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Foreign Trust

The agency relationship must be established by the time the

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

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

must continue as long as the statute of limitations remains open

A domestic trust is any trust if:

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

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

responsibility as an agent of the trust is terminated, see Section

primary supervision over the administration of the trust and

IV(B) of Notice 97-34.

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

U.S. Beneficiary

all substantial decisions of the trust.

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

Grantor

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

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

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

named in the trust instrument as a beneficiary and whether or

indirectly makes a gratuitous transfer of cash or other property

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

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

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

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

•

679, excluding section 678.

A foreign corporation that is a controlled foreign corporation

(as defined in section 957(a)),

Note. If a partnership or corporation makes a gratuitous

•

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

transfer to a trust, the partners or shareholders are generally

partnership, and

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

•

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

corporation made the transfer for a business purpose of the

beneficiary.

partnership or corporation.

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

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

unless the terms of the trust instrument specifically prohibit any

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

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

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

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

appointment over the tranferor trust exercises that power in

be amended or revised to allow such a distribution.

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

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

U.S. Person

treated as the owner of the transferor trust.

A U.S. person is:

•

Grantor Trust

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

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

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

alien status),

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

•

A domestic partnership,

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

•

A domestic corporation,

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

•

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

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

section 7701(a)(31)), and

trust.

•

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

Gross Value

Gross value is the FMV of property as determined under

Specific Instructions

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

valuation date. Although formal appraisals are not generally

required, you should keep contemporaneous records of how

Period Covered

you arrived at your good faith estimate.

File the 2005 return for calendar year 2005 and fiscal years that

Nongrantor Trust

begin in 2005 and end in 2006. For a fiscal year, fill in the tax

year space at the top of the form.

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

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

Initial Return, Final Return, Amended

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

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

Return

portion of the trust assets. See Grantor Trust above.

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

Owner

“Initial return” box.

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

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

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

“Final return” box.

trust rules.

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

Property

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

box.

Property means any property, whether tangible or intangible,

including cash.

Part I—General Information

U.S. Agent

Identification numbers. Use social security numbers or

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

individual taxpayer identification numbers to identify individuals.

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

Use employer identification numbers to identify estates, trusts,

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

partnerships, and corporations.

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

Do not enter a preparer tax identification number (PTIN)

7602, 7603, and 7604 with respect to:

•

in any entry space on Form 3520-A other than the entry

Any request by the IRS to examine records or produce

space for “Preparer’s SSN or PTIN” at the bottom of

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

CAUTION

page 1 of the form.

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

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

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

box number instead.

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

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

Line 2. If the trust did not appoint a U.S. agent, attach the

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

following documents to Form 3520-A:

•

See Identification numbers below.

A summary of the terms of the trust that includes a summary

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

of any oral agreements or understandings you have with the

records or testimony when requested or summoned by the IRS,

trustee, whether or not legally enforceable.

•

the IRS may redetermine the tax consequences of your

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

transactions with the trust and impose appropriate penalties

the trust instrument, any memoranda of wishes prepared by the

under section 6677.

trustees summarizing the settlor’s wishes, any letter of wishes

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Instructions For Form 3520-A - Annual Information Return Of Foreign Trust With A U.s. Owner - 2005 Page 2

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