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

2 0 09

Department of the Treasury

Internal Revenue Service

Instructions for Form 3520

Annual Return To Report Transactions With Foreign Trusts

and Receipt of Certain Foreign Gifts

4. You are a U.S. person who, during the current tax

Section references are to the Internal Revenue Code unless

year, received either:

otherwise noted.

a. More than $100,000 from a nonresident alien

individual or a foreign estate (including foreign persons

Pending Legislation May Affect

related to that nonresident alien individual or foreign estate)

that you treated as gifts or bequests; or

Form 3520

b. More than $14,139 from foreign corporations or

foreign partnerships (including foreign persons related to

At the time these instructions were sent to print, legislation

such foreign corporations or foreign partnerships) that you

was pending that would:

•

treated as gifts.

Clarify when foreign grantor trusts are treated as having,

Complete the identifying information on page 1 of the

or presumed to have, a U.S. beneficiary,

•

form and Part IV. See the instructions for Part IV.

Provide rules pertaining to the uncompensated use of

trust property and clarify when such use is treated as a

Note. You may also be required to file Form TD F 90-22.1,

distribution,

•

Report of Foreign Bank and Financial Accounts.

Provide for the possibility of additional reporting for U.S.

owners of foreign grantor trusts, and

Exceptions To Filing

•

Provide for a minimum penalty with respect to failure to

Form 3520 does not have to be filed to report the following

report on certain foreign trusts.

transactions.

•

Transfers to foreign trusts described in sections 402(b),

General Instructions

404(a)(4), or 404A.

•

Most fair market value (FMV) transfers by a U.S. person

Purpose of Form

to a foreign trust. However, some FMV transfers must

nevertheless be reported on Form 3520 (e.g., transfers in

U.S. persons (and executors of estates of U.S. decedents)

exchange for obligations that are treated as qualified

file Form 3520 to report:

•

obligations, transfers of appreciated property to a foreign

Certain transactions with foreign trusts and

•

trust for which the U.S. transferor does not immediately

Receipt of certain large gifts or bequests from certain

recognize all of the gain on the property transferred,

foreign persons.

transfers involving a U.S. transferor that is related to the

foreign trust). See Section III of Notice 97-34, 1997-25 I.R.B.

A separate Form 3520 must be filed for transactions with

22.

each foreign trust.

•

Transfers to foreign trusts that have a current

Who Must File

determination letter from the IRS recognizing their status as

exempt from income taxation under section 501(c)(3).

File Form 3520 if:

•

Transfers to, ownership of, and distributions from a

1. You are the responsible party for reporting a

Canadian registered retirement savings plan (RRSP) or a

reportable event that occurred during the current tax year, or

Canadian registered retirement income fund (RRIF), where

you held an outstanding obligation of a related foreign trust

the U.S. citizen or resident alien holding an interest in such

(or a person related to the trust) that you treated as a

RRSP or RRIF is eligible to file Form 8891, U.S. Information

qualified obligation during the current tax year. Responsible

Return for Beneficiaries of Certain Canadian Registered

party, reportable event, and qualified obligation are defined

Retirement Plans, with respect to the RRSP or RRIF.

•

on pages 3 and 4.

Distributions from foreign trusts that are taxable as

Complete the identifying information on page 1 of the

compensation for services rendered (within the meaning of

form and the relevant portions of Part I. See the instructions

section 672(f)(2)(B) and its regulations), so long as the

for Part I.

recipient reports the distribution as compensation income on

2. You are a U.S. person who, during the current tax

its applicable federal income tax return.

•

year, is treated as the owner of any part of the assets of a

Distributions from foreign trusts to domestic trusts that

foreign trust under the grantor trust rules.

have a current determination letter from the IRS recognizing

their status as exempt from income taxation under section

Complete the identifying information on page 1 of the

501(c)(3).

form and Part II. See the instructions for Part II.

•

Domestic trusts that become foreign trusts to the extent

3. You are a U.S. person who received (directly or

the trust is treated as owned by a foreign person, after

indirectly) a distribution from a foreign trust during the

application of section 672(f).

current tax year or a related foreign trust held an

outstanding obligation issued by you (or a person related to

Joint Returns

you) that you treated as a qualified obligation (defined on

page 3) during the current tax year.

Two transferors or grantors of the same foreign trust, or two

Complete the identifying information on page 1 of the

U.S. beneficiaries of the same foreign trust, may file a joint

form and Part III. See the instructions for Part III.

Form 3520, but only if they file a joint income tax return.

Cat. No. 23068I

Instructions For Form 3520 - Annual Return To Report Transactions With Foreign Trusts And Receipt Of Certain Foreign Gifts - 2009

Related Articles

Related forms

Related Categories