Just passing through

A client is the beneficiary of a US trust established in the 1950s. The trust owns shares in two Citibank funds bought in 1982 and 1992 respectively which have produced long-term and short-term capital gains for US tax purposes that are taxed in the trustees' hands on a 'pass-thru' basis. Thus year by year the US trustees have paid US tax on these gains without actually selling any shares in these Citibank funds. One fund has 'distributor' status the other not.

The trustees have now sold their shares in these funds and wish to make a capital payment to my client. The settlor now deceased was a US citizen domiciled and resident in the US; it is very doubtful that ITA 2007 s 716 et seq will apply because of the defence available under ITA 2007 s 739 et seq....