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If there is not enough space on the form, please attach a

Part II—U.S. Owner of a Foreign Trust

statement.

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Complete Part II if you are considered the owner of any

For transfers reported on attachments, you must enter

assets of a foreign trust under the grantor trust rules during

“Attachment” on one of the lines in column (b), and enter the

the tax year. You are required to enter a taxpayer

total amount of transfers reported on the attachment on line

identification number for such foreign trust on line 2b.

13, columns (c), (d), (e), (f), (h), and (i).

Line 20. Enter information regarding any person other than

Note. Penalties may be imposed for failure to report all

yourself who is considered the owner of any portion of the

required information. See Penalties on page 2.

trust under the grantor trust rules. Also, enter in column (e)

Line 13, column (e). Only include gain that is immediately

the specific Code section that causes that person to be

recognized at the time of the transfer.

considered an owner for U.S. income tax purposes. See the

grantor trust rules under sections 671 through 679.

Note. For any transfer by a U.S. person to a foreign

nongrantor trust after August 4, 1997, the transfer is treated

Line 21. See the list of country codes on pages 11, 12, and

as a sale or exchange and the transferor must recognize as

13. If the country is not included in the list, enter “OC” for

a gain the excess of the FMV of the transferred property

“other country” and the country’s name.

over its adjusted basis. Although the gain is not recognized

Line 22. If “Yes,” the copy of the Foreign Grantor Trust

on Form 3520, it must be reported on the appropriate form

Owner Statement (page 3 of Form 3520-A) should show the

or schedule of the transferor’s income tax return. See

amount of the foreign trust’s income that is attributable to

section 684.

you for U.S. income tax purposes. See Section IV of Notice

97-34.

Line 13, column (f). Generally, if the reported transaction

is a sale, you should report the gain on the appropriate form

If “No,” you may be liable for a penalty of 5% of the trust

or schedule of your income tax return.

assets that you are treated as owning, plus additional

penalties for continuing failure to file after notice by the IRS.

Line 15. Enter the name, address, whether the person is a

See section 6677. Also see Penalties on page 2.

U.S. beneficiary (defined on page 4), and taxpayer

identification number, if any, of all reportable beneficiaries.

Line 23. Enter the FMV of the trust assets that you are

Include specified beneficiaries, classes of discretionary

treated as owning. Include all assets at FMV as of the end of

beneficiaries, and names or classes of any beneficiaries that

the tax year. For this purpose, disregard all liabilities. The

could be named as additional beneficiaries. If there is not

trust should send you this information in connection with its

enough space on the form, please attach a statement.

Form 3520-A. If you did not receive such information (line 9

of the Foreign Grantor Trust Owner Statement) from the

Line 17. Enter the name, address, and taxpayer

trust, complete line 23 to the best of your ability. At a

identification number (if any) of any person, other than those

minimum, include the value of all assets that you have

listed on line 16, that has significant powers over the trust

transferred to the trust. Also use Form 8082 to notify the IRS

(e.g., “protectors,” “enforcers,” any person that must

that you did not receive a Foreign Grantor Trust Owner

approve trustee decisions or otherwise direct trustees, any

Statement. However, filing Form 8082 does not relieve you

person with a power of appointment, any person with

of any penalties that may be imposed under section 6677.

powers to remove or appoint trustees, etc.). Include a

See Penalties on page 2.

description of each person’s powers. If there is not enough

space, attach a statement.

Part III—Distributions to a U.S.

Line 18. If you checked “No” on line 3 (or you did not

Person From a Foreign Trust During

complete lines 3a through 3g) attach:

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A summary of the terms of the trust that includes a

the Current Tax Year

summary of any oral agreements or understandings you

have with the trustee, whether or not legally enforceable.

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If you received an amount from a portion of a foreign trust of

A copy of all trust documents (and any revisions),

which you are treated as the owner and you have correctly

including the trust instrument, any memoranda of wishes

reported any information required on Part II and the trust

prepared by the trustees summarizing the settlor’s wishes,

has filed a Form 3520-A with the IRS, do not separately

any letter of wishes prepared by the settlor summarizing his

disclose distributions again in Part III. If you received an

or her wishes, and any similar documents.

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amount from a foreign trust that would require a report under

A copy of the trust’s financial statements, including a

both Parts III and IV (gifts and bequests) of Form 3520,

balance sheet and an income statement similar to those

report the amount only in Part III.

shown on Form 3520-A. These financial statements must

Line 24. Report any cash or other property that you

reasonably reflect the trust’s accumulated income under

received (actually or constructively, directly or indirectly)

U.S. income tax principles. For example, the statements

during the current tax year, from a foreign trust, whether or

must not treat capital gains as additions to trust corpus.

not taxable, unless the amount is a loan to you from the trust

Schedule C—Qualified Obligations

that must be reported on line 25. For example, if you are a

partner in a partnership that receives a distribution from a

Outstanding in the Current Tax Year

foreign trust, you must report your allocable share of such

Line 19. Provide information on the status of outstanding

payment as an indirect distribution from the trust.

obligations of the foreign trust (or person related to the

Line 24, column (c). The filer is permitted to enter the

foreign trust) that you reported as a qualified obligation in

basis of the property in the hands of the beneficiary (as

the current tax year. This information is required in order to

determined under section 643(e)(1)), if lower than the FMV

retain the obligation’s status as a qualified obligation. If

of the property, but only if the taxpayer is not required to

relevant, attach a statement describing any changes in the

complete Schedule A (lines 31 through 38) due to lack of

terms of the qualified obligation.

documentation. For these purposes, lack of documentation

If the obligation fails to retain the status of a qualified

refers to a situation in which the filer checked “No” on line 29

obligation, you will be treated as having made a gratuitous

or 30 because (a) the beneficiary did not receive a Foreign

transfer to the foreign trust, which must be reported on

Grantor Trust Beneficiary Statement or a Foreign

Schedule B, Part I. See Section III(C)(2) of Notice 97-34.

Nongrantor Trust Beneficiary Statement from the trust or (b)

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Instructions For Form 3520 - Annual Return To Report Transactions With Foreign Trusts And Receipt Of Certain Foreign Gifts - 2008 Page 6

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