Code Section 643

Code Section	Effective Date	Name of Act	Name of Provision	10yr Revenue Estimate ($millions)
643 and 679	3/18/2010	The Hiring Incentives to Restore Employment Act	Uncompensated use of trust property	*See sec. 1471

*Note on Revenue Estimate

See section 1471, provision: Reporting on certain foreign accounts.

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Uncompensated use of trust property

Explanation of Provision

The provision expands section 643(i) to provide that any use of trust property by the U.S. grantor, U.S. beneficiary or any U.S. person related to a U.S. grantor or U.S. beneficiary is treated as a distribution of the fair market value of the use of the property to the U.S. grantor or U.S. beneficiary. The use of property is not treated as a distribution to the extent that the trust is paid the fair market value for the use of the property within a reasonable period of time. A subsequent return of property treated as a distribution under section 643(i) is disregarded for tax purposes.

For purposes of determining whether a foreign trust has a U.S. beneficiary under section 679, a loan of cash or marketable securities or the use of any other trust property by a U.S. person is treated as a payment from the trust to the U.S. person in the amount of the loan or the fair market value of the use of the property. A loan or use of property is not treated as a payment to the extent that the U.S. person repays the loan at a market rate of interest or pays the fair market value for the use of the trust property within a reasonable period of time.

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