United States

Final regulations address taxation of ESBTs with nonresident aliens

Rules adopt proposed regulations without change

TAX ALERT  | 

ORIGINAL ALERT – April 19, 2019: 

Proposed regulations address ESBTs with foreign beneficiaries

UPDATE – June 18, 2019: 

Treasury has published final regulations addressing the taxation of certain electing small business trusts (ESBTs) that have nonresident aliens as potential current beneficiaries. The final regulations adopted without change proposed regulations that Treasury issued April 17 – see original alert.

The regulations require in situations where a nonresident alien is a deemed owner of a grantor trust, and the trust makes an ESBT election, that the trust rather than the deemed owner be subject to tax on the S corporation income. The final regulations apply to all ESBTs after Dec. 31, 2017.

 

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