What Is “Form 1023”?
06/04/2026
IRS Form 1023, officially titled the “Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code,” is a federal tax document used by nonprofit organizations to formally request tax-exempt status. By filing this comprehensive application, an organization asks the federal government to legally excuse it from paying federal corporate income taxes on
What Is Foreign-Derived Intangible Income (FDII)?
06/04/2026
Foreign-Derived Intangible Income (FDII) is a U.S. tax incentive designed to encourage domestic corporations to keep their operations, jobs, and intellectual property within the United States rather than moving them overseas. It works by granting a special tax deduction on income earned from selling products, licensing intellectual property, or providing services to foreign customers from
What Is a “Foreign trust”?
06/04/2026
A foreign trust is any legal trust arrangement that fails to meet either the IRS’s “court test” or “control test” required to be classified as a domestic U.S. trust. In simpler terms, it is a trust that is either supervised by a non-U.S. court system or has its major financial and operational decisions managed by
What Is a Foreign Inheritance?
06/04/2026
A foreign inheritance is cash, property, real estate, or other assets received by a U.S. citizen or resident alien from a deceased person who was neither a U.S. citizen nor a U.S. resident. While the United States generally does not tax the value of the inherited assets themselves, you may face strict disclosure and reporting
What Is a Foreign Gift?
06/04/2026
A foreign gift is money, property, or any valuable asset given to a U.S. citizen or resident alien by a non-U.S. person, where nothing of equal value is expected or given in return. While the United States generally does not tax the recipient on the value of these gifts, you are legally required to disclose
What Is a “Foreign financial institution”?
06/04/2026
A foreign financial institution (FFI) is any non-U.S. business that accepts deposits, holds financial assets for others, or invests and trades in securities. Under the Foreign Account Tax Compliance Act (FATCA), these overseas entities are required to report information about financial accounts held by U.S. taxpayers directly to the IRS. Essentially, they act as an
What Is a “Foreign financial asset”?
06/04/2026
A foreign financial asset is any financial account or investment held outside the United States. This includes overseas bank accounts, foreign stocks, and interests in foreign businesses. If you are a U.S. taxpayer with money abroad, the IRS requires you to report these assets once their total value crosses a specific dollar threshold. 1. Meaning
What Is Fixed or Determinable Annual or Periodical Income?
06/04/2026
Fixed or determinable annual or periodical income, widely known by the acronym FDAP income, is a broad classification of passive U.S.-source income earned by foreign individuals and overseas entities. The IRS mandates that this income be taxed at a flat gross rate—typically 30%—which must be withheld directly at the source before the funds can leave
What Is FIRPTA?
06/04/2026
The Foreign Investment in Real Property Tax Act (FIRPTA) is a U.S. tax law that requires buyers to withhold a percentage of the purchase price when buying real estate from a foreign seller. This withheld amount acts as a temporary tax deposit, ensuring that international sellers pay their required capital gains taxes before taking their
What Is “Fiduciary”?
06/04/2026
A fiduciary is an individual, bank, or trust company legally appointed to manage money, property, or assets on behalf of someone else. Held to the highest legal and ethical standards, a fiduciary must always act in the absolute best financial interest of the person or entity they represent. In the tax world, a fiduciary is