Lucy Lee Co-Authors Article for STEP Journal on U.S. Income Tax Requirements for Foreign Trusts
Akin Gump tax partner Lucy Lee has co-authored an article for STEP Journal on U.S. federal income tax reporting requirements for foreign trusts and their related persons.
“The American way” discusses the definition of a trust for U.S. tax purposes and why a foreign nongrantor trust must file annually a U.S. tax return to report its income from U.S. sources. There are other reporting obligations imposed on foreign trusts and their related persons, the authors note, and taxpayers could be faced in some circumstances with becoming the beneficiary of a foreign trust with unknown and possibly questionable history. Failure to comply with U.S. tax rules can result in substantial civil penalties and, in certain circumstances, criminal penalties.
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