The U.S. taxation of foreign trusts and trusts with foreign
grantors was altered substantially by the Small Business Job
Protection Act of 1996 ("1996 Small Business
Act")1 and the Taxpayer Relief Act of 1997
("1997 TRA")2 The relevant provisions of those
Acts were enacted in an attempt to curb some of the serious foreign
trust tax abuses that were perceived to exist before their
enactment by the U.S. Treasury Department ("Treasury")
and Internal Revenue Service ("IRS" or
"Service"). This paper will attempt, in a general way, to
describe the numerous changes made by those Acts and the
regulations and other guidance issued in the ensuing 12 years that
have resulted in the current regime for taxing foreign trusts and
trusts with foreign grantors.
What is a Trust?
Before attempting to discuss the taxation of foreign trusts, it
is necessary to understand what is considered to be a
"trust" for U.S....
Specific Questions relating to this article should be addressed directly to the author.
For many years there has been a debate as to whether a company can incur a cost in relation to the acquisition of an asset or the incurral of operating expenditure, where it pays the supplier by issuing its own shares.
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