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- 7. Ownership of Foreign Corporations
If the foreign trust holds an interest in foreign corporations, especially those meeting the criteria of a ‘controlled foreign corporation’ (CFC) or ‘passive foreign investment company’ (PFIC), additional reporting may be necessary.
Stock ownership by a foreign trust in foreign corporations may be attributed proportionately to US beneficiaries.
This attribution can trigger additional tax and reporting obligations for US beneficiaries even if they do not receive distributions from the trust.
a). Form 8621 Information Return by a Shareholder of a Passive Foreign Investment Company
b). Form 5471 – Information Return of U.S. Persons with Respect to Certain Foreign Corporations