Impact of International Tax Reform Provisions on International Estate Planning

May 7, 2018

The 2017 tax reform act, signed into law on December 22, 2017 (the ‘‘2017 tax act’’) contains sweeping provisions that drastically change the international provisions of the Internal Revenue Code. This article examines one seemingly minor — but far-reaching — change to the Subpart F rules in the context of international estate planning: the change that eliminates the requirement that a foreign corporation be a controlled foreign corporation for an uninterrupted period of 30 days or more in order for U.S. shareholders of the corporation to be required to include certain income of the foreign corporation (even if not distributed). This change in law places increased pressure on
pre-death planning for nonresident aliens with U.S. heirs, and may also provide for renewed attention to the effect of the check-the-box rules on the federal estate tax regime. This article first details the change in law under the 2017 tax act and its application to international estate planning. It then examines planning alternatives and provides an in-depth analysis of the interaction of the check-the-box rules and U.S. transfer taxes.

To continue reading Henry Bubel and Jenny Longman's article from Bloomberg Tax's Estates, Gifts and Trusts Journal, please click here.