Treas. Reg. §1.643(h)-1(a)(1) provides that any property transferred to a U.S. person by an intermediary who has received property from a foreign nongrantor trust will be treated as property transferred directly by the foreign nongrantor trust to the U.S. person, if the intermediary received the property pursuant to a plan that had tax avoidance as a principal purpose.
A rebuttable presumption of tax avoidance is created if the U.S. person is related to the grantor of the foreign nongrantor trust and the U.S. person receives the property within 24 months before or after the intermediary received the distribution from the trust. Treas. Reg. §1.643(h)-1(a)(2).
These rules do not apply if the intermediary is the grantor of the foreign nongrantor trust or if the fair market value of all property transferred does not exceed $10,000. Treas. Reg. §1.643(h)-1(b)(2) & (d).
Treas. Reg. §1.643(h)-1(g) contains 11 examples of the rules related to distributions through intermediaries. We have created charts of these 11 examples. The charts are available at http://www.andrewmitchel.com/topic.php#641, where you can find hundreds of other situational charts.