BajaNomad - Register Fideicomiso with IRS

Register Fideicomiso with IRS

Reeljob - 2-25-2012 at 03:08 PM

Do some, all, or a few of you file the forms with the IRS re: foriegn property?

dtbushpilot - 2-25-2012 at 04:27 PM

Yes.

bajagrouper - 2-25-2012 at 06:34 PM

No, but you have to file for a foreign trust=Fideicomiso

and a bank account with more than $10,000 USD.........

john68 - 2-25-2012 at 08:56 PM

Stand by.

We may soon get a definitive answer from the IRS as to whether or not a fideicomiso is subject to section 6048 of the Internal Revenue Code.

Amy Jetel, a tax lawyer with Morgan Adler Buxton Jetel in Austin, Texas, filed a ruling request with the IRS a few weeks ago. The IRS usually responds within six months or so and its ruling will be published.

dtbushpilot - 2-25-2012 at 10:40 PM

the forms must be filed by March 15 not April 15 like your income tax return...fyi....dt

SDRonni - 2-26-2012 at 04:00 AM

Yes, 3520 and 3520-A

oxxo - 2-26-2012 at 05:46 AM

Quote:

Originally posted by Reeljob
Do some, all, or a few of you file the forms with the IRS re: foriegn property?

Yes, I do. Although there is dispute over whether it is required or not. it is prudent to file the form so that if it is determined that it is required, you are protected from penalties and interest. It is a simple one page form that you can fill out yourself. It takes all of 10 minutes to fill it out. My recommendation is to do it.

SDRonni - 2-26-2012 at 07:37 AM

oxxo: which form do you file? The 3520 is about four pages and the 3520-A is two, I think......I had a CPA do it the first time, last year, and since we don't ever rent it out, I just pretty much copied it for this year.

elfbrewery - 2-26-2012 at 01:49 PM

What is the real benefit to registerng fideicomiso with IRS? Will the IRS want capital gains taxes on the selling of this property?

dtbushpilot - 2-26-2012 at 04:25 PM

The real benefit is not being fined $10,000 for not doing it. Yes, of course the IRS will want their pound of flesh, they are nice enough to consider the amount of MX capital gains that you pay to offset any US taxes you would have to pay......dt

oxxo - 2-26-2012 at 11:57 PM

Quote:

Originally posted by SDRonni
oxxo: which form do you file? The 3520 is about four pages and the 3520-A is two, I think......I had a CPA do it the first time, last year, and since we don't ever rent it out, I just pretty much copied it for this year.

You are right, it is a two page form. My CPA filled it out the first year and I haved filled it out since. The information is essentially the same from year to year.

oxxo - 2-27-2012 at 12:11 AM

Quote:

Originally posted by elfbrewery
What is the real benefit to registerng fideicomiso with IRS? Will the IRS want capital gains taxes on the selling of this property?

Yes, the IRS wants you to pay capital gains tax when you sell in Mexico. However, they credit you with whatever capital gains tax you pay first in Mexico. The current capital gains tax in the US is 15% while in Mexico the capital gains tax is about 30% depending on a number of factors. So you likely wont owe capital gains tax in the US. They also want you to pay income tax on any rental of the property, again offset by any rental income tax you pay to Mexico.

Filing with the IRS protects you from a potential $10K penalty. If you dont sell your property or rent it, there is likely no tax implication from year to year by filing the form.

internal rapeing system (IRS)

captkw - 2-27-2012 at 07:17 AM

YA,go ahead and bend over for the IRS,,LOL :lol:

SFandH - 2-27-2012 at 07:45 AM

The following link mentions a new form, Form 8938.

Foreign Account Tax Compliance Act (FATCA)

It appears that the IRS wants this in addition to the 3520 and 3520-A. See Parts II and IV of Form 8938.

Looks like it will take about 5 to 10 minutes to complete - simple form.

[Edited on 2-27-2012 by SFandH]

captkw - 2-27-2012 at 07:51 AM

Quote:

Originally posted by captkw
YA,go ahead and bend over for the IRS,,LOL :lol:

SFandH - 2-27-2012 at 07:59 AM

Quote:

Originally posted by captkw

Quote:

Originally posted by captkw
YA,go ahead and bend over for the IRS,,LOL :lol:

Well, when you think about all the money the Government dishes out when you're retired, Social Security and Medicare, it's probably best to play it straight with the revenue collectors. Who would complain if the gov decided to deny benefits to people that don't comply? Afterall, they are short of cash these days.

Plus, it's about being a good citizen, and all that rot.

BLAALHH

captkw - 2-27-2012 at 08:04 AM

sheep have been known to follow each other over cliff's :lol:

oxxo - 2-27-2012 at 08:18 AM

Quote:

Originally posted by captkw
YA,go ahead and bend over for the IRS,,LOL :lol:

Well, then don't file the forms, it is your call. :light:

[Edited on 2-27-2012 by oxxo]

LAND OF THE FEE

captkw - 2-27-2012 at 08:31 AM

durrelllrobert - 2-27-2012 at 10:03 AM

Quote:

Originally posted by captkw
sheep have been known to follow each other over cliff's :lol:

..while the IRS watches!

Now ,THAT"S FUNNY

captkw - 2-27-2012 at 10:05 AM

had to look twice !! :lol:

K&T

Phil S - 2-27-2012 at 06:05 PM

It never ceases to amaze me how some people follow the letter to the law. Others make light of it.
Some years ago I sold a home in Baja. When the notario "closed' the transaction, he withheld the Mexican Federal capitol gains. (wasn't based on what we paid for it)) They used an appraisal price at the time we bought it, and then used another appriasal price when we sold it.??????? Was a pretty hefty tax I can remember. I mean HEFTY!!!! And because my CPA 'used" to be a good friend, I ended up paying another HEFTY tax to the U.S. IRS. And I can remember some gringos who had sold years prior to when we sold ours, and they didn't pay any Mexican tax !!!! Sooooo, No Baaaaaaaaa here. And I sleep good at nights. I pay my way, and I've never had my hand out for something for nothing. And proud of it.

dtbushpilot - 2-27-2012 at 10:03 PM

Good for you Phil, me too....

MitchMan - 2-29-2012 at 06:24 PM

While a fideicomiso is not a true trust, the IRS gets around this by mandating by fiat that the fideicomiso is to be "treated as a foreign trust". Such treatment means that if you have a fido, your are mandated to "consider" it as a true foreign trust and therefore you must file the IRS forms mentioned above. The IRS has the authority to mandate that the non-trust in fact shall be "treated" as though it is a an actual trust accompanied with all the filing requirements thereto.

Hook - 2-29-2012 at 06:47 PM

Where did you get this information, Mitch, that you alluded to and quoted above?

MitchMan - 2-29-2012 at 07:44 PM

Hook, I did a lot of research and careful reading on pertinent IRS code Sections, IRS definition of a foreign trust, interest in property in a foreign country and literature on requirements by the IRS for mandatory reporting for IRS forms 5471, 3520, and 3520-A. Particular attention to IRS code sections 671 to 679.

Much of the controversy is centered on whether or not a fideicomiso is, in fact, a true trust based on the generic definition of a trust. Well, in my research, I came to the unequivocal conclusion that a fideicomiso is not a true trust, foreign or otherwise. But, the controlling point to understand here is that the IRS can legally get around that short fall. They, in a sense, "re-define" things.... legally. Which is exactly what they did in this instance.... and they have the power to do that based on specific statutes.

One of the important things to know in researching these things is what the "goal" of the IRS is, then the chain of code sections and related regulations will become clearer to understand and track as you follow the legal trail. I have done a lot of tax work and tax research in my professional past.

Much of the research I had to do professionally was in getting a tax question relating to specific financial transactions and determining the best tax position to take. Most all of the time, these questions could not be answered by quoting a single statute (code section) or regulation because a question rarely fits a single statute or regulation straight on. It always lands somewhere in between and then you have to build a case by quoting court cases and their rulings.

But this issue (is a fido a trust and therefore subject to filing of the 3520, etc?) was resolved straight on and unequivocally, in my view. Bottom line, the fido doesn't have to be a true trust but, according to code, it shall be "treated" as a trust, and therefore, the filings are required.

laventana - 5-11-2012 at 05:19 PM

my two cents, the IRS just added a new page that to me the only reason is to clarify this situation. After all many claim here they want their piece of the pie, but we know that is not it for our instance. after all you do not have to report property owned in non-border coastal areas at all in Mexico. and for that matter you do not have to report real estate in any other part of the world. they are very specific to this as trusts for interest and so on that people are hiding money in always seemed what they were doing. It is the problem we have for the water zone they called it a trust.
but read this new chart which I think really gives the answer.

I think this definitively concludes the debate about reporting a fideicomiso.

http://www.irs.gov/businesses/article/0,,id=255986,00.html
Types of Foreign Assets and Whether They are Reportable

http://www.irs.gov/businesses/article/0,,id=255986,00.html

Comparison of Form 8938 and FBAR Requirements
Foreign real estate held directly

No

No

Foreign real estate held through a foreign entity

No, but the foreign entity itself is a specified foreign financial asset and its maximum value includes the value of the real estate

No

laventana - 8-16-2012 at 12:05 AM

I am confident most have heard about the single letter the IRS wrote to a person on their case. Here is a redacted copy of the letter. basically stating a fie is not a trust. You could hire that lawyer to get your own personal letter.

http://la-ventana.forumotion.com/t43-information-on-fideicom...

[Edited on 8-16-2012 by laventana]

capitolkat - 8-16-2012 at 09:46 AM

Mitch Man-- I strongly disagree. For 7 years I have advised my accountant of my fidecomiso in La Paz. I have explained the purpose of the trust, the fact I have no Mexican bank account, I do not have any income from my property and consistantly he has advised me it is not a reportable trust.

he is a former IRS agent, teaches Accounting Legal principals at the local law school in Nevada, has both an accounting and law degree, so I kind of believe he knows what he's talking about, and he gets the same question from me every year and does his due diligence and gives me the same answer- not required to report it. I have no problem reporting if it's required- but I don't want to report if it's not required -- so I don't

Norm