A cry for help from the Land Down Under

Posted by AussieTaxes on September 8, 2009, 9:37 am

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Here is a real challenge for you from Australia

My client who is an Australian citizen and resident ( with no US visa )
who has recently been appointed Trustee of a complex ( irrevocable ) trust
which was created in Illinois by a resident alien.

I have established that the change of Trustee ( from US citizen to an
Aussie citizen ) has changed what was a US complex trust ( US Court / US
Trustee / Aussie Beneficiaries ) into a foreign complex trust ( US court /
Aussie Trustee / Aussie Beneficiaries ).

I’m slowly getting my head around IRS form W-8 BEN ( although I'm not sure
in this instance it is the right form to use ), withholding tax and the
tax treaty between the US and Australia but it would appear that a tax
event has occured as a result of the change but I have NO idea what steps
are required to satisfy the IRS with regards to the change over…………please
help!!!!!!!!!!!!!!!

PS I did find this on the IRS website:

“Form 926, Return by a Transferor of Property to a Foreign Estate or
Trust, when contributing property to a foreign trust. These trusts are
usually U.S. tax neutral and are treated as grantor trusts with income
taxed to the grantor”

which has only served to confuse me more because if it is a grantor trust
it doesn’t need to submit a W-8 BEN but instead W-8ECI or
W-8IMY......whatever they are

PPS

If you think this is complicated…………………..it is only half of the equation I
have to go through the whole thing again with the Australian Tax Office

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Posted by Dick Adams on September 18, 2009, 9:42 pm

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> Here is a real challenge for you from Australia

> My client who is an Australian citizen and resident ( with no US visa )

> who has recently been appointed Trustee of a complex ( irrevocable )

> trust which was created in Illinois by a resident alien.

> I have established that the change of Trustee ( from US citizen to an

> Aussie citizen ) has changed what was a US complex trust ( US Court / US

> Trustee / Aussie Beneficiaries ) into a foreign complex trust ( US court

> / Aussie Trustee / Aussie Beneficiaries ).

> ....

First, my apologies for taking do long to reply to to you.

Second, it is my opinion that any income received by the Trustee
is taxable in Australia because any work performed was done in
Australia. You need a second opinion!

Finally, since the beneficiaries are in Australia, it may well be
in everyone's best interest to move the Trust to Australia. Of
course, that may be easier said than done.

Dick

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>