Distributions from a U.S. Estate or Trust to a Beneficiary in Germany, for Advisors

For executors, trustees and CPAs who distribute from a U.S. estate or trust to a beneficiary living in Germany.

Purchase the guide, USD 100

The case the guide follows

An executor in Fairfax, Virginia, closes her mother’s estate and divides the residue between a son in Arlington and a daughter who has lived in Munich for fifteen years and holds only German citizenship. The final Form 1041 and two Schedules K-1 are prepared and two equal checks are written. The distribution carried U.S. dividends and interest to a nonresident alien, nothing was withheld, and no Form 1042 or 1042-S was filed. As withholding agent, the executor owes the tax that was not withheld, with interest and penalties.

What the guide covers

• The two threshold questions: the beneficiary’s status for U.S. tax purposes and the character of what is distributed.
• How Subchapter J carries U.S.-source income out to a nonresident alien beneficiary with its character intact.
• When the fiduciary’s duty as withholding agent under Section 1441 arises, and the base on which the tax is computed.
• The treaty rate for each item of income under the income tax treaty with Germany, and the documentation on which it depends, including the German tax identification number on Form W-8BEN.
• Forms 1042 and 1042-S, which the Schedule K-1 does not replace.
• Real property under FIRPTA, grantor trusts, foreign trusts and the U.S. citizen living in Germany.
• The beneficiary’s German position and credit, the fiduciary’s personal liability, and the practice points.

The full title

Distributions from a U.S. Estate or Trust to a Beneficiary in Germany: The Fiduciary’s Withholding and Reporting Duties Under Section 1441 and the Income Tax Treaty. An Adviser’s Guide.

The guide A U.S. Trust with a Beneficiary in Germany, for Advisors treats the German side of the same distributions.