Par. 3. Section 1.679-0 is amended by: a. Revising entry for § 1.679-1(c)(2). b. Adding new entry for § 1.679-2(a)(5). c. Redesignating the entry for § 1.679-2(b)(3) as the entry for § 1.679-2(b)(4). d. Adding new entry for § 1.679-2(b)(3). e. Adding new entries for § 1.679-2(b)(4)(i) through (vi). f. Adding new entry for § 1.679-2(d). g. Revising the entries for § 1.679-4(d)(1) through (6). h. Removing the entry for § 1.679-4(d)(7). i. Revising the entry for § 1.679-7. The revisions and additions read as follows:
* * * * *
§ 1.679-1 U.S. transferor treated as owner of foreign trust.
(c) * * *
(2) U.S. person.
(i) In general.
(ii) Special rules.
(A) Dual resident taxpayers.
(B) Dual status taxpayers.
* * * * *
(6) Obligation.
§ 1.679-2 Trusts treated as having a U.S. beneficiary.
(a) * * *
(5) Loan or uncompensated use of trust property treated as paid or accumulated for the benefit of a U.S. person.
(i) In general.
(ii) Indirect loans.
(iii) Exceptions.
(iv) Safe harbors.
(A) Reasonable period.
(B) De minimis use.
(v) Interaction with section 643(i).
(vi) Examples.
(A) Example 1: Loan of cash to U.S. person.
(B) Example 2: Use of trust property by U.S. person.
(C) Example 3: Use of trust property by church.
(D) Example 4: Indirect loan of cash to a U.S. person.
(E) Example 5: Interaction with section 643(i) and with section 6048(c) information reporting.
* * * * *
(b) * * *
(3) Loans to, or uncompensated use of trust property by, indirect beneficiaries.
(4) * * *
(i) Example 1. Trust benefiting foreign corporation.
(ii) Example 2. Trust benefiting another trust.
(iii) Example 3. Trust benefiting another trust after transferor's death.
(iv) Example 4. Indirect benefit through use of debit card.
(v) Example 5. Other indirect benefit.
(vi) Example 6. Indirect benefit through an indirect loan.
* * * * *
(d) Presumption that foreign trust has U.S. beneficiary.
(1) In general.
(2) Authority of Commissioner to request information.
§ 1.679-4 Exceptions to general rule.
* * * * *
(d) * * *
(1) In general.
(i) Requirements of the obligation.
(ii) Additional requirements to remain a qualified obligation.
(2) Modification of a qualified obligation.
(3) Additional loans.
(4) Anti-abuse rule.
(5) Obligations that cease to be qualified.
(i) In general.
(ii) Amount transferred to the trust.
(iii) Timing of transfers resulting from failed qualified obligations.
(6) Examples.
(i) Example 1: Demand loan.
(ii) Example 2: Private annuity.
(iii) Example 3: Transfer to unrelated foreign trust in exchange for an obligation.
(iv) Example 4: Transfer for an obligation with term in excess of 5 years.
(v) Example 5: Transfer for a qualified obligation.
(vi) Example 6: Effect of modification treated as an exchange.
(vii) Example 7: Effect of subsequent obligation on original obligation.
* * * * *
§ 1.679-7 Applicability dates.
* * * * *