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We have a Canadian Irrevocable Trust owning a house in the USA - never rented;no income at

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tached to it. If...
We have a Canadian Irrevocable Trust owning a house in the USA - never rented;no income at tached to it. If we sell that house, does the Cdn Trust file a return with the US tax department and what would the tax rate be on the capital gain?
Submitted: 2 years ago.Category: Tax
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Answered in 21 minutes by:
7/24/2015
Tax Professional: Lev, Tax Advisor replied 2 years ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,162
Experience: Taxes, Immigration, Labor Relations
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Yes - the foreign trust will be required to report the sale transaction on the US tax return because that woudl be income from US sources.As that woudl be a gain realized from the sale of real estate - it will be classified as effectively connected to trade or business in the US and will be taxed at the same tax rates as for US residents.If proceeds are not distributed to beneficiaries - the gain woudl be taxed for the trust - and as that is a long term capital gain - tax rates are most likely ~15%.When proceed are distributed to beneficiaries - taxable gain is passed to beneficiaries as well - and will be taxed for them in similar manner.We also need to consider the total gain - as there possible additional tax liability - such as AMT and Net Investment tax.
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