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6. The U.S. person reports the status of the obligation,

when requested or summoned by the IRS, the IRS may

including principal and interest payments, on Part I,

redetermine the tax consequences of your transactions

Schedule C, and Part III, as applicable, for each year that

with the trust and impose appropriate penalties under

the obligation is outstanding.

section 6677.

The agency relationship must be established by the

Related Person

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

A related person generally includes any person who is

year and must continue as long as the statute of

related to you for purposes of section 267 and 707(b).

limitations remains open for the relevant tax year. If the

This includes, but is not limited to:

agent resigns, liquidates, or its responsibility as an agent

•

A member of your family— your brothers and sisters,

of the trust is terminated, see Notice 97-34.

half-brothers and half-sisters, spouse, ancestors

(parents, grandparents, etc.), lineal descendants

U.S. Beneficiary

(children, grandchildren, etc.), and the spouses of any of

A U.S. beneficiary generally includes any person that

these persons.

could possibly benefit (directly or indirectly) from the trust

•

A corporation in which you, directly or indirectly, own

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

more than 50% in value of the outstanding stock.

the person is named in the trust instrument as a

See section 643(i)(2)(B) and the regulations under

beneficiary and whether or not the person can receive a

sections 267 and 707(b).

distribution from the trust in the current year. In addition,

Person related to a foreign trust. A person is related to

a U.S. beneficiary includes:

•

a foreign trust if such person, without regard to the

A foreign corporation that is a controlled foreign

transfer at issue, is a grantor of the trust, a beneficiary of

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

•

the trust, or is related to any grantor or beneficiary of the

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

trust. See the definition of related person above.

the partnership, and

•

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

Reportable Event

beneficiary.

A reportable event includes:

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

beneficiary unless the terms of the trust instrument

1. The creation of a foreign trust by a U.S. person.

specifically prohibit any distributin of income or corpus to

2. The transfer of any money or property, directly or

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

indirectly, to a foreign trust by a U.S. person, including a

U.S. transferor, and the trust cannot be amended or

transfer by reason of death. This includes transfers that

revised to allow such a distribution.

are deemed to have occurred under sections 679(a)(4)

and (5).

U.S. Person

3. The death of a citizen or resident of the United

States if:

A U.S. person is:

•

The decedent was treated as the owner of any

A citizen or resident alien of the United States (see

portion of a foreign trust under the grantor trust rules or

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

•

Any portion of a foreign trust was included in the

determining resident alien status),

•

gross estate of the decedent.

A domestic partnership,

•

A domestic corporation,

•

Responsible Party

Any estate (other than a foreign estate, within the

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

Responsible party means:

•

Any trust if it is not a foreign trust (defined on page 2).

The grantor in the case of the creation of an inter vivos

trust,

•

U.S. Transferor

The transferor, in the case of a reportable event

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

(defined above) other than a transfer by reason of death,

1. Creates or settles a foreign trust.

•

The executor of the decedent’s estate in any other

2. Directly or indirectly transfers money or property to

case.

a foreign trust. This includes a U.S. citizen or resident

who has made a deemed transfer under section

U.S. Agent

679(a)(4) or a U.S. resident who has made a deemed

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

transfer under section 679(a)(5).

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

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

person to act as the trust’s authorized U.S. agent in

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

applying sections 7602, 7603, and 7604 with respect to:

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

•

Any request by the IRS to examine records or produce

trust.

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

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

amounts distributed, or required to be taken into account

a. The decedent made a testamentary transfer (a

under the grantor trust rules, with respect to a foreign

transfer by reason of death) to a foreign trust,

trust or

b. Immediately prior to death, the decedent was

•

Any summons by the IRS for such records or

treated as the owner of any portion of a foreign trust

testimony.

under the grantor trust rules, or

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

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

corporation controlled by the grantor or beneficiary may

in the estate of the decedent.

act as a U.S. agent. However, you may not treat the

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

Generally, the person defined as the transferor is the

name, address, and taxpayer identification number of the

responsible party (defined above) who must ensure that

U.S. agent on lines 3a through 3g. If the person identified

required information be provided or pay appropriate

as the U.S. agent does not produce records or testimony

penalties.

-4-

Instructions For Form 3520 - Annual Return To Report Transactions With Foreign Trusts And Receipt Of Certain Foreign Gifts - 2001 Page 4

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