Charles Rubin: Foreign Grantor Trust Making a Distribution to Owner/Beneficiary – One or Two Penalties for Nonreporting? (August 16, 2021)

Charles Rubin, of Gutter Chaves Josepher Rubin Forman Fleisher P.A., has made available for download his article, “Foreign Grantor Trust Making a Distribution to Owner/Beneficiary – One or Two Penalties for Nonreporting?”, published in JDSUPRA. The abstract is as follows:

A U.S. grantor of a foreign trust that is a grantor trust that receives a distribution from the trust as a beneficiary has two U.S. filing requirements attributable to the foreign trust status:

a. Code Section 6048(b) requires U.S. owners of any portion of a foreign trust to ensure that the trust files a return for the tax year. A 5% penalty applies for noncompliance under Code Section 6677(b).

b. Code section 6048(c) requires U.S. beneficiaries of a foreign trust that receive a distribution from the trust to report the distributions. A 35% penalty applies for noncompliance under Code Section 6677(a).

Forms 3520 and 3520-A are used for these reportings.

Click here to view Charles Rubin’s summary of “Foreign Grantor Trust Making a Distribution to Owner/Beneficiary – One or Two Penalties for Nonreporting?”

Posted by Marin Larkin, Associate Editor, Wealth Strategies Journal.

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