Are “Fideicomisos” subject to the reporting requirements of IRC 679 and 6048 or NOT?

20 09 2010
I read a good article on fideicomisos – the Mexican law creation in which a person transfer to other the property of assets for the fulfillment of certain goals – in “restricted zone” – a stretch of 100 kilometers from the border, and 50 kilometers from the beach in which foreigners cannot own realty for residential purposes – and whether its beneficiaries have to report it to the IRS per Internal Revenue Code §§ 679 6048, by attorney Amy P. Jetel. Do they have to report it?
No, says Ms. Jetel. (1) The U.S. person does not OWN the fideicomiso, and (2) neither “the initial purchase nor the ongoing payments made by the U.S. person should be considered reportable transfers to a foreign trust.”
In Ms. Jetel’s words,

San Juan de Alima, Michoacan: a good place for having a beach house in Mexico (but if you're not a Mexican, you need a fideicomiso)

Fideicomisos should not be subject to the reporting requirements of IRC Sections 679 and 6048, because they’re not the types of tax-avoidance structures targeted by these statutes, and because they can be excepted from the application of IRC Sections 679 and 6048 under a plain reading of the Internal Revenue Code, the Treasury Regulations, and Internal Revenue Service Notice 97-34.

This article is relevant for any attorney serving clients with an interest in having a house in Mexico generally, and of course for those tax law practitioners which clients may be in similar circumstances.
Thanks to the picture of this entry, now I rather be in San Juan de Alima.



One response

23 11 2012
When Timeshares in Mexico Go Sour: #PROFECO « The JurisMex Blog

[…] zone”—a stretch of 100 kilometers from the border, and 50 kilometers from the beach; rather, a fideicomiso is normally […]

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