Hello,
I am a US citizen, residing outside the USA.
I have a foreign trust, into which I have made a contribution of foreign currency.
I acquired the foreign currency earlier, and can determine the Section 988 outcome (a loss),
for the date when it was contributed into the foreign trust.
My Question: does Section 988 apply in these circumstances?
(If it matters, this is a Foreign Grantor Trust.)
(I don't want to claim a loss if S 988 doesn't actually apply.)
Thanks for any help you can provide!
You'll need to sign in or create an account to connect with an expert.
@msosso51 whereas we lack some information as to the country where this Trust is registered and therefore the laws of such a country regarding trust ( Grantor trusts specifically ) and therefore treaty assertions ) the following excerpt from statute ( section 988 ) suggests that you are not subject to 988 regs because this is not a 988 transaction ----->
"
(1)Section 988 transaction
Thanks very much for your response.
Maybe I'm being too restrictive, in trying to characterize the transaction as falling under sec 988?
If I contribute foreign currency into a foreign grantor trust, is there a realization event I can claim (ie, an ordinary loss)?
Thanks again for your earlier response.
@msosso51 , as I understand the definition of a section 988 transaction and hence the applicability of gain/loss recognition, your grantor trust, constituted under the laws of that Foreign country, is outside the regs of 988. This is more like a personal " savings " type of vehicle. And assuming that this is equivalent in characteristics to a US " Revocable " Trust then it is still your own asset. However, any income may need to recognized.
What I wanted to say is that it matters as to what the trust is for ( its charter ) whether it is domestic or foreign.
Also Treaty conditions may apply.
I am not an expert on Trusts ( domestic ) -- I will refer you to @M-MTax -- he deals with trusts. I deal with international / foreign tax issues.
pk
Unfortunately, I am not well versed in foreign trusts......that's a specialty and a tax pro who deals with that should be consulted. Sorry.
@msosso51 , please can you tell me more about the trust itself -- what is it for etc.. And under the laws of which country ? Also are you a citizen/resident of that country ?
I will come back once I hear from you
pk
Still have questions?
Make a postAsk questions and learn more about your taxes and finances.
astral101
Level 3
msosso51
New Member
run2winmom
Returning Member
muralx
Level 2
nativi81
New Member
Did the information on this page answer your question?
You have clicked a link to a site outside of the TurboTax Community. By clicking "Continue", you will leave the Community and be taken to that site instead.