IRS Clarifies That a Fideicomiso Isn’t a Trust

IRS Clarifies That a Fideicomiso Isn’t a Trust

Revenue Ruling 2013-14 puts this issue to rest

The Internal Revenue Service has done something right for a change.  They issued Revenue Ruling 2013-14 holding that a fideicomiso, or “Mexican Land Trust” isn’t a “trust” for U.S. tax purposes. Therefore, U.S. persons who own their Mexican coastal real estate through fideicomisos aren’t required to submit foreign trust forms (Forms 3520 and 3520-A), and they need not worry about the hefty failure-to-file penalties associated with these forms.
Previously, this holding was confined to a Private Letter Ruling 201245003 (July 30, 2012), which can only be used by the taxpayer who requested it and can’t be cited by other taxpayers as binding authority. Now, with this revenue ruling, all taxpayers can rest easy.  For a thorough discussion of the legal analysis of the PLR (the reasoning of which is followed by Rev. Rul. 2013-14), see “Fideicomisos: Clarity at Last?” in the November 2012 issue of Trusts & Estates.

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