26 CFR § 1.684-1 - Recognition of gain on transfers to certain foreign trusts and estates.
---
identifier: "/us/cfr/t26/s1.684-1"
source: "ecfr"
legal_status: "authoritative_unofficial"
title: "26 CFR § 1.684-1 - Recognition of gain on transfers to certain foreign trusts and estates."
title_number: 26
title_name: "Internal Revenue"
section_number: "1.684-1"
section_name: "Recognition of gain on transfers to certain foreign trusts and estates."
chapter_name: "INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY"
subchapter_number: "A"
subchapter_name: "INCOME TAX"
part_number: "1"
part_name: "INCOME TAXES"
positive_law: false
currency: "2026-04-05"
last_updated: "2026-04-05"
format_version: "1.1.0"
generator: "[email protected]"
authority: "26 U.S.C. 7805, unless otherwise noted."
regulatory_source: "T.D. 6500, 25 FR 11402, Nov. 26, 1960; 25 FR 14021, Dec. 21, 1960; T.D. 9989, 89 FR 17606, Mar. 11, 2024, unless otherwise noted."
cfr_part: "1"
---
# 1.684-1 Recognition of gain on transfers to certain foreign trusts and estates.
(a) *Immediate recognition of gain*—(1) *In general.* Any U.S. person who transfers property to a foreign trust or foreign estate shall be required to recognize gain at the time of the transfer equal to the excess of the fair market value of the property transferred over the adjusted basis (for purposes of determining gain) of such property in the hands of the U.S. transferor unless an exception applies under the provisions of § 1.684-3. The amount of gain recognized is determined on an asset-by-asset basis.
(2) *No recognition of loss.* Under this section a U.S. person may not recognize loss on the transfer of an asset to a foreign trust or foreign estate. A U.S. person may not offset gain realized on the transfer of an appreciated asset to a foreign trust or foreign estate by a loss realized on the transfer of a depreciated asset to the foreign trust or foreign estate.
(b) *Definitions.* The following definitions apply for purposes of this section:
(1) *U.S. person.* The term *U.S. person* means a United States person as defined in section 7701(a)(30), and includes a nonresident alien individual who elects under section 6013(g) to be treated as a resident of the United States.
(2) *U.S. transferor.* The term *U.S. transferor* means any U.S. person who makes a transfer (as defined in § 1.684-2) of property to a foreign trust or foreign estate.
(3) *Foreign trust.* Section 7701(a)(31)(B) defines foreign trust. See also § 301.7701-7 of this chapter.
(4) *Foreign estate.* Section 7701(a)(31)(A) defines foreign estate.
(c) *Reporting requirements.* A U.S. person who transfers property to a foreign trust or foreign estate must comply with the reporting requirements under section 6048.
(d) *Examples.* The following examples illustrate the rules of this section. In all examples, *A* is a U.S. person and *FT* is a foreign trust. The examples are as follows:
[T.D. 8956, 66 FR 37899, July 20, 2001]