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§ 3.7 GRANTOR TRUST RULESthan adequate and full consideration; the power to borrow without adequateinterest or security; the power to borrow trust funds; and a generalpower of administration.4. A grantor is treated as the owner of any portion of a trust if the grantor ora nonadverse party 526 has a power to revoke the trust or return the corpusto the grantor. 5275. A grantor is treated as the owner of any portion of a trust if the grantor ora nonadverse party has the power to distribute income to or for the benefitof the grantor or his or her spouse. 528In some instances, a person other than a grantor is treated as a substantial ownerof a portion of a trust. 529 These rules also may apply with respect to foreigntrusts having one or more U.S. beneficiaries. 530526 A nonadverse party is a person who is not an adverse party. IRC § 672(b). An adverse party is a person havinga substantial beneficial interest in a trust that would be adversely affected by the exercise or nonexercise of thepower which he or she possesses with respect to the trust. IRC § 672(a); Reg. § 1.672(a)-1(a). A person havinga general power of appointment over trust property is deemed to have a beneficial interest in the trust. IRC §672(a); Reg. § 1.672(a)-1(a).527 IRC § 676.528 IRC § 677. The IRS examined a proposed trust agreement and concluded that the grantor would not be treatedas the owner of the trust, although the agency observed that actual operation of the trust could lead to a differentconclusion. Priv. Ltr. Rul. 199927010, corrected by Priv. Ltr. Rul. 200003059.529 IRC § 678.530 IRC § 679. 123