshoretax/panama-foundation.html If it
      functions as a trust, then the forms for a foreign trust would be
      required. If it functions as a corporation, then the forms for a
      foreign corporation should be used.

      If a tax filing date falls on a weekend or national holiday, then the
      actual due date is delayed to the next Monday or the work-day after
      the holiday.

      Other forms might be required depending on the kind of investments you
      make, or the kind of business you operate and whether you live and
      work outside the U.S. for a full year, etc., etc. For an extensive
      list of forms that may be required for diverse international
      transactions see www.offshorepress.com/AICPA/ I originally created
      this part of my web site for other CPAs, but it's not restricted in
      any way and is open to the public.

      Vern

      The comments in this memorandum are not intended to constitute an
      opinion regarding any specific tax issues because additional tax
      issues may exist that could affect the tax treatment of the tax issues
      addressed in this memo. This memorandum does not consider or reach a
      conclusion with respect to those additional issues and was not written
      and cannot be used for the purpose of avoiding penalties under code
      section 6662(d). For further details see
      http://www.offshorepress.com/vkjcpa/disclosurerules.htm
    Your message has been successfully submitted and would be delivered to recipients shortly.