[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: 26CFR1.679-6]

[Page 321-322]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.679-6  Outbound migrations of domestic trusts.

    (a) In general. Subject to the provisions of paragraph (b) of this 
section, if an individual who is a U.S. person transfers property to a 
trust that is not a foreign trust, and such trust becomes a foreign 
trust while the U.S. person is alive, the U.S. individual is treated as 
a U.S. transferor and is deemed to transfer the property to a foreign 
trust on the date the domestic trust becomes a foreign trust.
    (b) Amount deemed transferred. For purposes of paragraph (a) of this 
section, the property deemed transferred to the trust when it becomes a 
foreign trust includes undistributed net income, as defined in section 
665(a), attributable to the property previously transferred. 
Undistributed net income for periods prior to the migration is taken 
into account only for purposes of determining the portion of the trust 
that is attributable to the property transferred by the U.S. person.
    (c) Example. The following example illustrates the rules of this 
section. For purposes of the example, A is a resident alien, B is A's 
son, who is a resident alien, and DT is a domestic trust. The example is 
as follows:

    Example. Outbound migration of domestic trust. On January 1, 2002, A 
transfers property to DT, for the benefit of B. On January 1, 2003, DT 
acquires a foreign trustee who has the power to determine whether and 
when distributions will be made to B. Under section 7701(a)(30)(E) and 
Sec. 301.7701-7(d)(ii)(A) of this chapter, DT becomes a foreign trust 
on January 1, 2003. Under paragraph (a) of this section, A is treated as 
transferring property to a foreign trust on January 1, 2003. Under 
paragraph (b) of this section, the property deemed transferred to the 
trust when it becomes a foreign trust includes undistributed

[[Page 322]]

net income, as defined in section 665(a), attributable to the property 
deemed transferred.

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