SPECIAL RULES WHERE GRANTOR OF TRUST IS A FOREIGN PERSON.

SEC. 11343. SPECIAL RULES WHERE GRANTOR OF TRUST IS A FOREIGN PERSON. (a) In General.— Section 672 (relating to definitions and rules) is amended by adding at the end thereof the following new subsection: “(f) Special Rule Where Grantor is Foreign Person.— “(1) In general.— If— “(A) but for this subsection, a foreign person would be treated as the owner of any portion of a trust, and “(B) such trust has a beneficiary who is a United States person, such beneficiary shall be treated as the grantor of such portion to the extent such beneficiary has made transfers of property by gift (directly or indirectly) to such foreign person. For purposes of the preceding sentence, any gift shall not be taken into account to the extent such gift would be excluded from taxable gifts under section 2503(b). “(2) Regulations.— The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this subsection.>” (b) Effective Date.— The amendments made by this section shall apply to— (1) any trust created after the date of the enactment of this Act, and (2) any portion of a trust created on or before such date which is attributable to amounts contributed to the trust after such date.