Foreign Trusts For US Family Members: Use of Section 645 Election
Foreign Trusts For US Family Members: Use of Section 645 Election
Foreign Trusts For US Family Members: Use of Section 645 Election
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<strong>Section</strong> <strong>645</strong> Basis-Step Up:<br />
Illustration<br />
• Assumed Facts:<br />
• Non-U.S. person (FP) settles foreign trust (FT) f/b/o U.S. person<br />
• FT provides FP with power to “revest”, thus it is a “qualified<br />
revocable trust” and owns:<br />
• Non-U.S. real estate (Asset 1)<br />
• Non-U.S. corporation owning a non-passive non-U.S. business<br />
(Asset 2)<br />
• A so-called “passive foreign investment company” (PFIC)<br />
• A so-called “controlled foreign corporation” (CFC) which holds only<br />
shares <strong>of</strong> stock in a publicly traded U.S. corporation (Asset 3)<br />
• Each <strong>of</strong> Asset 1, Asset 2, Asset 3, PFIC and CFC have a basis<br />
<strong>of</strong> zero and fair market value <strong>of</strong> $100<br />
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