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Foreign Trust

records or testimony when requested or summoned by the IRS,

the IRS may redetermine the tax consequences of your

A foreign trust is any trust other than a domestic trust. A

transactions with the trust and impose appropriate penalties

domestic trust is any trust if:

under section 6677.

1. A court within the United States is able to exercise

The agency relationship must be established by the time the

primary supervision over the administration of the trust and

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

2. One or more U.S. persons have the authority to control

must continue as long as the statute of limitations remains open

all substantial decisions of the trust.

for the relevant tax year. If the agent resigns, liquidates, or its

responsibility as an agent of the trust is terminated, see

Grantor

Notice 97-34.

A grantor includes any person who creates a trust or directly or

U.S. Beneficiary

indirectly makes a gratuitous transfer of cash or other property

to a trust. A grantor includes any person treated as the owner of

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

any part of a foreign trust’s assets under sections 671 through

possibly benefit (directly or indirectly) from the trust (including

679, excluding section 678.

an amended trust) at any time, whether or not the person is

named in the trust instrument as a beneficiary and whether or

Note: If a partnership or corporation makes a gratuitous

not the person can receive a distribution from the trust in the

transfer to a trust, the partners or shareholders are generally

current year. In addition, a U.S. beneficiary includes:

treated as the grantors of the trust, unless the partnership or

•

A foreign corporation that is a controlled foreign corporation

corporation made the transfer for a business purpose of the

(as defined in section 957(a)),

partnership or corporation.

•

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

If a trust makes a gratuitous transfer to another trust, the

partnership, and

grantor of the transferor trust is treated as the grantor of the

•

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

transferee trust, except that if a person with a general power of

beneficiary.

appointment over the tranferor trust exercises that power in

A foreign trust will be treated as having a U.S. beneficiary

favor of another trust, such person is treated as the grantor of

unless the terms of the trust instrument specifically prohibit any

the transferee trust, even if the grantor of the transferor trust is

distribution of income or corpus to a U.S. person at any time,

treated as the owner of the transferor trust.

even after the death of the U.S. transferor, and the trust cannot

Grantor Trust

be amended or revised to allow such a distribution.

A grantor trust is any trust to the extent that the assets of the

U.S. Person

trust are treated as owned by a person other than the trust. See

A U.S. person is:

the grantor trust rules in sections 671 through 679. A part of the

•

A citizen or resident alien of the United States (see Pub. 519,

trust may be treated as a grantor trust to the extent that only a

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

portion of the trust assets are owned by a person other than the

alien status),

trust.

•

A domestic partnership,

•

Gross Value

A domestic corporation,

•

Any estate (other than a foreign estate, within the meaning of

Gross value is the FMV of property as determined under

section 7701(a)(31)), and

section 2031 and its regulations as if the owner had died on the

•

Any trust if it is not a foreign trust (defined above).

valuation date. Although formal appraisals are not generally

required, you should keep contemporaneous records of how

you arrived at your good faith estimate.

Specific Instructions

Nongrantor Trust

A nongrantor trust is any trust to the extent that the assets of

Period Covered

the trust are not treated as owned by a person other than the

trust. Thus, a nongrantor trust is treated as a taxable entity. A

File the 2002 return for calendar year 2002 and fiscal years that

trust may be treated as a nongrantor trust with respect to only a

begin in 2002 and end in 2003. For a fiscal year, fill in the tax

portion of the trust assets. See Grantor Trust above.

year space at the top of the form.

Owner

Initial Return, Final Return, Amended

An owner of a foreign trust is the person that is treated as

Return

owning any of the assets of a foreign trust under the grantor

trust rules.

Initial return. If this is the foreign trust’s first return, check the

Property

“Initial return” box.

Final return. If the foreign trust ceases to exist, check the

Property means any property, whether tangible or intangible,

“Final return” box.

including cash.

Amended return. If this Form 3520-A is filed to amend a Form

U.S. Agent

3520-A that you previously filed, check the “Amended return”

A U.S. agent is a U.S. person (defined below) that has a

box.

binding contract with a foreign trust that allows the U.S. person

to act as the trust’s authorized U.S. agent (see instructions for

Part I—General Information

Part I, Lines 3a through 3g, on page 3) in applying sections

Identification numbers. Use social security numbers or

7602, 7603, and 7604 with respect to:

•

individual taxpayer identification numbers to identify individuals.

Any request by the IRS to examine records or produce

Use employer identification numbers to identify estates, trusts,

testimony related to the proper U.S. tax treatment of amounts

partnerships, and corporations.

distributed, or required to be taken into account under the

grantor trust rules, with respect to a foreign trust or

Address. Include the suite, room, or other unit number after

•

Any summons by the IRS for such records or testimony.

the street address. If the Post Office does not deliver mail to the

A U.S. grantor, a U.S. beneficiary, or a domestic corporation

street address and the U.S. person has a P.O. box, show the

controlled by the grantor or beneficiary may act as a U.S. agent.

box number instead.

However, you may not treat the foreign trust as having a U.S.

Foreign address. Do not abbreviate the country name.

agent unless you enter the name, address, and taxpayer

identification number of the U.S. agent on lines 3a through 3g. If

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

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Instructions For Form 3520-A - Annual Information Return Of Foreign Trust With A U.s. Owner - 2002 Page 2

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