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26 U.S.C. § 679 — Foreign trusts having one or more United States beneficiaries
Federal law — U.S. Code and appendices · legal_authorities
**(a) Transferor treated as owner**
(1) **In general** — A United States person who directly or indirectly transfers property to a foreign trust (other than a trust described in section 6048(a)(3)(B)(ii)) shall be treated as the owner for his taxable year of the portion of such trust attributable to such property if for such year there is a United States beneficiary of any portion of such trust.
(2) **Exceptions** — Paragraph (1) shall not apply—
(A) *Transfers by reason of death* — To any transfer by reason of the death of the transferor.
(B) *Transfers at fair market value* — To any transfer of property to a trust in exchange for consideration of at least the fair market value of the transferred property. For purposes of the preceding sentence, consideration other than cash shall be taken into account at its fair market value.
(3) **Certain obligations not taken into account under fair market value exception**
(A) *In general* — In determining whether paragraph (2)(B) applies to any transfer by a person described in clause (ii) or (iii) of subparagraph (C), there shall not be taken into account—
(i) except as provided in regulations, any obligation of a person described in subparagraph (C), and
(ii) to the extent provided in regulations, any obligation which is guaranteed by a person described in subparagraph (C).
(B) *Treatment of principal payments on obligation* — Principal payments by the trust on any obligation referred to in subparagraph (A) shall be taken into account on and after the date of the payment in determining the portion of the trust attributable to the property transferred.
(C) *Persons described* — The persons described in this subparagraph are—
(i) the trust,
(ii) any grantor, owner, or beneficiary of the trust
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Source file: Laws/federal/codes/united-states-code/title-26/section-679-foreign-trusts-having-one-or-more-united-states-beneficiaries--9aac07b02a.md
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Source location: Title 26, Chapter 1, § 679; chapter-001-normal-taxes-and-surtaxes.md
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**(a) Transferor treated as owner**
(1) **In general** — A United States person who directly or indirectly transfers property to a foreign trust (other than a trust described in section 6048(a)(3)(B)(ii)) shall be treated as the owner for his taxable year of the portion of such trust attributable to such property if for such year there is a United States beneficiary of any portion of such trust.
(2) **Exceptions** — Paragraph (1) shall not apply—
(A) *Transfers by reason of death* — To any transfer by reason of the death of the transferor.
(B) *Transfers at fair market value* — To any transfer of property to a trust in exchange for consideration of at least the fair market value of the transferred property. For purposes of the preceding sentence, consideration other than cash shall be taken into account at its fair market value.
(3) **Certain obligations not taken into account under fair market value exception**
(A) *In general* — In determining whether paragraph (2)(B) applies to any transfer by a person described in clause (ii) or (iii) of subparagraph (C), there shall not be taken into account—
(i) except as provided in regulations, any obligation of a person described in subparagraph (C), and
(ii) to the extent provided in regulations, any obligation which is guaranteed by a person described in subparagraph (C).
(B) *Treatment of principal payments on obligation* — Principal payments by the trust on any obligation referred to in subparagraph (A) shall be taken into account on and after the date of the payment in determining the portion of the trust attributable to the property transferred.
(C) *Persons described* — The persons described in this subparagraph are—
(i) the trust,
(ii) any grantor, owner, or beneficiary of the trust, and
(iii) any person who is related (within the meaning of section 643(i)(2)(B)) to any grantor, owner, or beneficiary of the trust.
(4) **Special rules applicable to foreign grantor who later becomes a United States person**
(A) *In general* — If a nonresident alien individual has a residency starting date within 5 years after directly or indirectly transferring property to a foreign trust, this section and section 6048 shall be applied as if such individual transferred to such trust on the residency starting date an amount equal to the portion of such trust attributable to the property transferred by such individual to such trust in such transfer.
(B) *Treatment of undistributed income* — For purposes of this section, undistributed net income for periods before such individual’s residency starting date shall be taken into account in determining the portion of the trust which is attributable to property transferred by such individual to such trust but shall not otherwise be taken into account.
(C) *Residency starting date* — For purposes of this paragraph, an individual’s residency starting date is the residency starting date determined under section 7701(b)(2)(A).
(5) **Outbound trust migrations** — If—
(A) an individual who is a citizen or resident of the United States transferred property to a trust which was not a foreign trust, and
(B) such trust becomes a foreign trust while such individual is alive,
then this section and section 6048 shall be applied as if such individual transferred to such trust on the date such trust becomes a foreign trust an amount equal to the portion of such trust attributable to the property previously transferred by such individual to such trust. A rule similar to the rule of paragraph (4)(B) shall apply for purposes of this paragraph.
**(b) Trusts acquiring United States beneficiaries** If—
(1) subsection (a) applies to a trust for the transferor’s taxable year, and
(2) subsection (a) would have applied to the trust for his immediately preceding taxable year but for the fact that for such preceding taxable year there was no United States beneficiary for any portion of the trust,
then, for purposes of this subtitle, the transferor shall be treated as having income for the taxable year (in addition to his other income for such year) equal to the undistributed net income (at the close of such immediately preceding taxable year) attributable to the portion of the trust referred to in subsection (a).
**(c) Trusts treated as having a United States beneficiary**
(1) **In general** — For purposes of this section, a trust shall be treated as having a United States beneficiary for the taxable year unless—
(A) under the terms of the trust, no part of the income or corpus of the trust may be paid or accumulated during the taxable year to or for the benefit of a United States person, and
(B) if the trust were terminated at any time during the taxable year, no part of the income or corpus of such trust could be paid to or for the benefit of a United States person.
For purposes of subparagraph (A), an amount shall be treated as accumulated for the benefit of a United States person even if the United States person’s interest in the trust is contingent on a future event.
(2) **Attribution of ownership** — For purposes of paragraph (1), an amount shall be treated as paid or accumulated to or for the benefit of a United States person if such amount is paid to or accumulated for a foreign corporation, foreign partnership, or foreign trust or estate, and—
(A) in the case of a foreign corporation, such corporation is a controlled foreign corporation (as defined in section 957(a)),
(B) in the case of a foreign partnership, a United States person is a partner of such partnership, or
(C) in the case of a foreign trust or estate, such trust or estate has a United States beneficiary (within the meaning of paragraph (1)).
(3) **Certain United States beneficiaries disregarded** — A beneficiary shall not be treated as a United States person in applying this section with respect to any transfer of property to foreign trust if such beneficiary first became a United States person more than 5 years after the date of such transfer.
(4) **Special rule in case of discretion to identify beneficiaries** — For purposes of paragraph (1)(A), if any person has the discretion (by authority given in the trust agreement, by power of appointment, or otherwise) of making a distribution from the trust to, or for the benefit of, any person, such trust shall be treated as having a beneficiary who is a United States person unless—
(A) the terms of the trust specifically identify the class of persons to whom such distributions may be made, and
(B) none of those persons are United States persons during the taxable year.
(5) **Certain agreements and understandings treated as terms of the trust** — For purposes of paragraph (1)(A), if any United States person who directly or indirectly transfers property to the trust is directly or indirectly involved in any agreement or understanding (whether written, oral, or otherwise) that may result in the income or corpus of the trust being paid or accumulated to or for the benefit of a United States person, such agreement or understanding shall be treated as a term of the trust.
(6) **Uncompensated use of trust property treated as a payment** — For purposes of this subsection, a loan of cash or marketable securities (or the use of any other trust property) directly or indirectly to or by any United States person (whether or not a beneficiary under the terms of the trust) shall be treated as paid or accumulated for the benefit of a United States person. The preceding sentence shall not apply to the extent that the United States person repays the loan at a market rate of interest (or pays the fair market value of the use of such property) within a reasonable period of time.
**(d) Presumption that foreign trust has United States beneficiary** If a United States person directly or indirectly transfers property to a foreign trust (other than a trust described in section 6048(a)(3)(B)(ii)), the Secretary may treat such trust as having a United States beneficiary for purposes of applying this section to such transfer unless such person—
(1) submits such information to the Secretary as the Secretary may require with respect to such transfer, and
(2) demonstrates to the satisfaction of the Secretary that such trust satisfies the requirements of subparagraphs (A) and (B) of subsection (c)(1).
**(e) Regulations** The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this section.
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Distributable net income** For purposes of this part, the term “distributable net income” means, with respect to any taxable year, the taxable income of the estate or trust computed with the following modifications—
(1) **Deduction for distributions** — No deduction shall be taken under sections 651 and 661 (relating to additional deductions).
(2) **Deduction for personal exemption** — No deduction shall be taken under section 642(b) (relating to deduction for personal exemptions).
(3) **Capital gains and losses** — Gains from the sale or exchange of capital assets shall be excluded to the extent that such gains are allocated to corpus and are not (A) paid, credited, or required to be distributed to any beneficiary during the taxable year, or (B) paid, permanently set aside, or to be used for the purposes specified in section 642(c). Losses from the sale or exchange of capital assets shall be excluded, except to the extent such losses are taken into account in determining the amount of gains from the sale or exchange of capital assets which are paid, credited, or required to be distributed to any beneficiary during the taxable year. The exclusion under section 1202 shall not be taken into account.
(4) **Extraordinary dividends and taxable stock dividends** — For purposes only of subpart B (relating to trusts which distribute current income only), there shall be excluded those items of gross income constituting extraordinary dividends or taxable stock dividends which the fiduciary, acting in good faith, does not pay or credit to any beneficiary by reason of his determination that such dividends are allocable to corpus under the terms of the governing instrument and applicable local law.
(5) **Tax-exempt interest** — There shall be included any tax-exempt inter
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 643
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Allowance of credit**
(1) **In general** — In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter the amount of the qualified adoption expenses paid or incurred by the taxpayer.
(2) **Year credit allowed** — The credit under paragraph (1) with respect to any expense shall be allowed—
(A) in the case of any expense paid or incurred before the taxable year in which such adoption becomes final, for the taxable year following the taxable year during which such expense is paid or incurred, and
(B) in the case of an expense paid or incurred during or after the taxable year in which such adoption becomes final, for the taxable year in which such expense is paid or incurred.
(3) **$10,000 credit for adoption of child with special needs regardless of expenses** — In the case of an adoption of a child with special needs which becomes final during a taxable year, the taxpayer shall be treated as having paid during such year qualified adoption expenses with respect to such adoption in an amount equal to the excess (if any) of $10,000 over the aggregate qualified adoption expenses actually paid or incurred by the taxpayer with respect to such adoption during such taxable year and all prior taxable years.
(4) **Portion of credit refundable** — So much of the credit allowed under paragraph (1) as does not exceed $5,000 shall be treated as a credit allowed under subpart C and not as a credit allowed under this subpart.
**(b) Limitations**
(1) **Dollar limitation** — The aggregate amount of qualified adoption expenses which may be taken into account under subsection (a) for all taxable years with respect to the adoption of a child by the taxpayer shall not exceed $10,000.
(2) **Income limitation**
(A) *In general* —
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 23
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Civil penalty** In addition to any criminal penalty provided by law, if any notice or return required to be filed by section 6048—
(1) is not filed on or before the time provided in such section, or
(2) does not include all the information required pursuant to such section or includes incorrect information,
the person required to file such notice or return shall pay a penalty equal to the greater of $10,000 or 35 percent of the gross reportable amount. If any failure described in the preceding sentence continues for more than 90 days after the day on which the Secretary mails notice of such failure to the person required to pay such penalty, such person shall pay a penalty (in addition to the amount determined under the preceding sentence) of $10,000 for each 30-day period (or fraction thereof) during which such failure continues after the expiration of such 90-day period. At such time as the gross reportable amount with respect to any failure can be determined by the Secretary, any subsequent penalty imposed under this subsection with respect to such failure shall be reduced as necessary to assure that the aggregate amount of such penalties do not exceed the gross reportable amount (and to the extent that such aggregate amount already exceeds the gross reportable amount the Secretary shall refund such excess to the taxpayer).
**(b) Special rules for returns under section 6048(b)** In the case of a return required under section 6048(b)—
(1) the United States person referred to in such section shall be liable for the penalty imposed by subsection (a), and
(2) subsection (a) shall be applied by substituting “5 percent” for “35 percent”.
**(c) Gross reportable amount** For purposes of subsection (a), the term “gross reportable amount” means—
(1) the gross valu
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 6677
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Federal law — U.S. Code and appendices · legal_authorities
**(a) General rule** A person other than the grantor shall be treated as the owner of any portion of a trust with respect to which:
(1) such person has a power exercisable solely by himself to vest the corpus or the income therefrom in himself, or
(2) such person has previously partially released or otherwise modified such a power and after the release or modification retains such control as would, within the principles of sections 671 to 677, inclusive, subject a grantor of a trust to treatment as the owner thereof.
**(b) Exception where grantor is taxable** Subsection (a) shall not apply with respect to a power over income, as originally granted or thereafter modified, if the grantor of the trust or a transferor (to whom section 679 applies) is otherwise treated as the owner under the provisions of this subpart other than this section.
**(c) Obligations of support** Subsection (a) shall not apply to a power which enables such person, in the capacity of trustee or cotrustee, merely to apply the income of the trust to the support or maintenance of a person whom the holder of the power is obligated to support or maintain except to the extent that such income is so applied. In cases where the amounts so applied or distributed are paid out of corpus or out of other than income of the taxable year, such amounts shall be considered to be an amount paid or credited within the meaning of paragraph (2) of section 661(a) and shall be taxed to the holder of the power under section 662.
**(d) Effect of renunciation or disclaimer** Subsection (a) shall not apply with respect to a power which has been renounced or disclaimed within a reasonable time after the holder of the power first became aware of its existence.
**(e) Cross reference** For provision under which beneficiary
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 678
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Federal law — U.S. Code and appendices · legal_authorities
Page 1851
TITLE 26—INTERNAL REVENUE CODE
§ 679
1969—Subsec. (a)(1) to (3). Pub. L. 91–172, § 332(a)(1), in-
serted ‘‘or the grantor’s spouse’’ after ‘‘the grantor’’ in
pars. (1), (2), and (3).
Subsec. (b). Pub. L. 91–172, § 332(a)(2), inserted ‘‘(other
than the grantor’s spouse)’’ after ‘‘beneficiary’’.
Statutory Notes and Related Subsidiaries
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by Pub. L. 99–514 applicable with respect
to transfers in trust made after Mar. 1, 1986, except for
transfers pursuant to a certain binding property settle-
ment agreement, see section 1402(c) of Pub. L. 99–514,
set out as a note under section 673 of this title.
EFFECTIVE DATE OF 1969 AMENDMENT
Pub. L. 91–172, title III, § 332(b), Dec. 30, 1969, 83 Stat.
599, provided that: ‘‘The amendments made by sub-
section (a) [amending this section] shall apply in re-
spect of property transferred in trust after October 9,
1969.’’
§ 678. Person other than grantor treated as sub-
stantial owner
(a) General rule
A person other than the grantor shall be treat-
ed as the owner of any portion of a trust with re-
spect to which:
(1) such person has a power exercisable sole-
ly by himself to vest the corpus or the income
therefrom in himself, or
(2) such person has previously partially re-
leased or otherwise modified such a power and
after the release or modification retains such
control as would, within the principles of sec-
tions 671 to 677, inclusive, subject a grantor of
a trust to treatment as the owner thereof.
(b) Exception where grantor is taxable
Subsection (a) shall not apply with respect to
a power over income, as originally granted or
thereafter modified, if the grantor of the trust
or a transferor (to whom section 679 applies) is
otherwise treated as the owner under
Source: Supplied 2024 U.S. Code historical extraction · 26 U.S.C. § 679
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