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captkw
Ultra Nomad
Posts: 3850
Registered: 10-19-2010
Location: el charro b.c.s.
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Mood: new dog/missing the old 1
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Now ,THAT"S FUNNY
had to look twice !! K&T
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Phil S
Super Nomad
Posts: 1205
Registered: 10-28-2003
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Mood: After 34 years. Still in love w/ my wife
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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.
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dtbushpilot
Ultra Nomad
Posts: 3296
Registered: 1-11-2007
Location: Buena Vista BCS
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Mood: Tranquilo
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Good for you Phil, me too....
"Life is tough".....It's even tougher if you're stupid.....
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MitchMan
Super Nomad
Posts: 1856
Registered: 3-9-2009
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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.
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Hook
Elite Nomad
Posts: 9011
Registered: 3-13-2004
Location: Sonora
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Mood: Inquisitive
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Where did you get this information, Mitch, that you alluded to and quoted above?
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MitchMan
Super Nomad
Posts: 1856
Registered: 3-9-2009
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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.
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laventana
Nomad
Posts: 216
Registered: 8-24-2006
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Mood: sharing
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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
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laventana
Nomad
Posts: 216
Registered: 8-24-2006
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Mood: sharing
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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]
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capitolkat
Senior Nomad
Posts: 510
Registered: 3-9-2006
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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
Life is too short to drink bad wine
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