David W. Chiu - Page 9

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            requirements set forth in that section.6  Regulations under                                  
            section 408 further clarify that such a trust "must be maintained                            
            at all times as a domestic trust in the United States."  Sec.                                
            1.408-2(b), Income Tax Regs.7                                                                
                  Petitioner maintains that the amounts withdrawn from his                               
            Varian IRA were transferred to an account at the Hong Kong &                                 
            Shanghai Banking Corp., located in Hong Kong.  Even if we were to                            
            assume that the account at the Hong Kong bank was set up as a                                
            trust or a custodial account8 (and petitioner has provided no                                
            evidence in that regard), petitioner's rollover claim would fail                             
            because he has not shown that the transfer was to a domestic                                 
            entity.  The situs of a trust is generally defined to be the                                 
            place of performance of the active duties of the trustee, and                                
            where the settlor selects a bank as the trustee, the location of                             
            the bank has been held to be the situs of the trust.  90 C.J.S.                              
            Trusts, sec. 160(b) at 12 (1955).  Thus, the available evidence                              
            strongly suggests that the situs of any trust to which the Varian                            
            IRA proceeds were transferred is the Hong Kong branch office of                              

                  6Sec. 408(h) further provides that a "custodial account" may                           
            be treated as a "trust" for purposes of sec. 408, but such                                   
            custodial account must also be maintained in the United States.                              
                  7In certain circumstances, a tax-free rollover from an IRA                             
            may also be made into a qualified pension or profit-sharing plan.                            
            See sec. 408(d)(3)(A)(ii).  However, a qualified plan likewise                               
            denotes a "trust created or organized in the United States".                                 
            Sec. 401(a).                                                                                 
                  8See supra note 6.                                                                     

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