Taxation of a Administration Trust with foreign beneficiaries - Spidell

Taxation of a Administration Trust with foreign beneficiaries

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Message Board Taxation of a Administration Trust with foreign beneficiaries

This topic contains 3 replies, has 2 voices, and was last updated by Lynn Freer 2 months, 2 weeks ago.

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  • #169623
    Lawrence Sternshein
    Participant

    Decedent passed away with a living trust.  He was a resident and citizen of the U.S. and lived in CA his entire life.

    His sons, both citizens of the U.S. and of the Netherlands are residents of the Netherlands and have been for most of their lives.  They have inherited their fathers estate, but haven’t made any distributions of income (or principal) and therefore the Trust is paying tax on the income at the Trust Level.  The size of the estate was large enough that a 706 was completed and estate tax was paid.

    The son’s file income tax returns in the Netherlands and in the U.S. which are filed by another accountant.  I was the accountant for the deceased and are filing his final tax return and the trust return for the administration.

    What is required to be filed in addition to a 1041 and 541 for the Trust or is there another return to file and \ or disclosures to make in addition to or in lieu of these returns?

    Any guidance is appreciated and \ or a referral to a qualified attorney if necessary.

     

    Thank you for your help,

    Larry

  • #169782
    Lynn Freer
    Participant

    The beneficiaries would be taxed on any distributed income that is sourced to California. I’m not aware of other income tax returns that would need to be filed. But there may be property tax forms to file if the property is transferred to the children or held by the estate.If any of the assets were probated, there would actually be two 1041s and 541s required.

    Claudia Hill EA does a lot of estate and trust work. You might contact her. She is in Cupertino CA.

  • #169896
    Lawrence Sternshein
    Participant

    Thanks Lynn,

    No distributions were made so the Trust pays the tax at the Trust level regardless of which country the beneficiaries live.  Thank you for confirming this.

    Larry

  • #169995
    Lynn Freer
    Participant

    You are correct