Looking for a Form 3520 Templates? Download it for free!

•

trust as having a U.S. agent unless you enter the name,

A U.S. person, directly or indirectly, uses property that is

address, and taxpayer identification number of the U.S.

owned by the foreign trust and does not pay FMV of the use

agent on lines 3a through 3g on page 1 of the form. See

of such property within a reasonable period of time.

Identification numbers on page 6.

Presumption that foreign trust has U.S. beneficiary. For

transfers of property after March 18, 2010, if a U.S. person

If the person identified as the U.S. agent does not

directly or indirectly transfers property to a foreign trust

produce records or testimony when requested or summoned

(other than a deferred compensation or charitable trust

by the IRS, the IRS may redetermine the tax consequences

described in section 6048(a)(3)(B)(ii)), the IRS may treat

of your transactions with the trust and impose appropriate

such trust as having a U.S. beneficiary for purposes of

penalties under section 6677.

applying section 679(d) to such transfer if the IRS requests

The agency relationship must be established by the time

information with respect to the transfer and the U.S. person

the U.S. person files Form 3520 for the relevant tax year

fails to demonstrate to the satisfaction of the IRS that no

and must continue as long as the statute of limitations

portion of the income or corpus of the trust may ever be paid

remains open for the relevant tax year. If the agent resigns

to or accumulated for the benefit of a U.S. person.

or liquidates, or its responsibility as an agent of the trust is

U.S. Person

terminated, see section IV(B) of Notice 97-34.

A U.S. person is:

U.S. Beneficiary

•

A citizen or resident alien of the United States (see Pub.

A U.S. beneficiary generally includes any U.S. person that

519, U.S. Tax Guide for Aliens, for guidance on determining

could possibly benefit (directly or indirectly) from the trust

resident alien status),

•

(including an amended trust) at any time, whether or not the

A domestic partnership,

•

person is named in the trust instrument as a beneficiary and

A domestic corporation,

•

whether or not the person can receive a distribution from the

Any estate (other than a foreign estate, within the

trust in the current year. In addition, a U.S. beneficiary

meaning of section 7701(a)(31)(A)), and

•

includes:

Any domestic trust (defined on page 3).

•

A foreign corporation that is a controlled foreign

U.S. Transferor

corporation (as defined in section 957(a)),

•

A foreign partnership if a U.S. person is a partner of the

A U.S. transferor is any U.S. person who:

partnership, and

1. Creates or settles a foreign trust.

•

A foreign estate or trust if the estate or trust has a U.S.

2. Directly or indirectly transfers money or property to a

beneficiary.

foreign trust. This includes deemed transfers under section

Foreign trust treated as having a U.S. beneficiary. In

679(a)(4) or section 679(a)(5).

general, a foreign trust will be treated as having a U.S.

3. Makes a sale to a foreign trust if the sale was at other

than arm’s-length terms or was to a related foreign trust, or

beneficiary unless the terms of the trust instrument

makes (or guarantees) a loan to a related foreign trust.

specifically prohibit any distribution of income or corpus to a

U.S. person at any time, even after the death of the U.S.

4. Is the executor of the estate of a U.S. person and:

transferor or any event terminating the trust, and the trust

a. The decedent made a testamentary transfer (a

cannot be amended or revised to allow such a distribution.

transfer by reason of death) to a foreign trust,

For these purposes, an amount will be treated as

b. Immediately prior to death, the decedent was treated

accumulated for the benefit of a U.S. person even if the U.S.

as the owner of any portion of a foreign trust under the rules

person’s interest in the trust is contingent on a future event

of sections 671 through 679, or

c. Any portion of a foreign trust’s assets were included in

and regardless of whether anything is actually distributed to

a U.S. person during that tax year.

the estate of the decedent.

Special rule in case of discretion to identify

Generally, the person defined as the transferor is the

beneficiaries. For purposes of the general rule above, if

responsible party (defined on page 4) who must ensure that

any person has the discretion of making a distribution from

required information be provided or pay appropriate

the trust to, or for the benefit of, any person, the trust will be

penalties.

treated as having a beneficiary who is a U.S. person unless

the terms of the trust specifically identify the class of

persons to whom such distributions may be made, and none

Specific Instructions

of those persons are U.S. persons during the tax year.

Certain agreements and understandings treated as

Period Covered

terms of the trust. For purposes of the general rule above,

if any U.S. person who directly or indirectly transfers

File the 2010 return for calendar year 2010 and fiscal years

property to the trust is directly or indirectly involved in any

that begin in 2010 and end in 2011. For a fiscal year, fill in

agreement or understanding (whether written, oral, or

the tax year space at the top of the form.

otherwise) that may result in the income or corpus of the

trust being paid or accumulated to or for the benefit of a U.S.

Item A—Initial Return, Final Return,

person, such agreement or understanding will be treated as

Amended Return

a term of the trust.

Certain loans or uncompensated use of trust

Initial return. If this is the first return you are filing

property. If a foreign trust is not already treated as having

concerning the foreign trust identified, check the “Initial

a U.S. beneficiary under the rules described above, the trust

return” box.

will be treated as having a U.S. beneficiary if, after March

Final return. If no further returns for transactions with the

18, 2010, either:

foreign trust are required, check the “Final return” box.

•

The foreign trust loans cash or marketable securities

Example. If you annually filed Part II, Form 3520,

directly or indirectly to a U.S. person and the U.S. person

does not repay the loan at a market rate of interest within a

because you were the owner of the trust for U.S. income tax

reasonable period of time, or

purposes and the trust has terminated within the tax year,

-5-

Instructions For Form 3520 - Annual Return To Report Transactions With Foreign Trusts And Receipt Of Certain Foreign Gifts - 2010 Page 5

Related Articles

Related forms

Related Categories