# 26 U.S.C. § 684: Recognition of gain on certain transfers to certain foreign trusts and estates

Source: OLRC release point 119-134 <https://uscode.house.gov/us/usc/119-134/t26/s684>. Cite pinpoints as 26 U.S.C. § 684(a)(1).

## § 684(a) In general

Except as provided in regulations, in the case of any transfer of property by a United States person to a foreign estate or trust, for purposes of this subtitle, such transfer shall be treated as a sale or exchange for an amount equal to the fair market value of the property transferred, and the transferor shall recognize as gain the excess of—

**§ 684(a)(1)** the fair market value of the property so transferred, over

**§ 684(a)(2)** the adjusted basis (for purposes of determining gain) of such property in the hands of the transferor.

## § 684(b) Exception

Subsection (a) shall not apply to a transfer to a trust by a United States person to the extent that any person is treated as the owner of such trust under section 671.

## § 684(c) Treatment of trusts which become foreign trusts

If a trust which is not a foreign trust becomes a foreign trust, such trust shall be treated for purposes of this section as having transferred, immediately before becoming a foreign trust, all of its assets to a foreign trust.

## Regulations

- [Treas. Reg. § 1.684-1](/26/reg/1.684-1.md): Recognition of gain on transfers to certain foreign trusts and estates. (interprets § 684)
- [Treas. Reg. § 1.684-2](/26/reg/1.684-2.md): Transfers. (interprets § 684)
- [Treas. Reg. § 1.684-3](/26/reg/1.684-3.md): Exceptions to general rule of gain recognition. (interprets § 684)
- [Treas. Reg. § 1.684-4](/26/reg/1.684-4.md): Outbound migrations of domestic trusts. (interprets § 684)
- [Treas. Reg. § 1.684-5](/26/reg/1.684-5.md): Effective/applicability dates. (interprets § 684)

## Final rules

- [82 FR 6235](https://www.federalregister.gov/documents/2017/01/19/2017-01365/application-of-modified-carryover-basis-to-general-basis-rules) (2017): Application of Modified Carryover Basis to General Basis Rules
- [66 FR 37897](https://www.federalregister.gov/documents/2001/07/20/01-17972/recognition-of-gain-on-certain-transfers-to-certain-foreign-trusts-and-estates) (2001): Recognition of Gain on Certain Transfers to Certain Foreign Trusts and Estates

## Connections

Cites: § 671 Trust income, deductions, and credits attributable to grantors and others as substantial owners

Cited by: § 877A Tax responsibilities of expatriation

## Amendments

- 1997-08-05: [Pub. L. 105-34](/26/act/105-34.md), 111 Stat. 978
- 2001-06-07: [Pub. L. 107-16](/26/act/107-16.md), 115 Stat. 84
- 2010-12-17: [Pub. L. 111-312](/26/act/111-312.md), 124 Stat. 3300