Can Form 3520 Offshore 2023-2024

Hello, Rob Lambert here with asset protection training. Today, I'm going to be talking about when your offshore trust is considered domestic for tax purposes. It can be quite strange, but often you can have an asset protection trust that is offshore and unreachable by creditors, yet still treated as a domestic trust for tax purposes. In this video, I will discuss this unique situation and the consequences that come with it. The consequences are not significant if you take a conservative approach and address the issues properly. I want to emphasize that these tax issues are not for regular people or do-it-yourselfers. While the issues can be researched easily, it is always advisable to seek professional tax advice to ensure compliance. Making mistakes in this area can lead to significant trouble and heartache. One such mistake is not reporting an offshore bank account, which can have severe consequences. Now, let's delve into the topic of when an offshore trust is considered domestic for tax purposes. Firstly, we need to look at the definition of a domestic trust. According to the Internal Revenue Code section 7701(a)(30), the term "United States person" refers to any trust if two conditions are met. First, a court within the United States has the ability to exercise primary supervision over the trust's administration. Second, one or more United States persons have the authority to control all substantial decisions of the trust. This definition is combined with section 7701(a)(31), which defines a foreign estate or trust as any trust that does not meet the criteria mentioned earlier. If a trust is structured in such a way that a United States court can exercise primary supervision and one or more United States persons have control over substantial decisions, it is reasonable for a tax preparer to consider...