서강대학교

목차

NOTICE OF MAJOR CONTRIBUTIONS TO ORIGINAL KNOWLEDGE VII
ACKNOWLEDGEMENTS X
TABLE OF ABBREVIATIONS XVII
CHAPTER I. INTRODUCTION 1
SECTION 1. RESEARCH BACKGROUND AND PROBLEM STATEMENT 1
SECTION 2. RESEARCH PURPOSE AND QUESTIONS 8
SECTION 3. LITERATURE REVIEW AND DIFFERENTIATION 11
SECTION 4. RESEARCH SCOPE AND METHODOLOGY 35
SECTION 5. ACADEMIC SIGNIFICANCE AND EXPECTED EFFECTS 39
(1) Academic Significance: Bridging the Common Law-Civil Law Divide 39
(2) Practical and Policy-Oriented Expected Effects 39
SECTION 6. THESIS COMPOSITION AND CHAPTER OUTLINE 41
CHAPTER II. DESIGNING A U.S. NON-GRANTOR TRUST FOR ASSET PRESERVATION PURPOSES 45
SECTION 1. CONCEPTUAL FRAMEWORK OF U.S. TRANSFER TAX PROTECTIONS FOR THE NRNC GRANTOR 45
(1) Three Elements of Estate Tax Filters Built-In the Internal Revenue Code 45
(2) The Situs Rules 50
(3) Estate Tax Filtering: Multi-Entity Structures 52
(4) Estate Tax Filtering: Foreign Corporation underneath a Domestic Disregarded Entity 54
(5) Estate Tax Filtering: Foreign Corporation above a Domestic Disregarded Entity 59
SECTION 2. WHY NON-GRANTOR TRUST IS A SUPERIOR SOLUTION TO OTHERS FOR THE NRNC GRANTORS 61
(1) The NRNC client's primary goals: (i) U.S. Estate Tax Protection, (ii) No NRNC Personal U.S. Income Tax Filing, (iii) Minimize U.S. Capital Gains Tax on Sale, and (iv) Imputed Tax-Free Family Use 61
(2) Plausible U.S. Real Estate Holding Structure for a Korean NRNC 63
(3) Outstanding Benefits of Trusts in Korea-U.S. Cross-Border Estate Planning 64
SECTION 3. ISSUES IN STRUCTURING U.S. NON-GRANTOR TRUST FOR THE ASSET PRESERVATION 68
(1) Framework in Big Picture 68
(2) Issue 1: Domestic Trust vs. Foreign Trust 69
(3) Issue 2: Gift Tax 71
(4) Issue 3: Uncertainties of the FIRPTA Withholding under IRC §897(a) 73
(5) Issue 4: Grantor Trust Structuring for an NRNC Grantor 77
(a) Power to Revest 80
(b) Power to Appoint Successor Trustees 82
(c) A Short Summary 83
SECTION 4. U.S. ESTATE AND GIFT TAX ANALYSIS FOR THE NRNC GRANTOR 84
(1) IRC §2103 Gross Estate of an NRNC: From IRC §2031(a) to IRC §2033 84
(a) A Solution to the grantor 88
(b) A Solution to the beneficiary 91
(c) The Power of Appointment 93
(2) U.S. Generation-Skipping Transfer Tax (GSTT) 97
(3) U.S. Gift Tax 99
(4) Income Taxation of Capital Gain 100
(5) Capital Gains Disposition by a Foreign Non-Grantor Trust 105
(6) Net Investment Income Tax (“NIIT”) in Trust Structures 107
(7) Possibility of Basis Step-Up 110
SECTION 5. POTENTIAL DANGERS OF THE USE OF FOREIGN TRUST-OWNED ASSETS BY U.S. BENEFICIARIES 113
(1) Grantor vs. Non-Grantor and Irrevocable vs. Revocable 113
(2) Risk of Harm under the Proposed Regulations IRC §643(i) 115
(a) Trust Distributions in the Form of Loan 122
(b) Tax Rates on Rental Income 123
(c) Engaged in a Trade or Business in the U.S 124
(d) I.R.S. Forms 3520 and 4970 “Tax on Accumulation Distribution of Trusts” 128
(3) The Actual Calculation: Form 3520, Part III, Schedule B 130
(4) The Default Calculation: Form 3520, Part III, Schedule A 131
(5) Risk of Penalties 132
SECTION 6. RESTRUCTURING THE EXISTING HOLDING STRUCTURES INTO A TRUST .. 133
CHAPTER III. LEGAL REVIEW OF THE SUBSTANCE-OVER-FORM DOCTRINE AND JURISDICTIONAL COLLISION IN CROSS-BORDER PROPERTYSUCCESSION 140
SECTION 1. UTILITY OF TRUST FROM THE PERSPECTIVE OF THE U.S.–KOREA INCOME TAX CONVENTION 140
(1) Does the Trust satisfy the definition of a Resident for purposes of the Contracting State? 140
(2) How a Common Law Trust, Recognized as a “Person” in Italy, is nonetheless Denied Eligibility for Treaty Benefits 143
(3) Implications of the Italian Trust Case for Korean Beneficial Ownership Recognition of the Non-grantor Trustees 148
SECTION 2. U.S. TIEBREAKER RULES 154
(1) The Tiebreaker Rules in the U.S. Model Treaty (2016), Article 3(3) 154
(2) The Latest Court Decision of the Tiebreaker Rules: U.S.-Mexico (1994) Article 4(2) 156
(a) Aroeste v. United States., 655 F. Supp. 3d 1053 (2023) 157
(b) Implications to the U.S. Permanent Resident Taxpayers 158
SECTION 3. THE JURISDICTIONAL NERVE CENTER: CONFLICTS IN LITIGATION AND ENFORCEMENT 166
(1) U.S. General Jurisdiction Post-Mallory v. Norfolk Southern Railway Co., 600 U.S. 122 (2023): The risk of "Consent by Registration" for trust-owned corporate interests 166
(2) The Hertz Nerve Center vs. the Perkins Exception: The Nerve Center Ruling in Perkins v. Benguet Mining Co., 342 U.S. 437 (1952) by locating the "home" of a trust for personal jurisdiction. 174
(3) Korean Recognition of Foreign Judgments: How the "Public Order" clause allows Korean courts to ignore U.S. rulings that bypass Legitima Portio 180
SECTION 4. THE "CHOICE OF LAW" COLLISION IN REAL PROPERTY 187
CHAPTER IV. BENEFIT MIGRATION: CHALLENGES AND OPPORTUNITIES 197
SECTION 1. A CRITICAL REVIEW OF KOREAN LEGISLATION AND JURISPRUDENCE 197
(1) The Rigidity of the Korean Trust Act (Articles 59 & 60) 197
(2) A Will Substitute Trust-owned Property vs. System of Legitima Portio - Suwon District Court, 2017gahap408489 199
(3) Less-Clear Trust Taxation Rules in Korea 208
(a) “choice of law rules” of Trust 221
(b) Actual Place of Management Standard 229
(4) Migration of Trust Benefits under Korean Law 245
(5) Limited but Somehow Meaningful Utility of Structuring the Foreign Non-Grantor Trusts 253
(6) The Beneficiary-Friendly Withholding Rules in the Financial Investment Services and Capital Markets Act (the “Capital Markets Act”) 258
(7) Criticism of the 2020 Trust Income Tax Amendment: The failure to distinguish between "Passive Conduits" and "Active Business Trusts." 263
SECTION 2. COMPLIANCE ISSUES: INTERNATIONAL INFORMATION REPORTING. 281
(1) The Reporting Matrix for U.S. Non-Grantor Trusts 281
(a) Category 1 Requirements and Initial Conflict 284
(b) Category 3 Requirements 286
(c) Category 5 Requirements 291
(d) Mandatory Form 5471 Filing with Zero Tax Liability 296
(e) Form 5472 Attribution Rules for a Reporting Corporation 299
(2) Tax Liability Anomaly for Treaty Nonresidents: Why "Treaty Non-residents" must file Form 5471 even with zero U.S. tax liability 304
(3) The Enforcement Landscape Post-Farhy: The current "Split in the Circuits" regarding the I.R.S.'s authority to assess administrative penalties 306
(a) Trustee's Mandatory Filing Burden 307
(b) Complex Ownership and Form 5472 308
(c) Beneficiary Status and Filing Waivers 309
SECTION 3. PROPOSALS FOR FUNCTIONAL EQUIVALENCE AND LEGISLATIVE REFORM 311
(1) The Compliance Framework: Functional Equivalence Translation: Reporting U.S. trusts as "Managed Asset Pools" under the FISCMA analogy 311
(2) Functional Equivalence and FISCMA 320
(3) Legislative Solutions: Codifying the "Vested/Reportable" rule and the "Asserted Claim Settlement Mechanism" to resolve Legitima Portio conflicts 326
(4) Any Benefits of using U.S. Non-Grantor Trust? 334
(5) Summary of Chapter IV 337
CHAPTER V. CONCLUSION 342
APPENDIX 1. MEMORANDUM OF LEGAL PRECEDENTS 348
APPENDIX 2. TAX FILING DISCLOSURE STATEMENT 355
APPENDIX 3. CALCULATION WORKSHEET: U.S. DNI TO KOREAN GLOBAL INCOME 358
APPENDIX 4. SUMMARY OF PROPOSED LEGISLATIVE REFORMS 360
BIBLIOGRAPHY 370