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

Line 20. Enter information regarding any person other

nongrantor trust after August 4, 1997, the transfer is

than yourself who is considered the owner of any portion

treated as a sale or exchange and the transferor must

of the trust under the grantor trust rules. Also, enter in

recognize as a gain the excess of the FMV of the

column (e) the specific Code section that causes that

transferred property over its adjusted basis. Although the

person to be considered an owner for U.S. income tax

gain is not recognized on Form 3520, it must be reported

purposes. See the grantor trust rules under sections 671

on the appropriate form or schedule of the transferor’s

through 679.

income tax return. See section 684.

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

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

12 of these instructions. If the country is not included in

transaction is a sale, you should report the gain on the

the list, enter “OC” for “other country” and the country’s

appropriate form or schedule of your income tax return.

name.

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

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

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

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

identification number, if any, of all reportable

the amount of the foreign trust’s income that is

beneficiaries. Include specified beneficiaries, classes of

attributable to you for U.S. income tax purposes. See

discretionary beneficiaries, and names or classes of any

Section IV of Notice 97-34.

beneficiaries that could be named as additional

beneficiaries. If there is not enough space on the form,

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

please attach a statement.

trust assets that you are treated as owning, plus

additional penalties for continuing failure to file after

Line 17. Enter the name, address, and taxpayer

notice by the IRS. See section 6677.

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

those listed on line 16, that has significant powers over

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

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

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

must approve of trustee decisions, or otherwise direct

end of the tax year. For this purpose, disregard all

trustees, any person with a power of appointment, any

liabilities. The trust should send you this information in

person with powers to remove or appoint trustees, etc.).

connection with its Form 3520-A. If you did not receive

Include a description of each person’s powers. If there is

such information (line 9 of the Foreign Grantor Trust

not enough space, please attach a statement.

Owner Statement) from the trust, complete line 23 to the

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

best of your ability. At a minimum, include the value of all

complete lines 3a through 3g) attach:

assets that you have transferred to the trust. Also use

•

A summary of the terms of the trust that includes a

Form 8082 to notify the IRS that you did not receive a

summary of any oral agreements or understandings you

Foreign Grantor Trust Owner Statement. However, filing

have with the trustee, whether or not legally enforceable.

Form 8082 does not relieve you of any penalties that may

•

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

be imposed under section 6677. See Penalties on page

including the trust instrument, any memoranda of wishes

prepared by the trustees summarizing the settlor’s

wishes, any letter of wishes prepared by the settlor

Part III—Distributions to a U.S.

summarizing his or her wishes, and any similar

Person From a Foreign Trust During

documents.

•

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

the Current Tax Year

balance sheet and an income statement similar to those

shown on Form 3520-A. These financial statements must

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

reasonably reflect the trust’s accumulated income under

of which you are treated as the owner and you have

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

correctly reported any information required on Part II and

must not treat capital gains as additions to trust corpus.

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

separately disclose distributions again in Part III. If you

Schedule C—Qualified Obligations

received an amount from a foreign trust that would

Outstanding in the Current Tax Year

require a report under both Parts III and IV (gifts and

bequests) of Form 3520, report the amount only in Part

Line 19. Provide information on the status of

III.

outstanding obligations of the foreign trust (or person

related to the foreign trust) that you reported as a

Line 24. Report any cash or other property that you

qualified obligation in the current tax year. This

received (actually or constructively, directly or indirectly)

information is required in order to retain the obligation’s

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

status as a qualified obligation. If relevant, attach a

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

statement describing any changes in the terms of the

the trust that must be reported on line 25. For example, if

qualified obligation.

you are a partner in a foreign partnership that receives a

If the obligation fails to retain the status of a qualified

distribution from a foreign trust, you must report your

obligation, you will be treated as having made a

allocable share of such payment as an indirect

gratuitous transfer to the foreign trust, which must be

distribution from the trust.

reported on Schedule B, Part I. See Section III(C)(2) of

Line 25. If you, or a person related to you, received a

Notice 97-34.

loan from a related foreign trust, it will be treated as a

distribution to you unless the obligation you issued in

Part II—U.S. Owner of a Foreign Trust

exchange is a qualified obligation.

Complete Part II if you are considered the owner of any

assets of a foreign trust under the grantor trust rules

For this purpose, a loan to you by an unrelated third

during the tax year. You are required to enter a taxpayer

party that is guaranteed by a foreign trust is generally

identification number for such foreign trust on line 2b.

treated as a loan from the trust.

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Instructions For Form 3520 - Annual Return To Report Transactions With Foreign Trusts And Receipt Of Certain Foreign Gifts - 2001 Page 6

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