[Code of Federal Regulations]
[Title 26, Volume 8]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.679-1]

[Page 309-310]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.679-1  U.S. transferor treated as owner of foreign trust.

    (a) In general. A U.S. transferor who transfers property to a 
foreign trust is treated as the owner of the portion of the trust 
attributable to the property transferred if there is a U.S. beneficiary 
of any portion of the trust, unless an exception in Sec. 1.679-4 
applies to the transfer.
    (b) Interaction with sections 673 through 678. The rules of this 
section apply without regard to whether the U.S. transferor retains any 
power or interest described in sections 673 through 677. If a U.S. 
transferor would be treated as the owner of a portion of a foreign trust 
pursuant to the rules of this section and another person would be 
treated as the owner of the same portion of the trust pursuant to 
section 678, then the U.S. transferor is treated as the owner and the 
other person is not treated as the owner.
    (c) Definitions. The following definitions apply for purposes of 
this section and Sec. Sec. 1.679-2 through 1.679-7:
    (1) U.S. transferor. The term U.S. transferor means any U.S. person 
who makes a transfer (as defined in Sec. 1.679-3) of property to a 
foreign trust.
    (2) U.S. person. The term U.S. person means a United States person 
as defined in section 7701(a)(30), a nonresident alien individual who 
elects under section 6013(g) to be treated as a resident of the United 
States, and an individual who is a dual resident taxpayer within the 
meaning of Sec. 301.7701(b)-7(a) of this chapter.
    (3) Foreign trust. Section 7701(a)(31)(B) defines the term foreign 
trust. See also Sec. 301.7701-7 of this chapter.
    (4) Property. The term property means any property including cash.
    (5) Related person. A person is a related person if, without regard 
to the transfer at issue, the person is--
    (i) A grantor of any portion of the trust (within the meaning of 
Sec. 1.671-2(e)(1));
    (ii) An owner of any portion of the trust under sections 671 through 
679;
    (iii) A beneficiary of the trust; or
    (iv) A person who is related (within the meaning of section 
643(i)(2)(B)) to any grantor, owner or beneficiary of the trust.
    (6) Obligation. The term obligation means any bond, note, debenture, 
certificate, bill receivable, account receivable, note receivable, open 
account, or other evidence of indebtedness, and, to the extent not 
previously described, any annuity contract.

[[Page 310]]

    (d) Examples. The following examples illustrate the rules of 
paragraph (a) of this section. In these examples, A is a resident alien, 
B is A's son, who is a resident alien, C is A's father, who is a 
resident alien, D is A's uncle, who is a nonresident alien, and FT is a 
foreign trust. The examples are as follows:

    Example 1. Interaction with section 678. A creates and funds FT. FT 
may provide for the education of B by paying for books, tuition, room 
and board. In addition, C has the power to vest the trust corpus or 
income in himself within the meaning of section 678(a)(1). Under 
paragraph (b) of this section, A is treated as the owner of the portion 
of FT attributable to the property transferred to FT by A and C is not 
treated as the owner thereof.
    Example 2. U.S. person treated as owner of a portion of FT. D 
creates and funds FT for the benefit of B. D retains a power described 
in section 676 and Sec. 1.672(f)-3(a)(1). A transfers property to FT. 
Under sections 676 and 672(f), D is treated as the owner of the portion 
of FT attributable to the property transferred by D. Under paragraph (a) 
of this section, A is treated as the owner of the portion of FT 
attributable to the property transferred by A.

[T.D. 8955, 66 FR 37889, July 20, 2001]