Fiduciaries and accounting professionals need to be familiar with international tax issues before allocating funds from a domestic trust or estate to foreign beneficiaries, writes Larry McNamara, a member of the AICPA Trust, Estate and Gift Tax Technical Resource Panel. First, the practitioner needs to verify the tax status of the foreign beneficiary. Then, the practitioner must calculate the net distribution amount after properly withholding tax payments. A qualified intermediary or an authorized foreign agent may assume responsibility, and the fiduciary in that case doesn't have to worry about withholding. Exhibit 2 of Regs. Sec. 1.1441-5 has a summary of rules for complex trusts and estates.
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