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Gross Value

beneficiary and whether or not the person can receive a

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

Gross value is the FMV of property as determined under

U.S. beneficiary includes:

section 2031 and its regulations as if the owner had died

A foreign corporation that is a controlled foreign

on the valuation date. Although formal appraisals are not

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

generally required, you should keep contemporaneous

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

records of how you arrived at your good faith estimate.

partnership, and

Nongrantor Trust

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

beneficiary.

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

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

Foreign trust treated as having a U.S. beneficiary. In

than the trust. Thus, a nongrantor trust is treated as a

general, a foreign trust will be treated as having a U.S.

taxable entity. A trust may be treated as a nongrantor trust

beneficiary unless the terms of the trust instrument

with respect to only a portion of the trust assets. See

specifically prohibit any distribution of income or corpus to

Grantor Trust above.

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

transferor or any event terminating the trust, and the trust

Owner

cannot be amended or revised to allow such a distribution.

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

For these purposes, an amount will be treated as

owning any of the assets of a foreign trust under the

accumulated for the benefit of a U.S. person even if the

grantor trust rules.

U.S. person's interest in the trust is contingent on a future

event and regardless of whether anything is actually

Property

distributed to a U.S. person during that tax year.

Property means any property, whether tangible or

Special rule in case of discretion to identify

intangible, including cash.

beneficiaries. For purposes of the general rule above, if

any person has the discretion of making a distribution

U.S. Agent

from the trust to, or for the benefit of any person, the trust

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

will be treated as having a beneficiary who is a U.S.

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

person, unless the terms of the trust specifically identify

person to act as the trust's authorized U.S. agent (see the

the class of persons to whom such distributions may be

instructions for Part I, Lines 3a through 3g, later) in

made, and none of those persons are U.S. persons during

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

the tax year.

Any request by the IRS to examine records or produce

Certain agreements and understandings treated as

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

terms of the trust. For purposes of the general rule

amounts distributed, or required to be taken into account

above, if any U.S. person who directly or indirectly

under the grantor trust rules, with respect to a foreign trust

transfers property to the trust is directly or indirectly

involved in any agreement or understanding (whether

Any summons by the IRS for such records or testimony.

written, oral, or otherwise) that may result in the income or

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

corpus of the trust being paid or accumulated to or for the

corporation controlled by the grantor or beneficiary may

benefit of a U.S. person, such agreement or

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

understanding will be treated as a term of the trust.

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

Certain loans or uncompensated use of trust

name, address, and taxpayer identification number of the

property. If a foreign trust is not already treated as

U.S. agent on lines 3a through 3g of Part I of the form. See

having a U.S. beneficiary under the rules described

Identification numbers later.

above, the trust will be treated as having a U.S.

beneficiary if, after March 18, 2010, either:

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

The foreign trust loans cash or marketable securities

produce records or testimony when requested or

directly or indirectly to a U.S. person and the U.S. person

summoned by the IRS, the IRS may redetermine the tax

does not repay the loan at a market rate of interest within

consequences of your transactions with the trust and

a reasonable period of time, or

impose appropriate penalties under section 6677.

A U.S. person uses property that is owned by the

The agency relationship must be established by the

foreign trust and does not pay FMV of the use of such

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

property within a reasonable period of time.

year and must continue as long as the statute of

Presumption that foreign trust has U.S. beneficiary.

limitations remains open for the relevant tax year. If the

For transfers of property after March 18, 2010, if a U.S.

agent’s responsibility as an agent of the trust is terminated

person directly or indirectly transfers property to a foreign

for any reason (e.g., agent’s resignation, agent’s

trust (other than a deferred compensation or charitable

liquidation, or agent’s death), see section IV(B) of

trust described in section 6048(a)(3)(B)(ii)), the IRS may

Notice 97-34.

treat such trust as having a U.S. beneficiary for purposes

U.S. Beneficiary

of applying section 679(d) to such transfer if the IRS

requests information with respect to the transfer and the

A U.S. beneficiary generally includes any person that

U.S. person fails to demonstrate to the satisfaction of the

could possibly benefit (directly or indirectly) from the trust

IRS that no portion of the income or corpus of the trust

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

the person is named in the trust instrument as a

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Instructions For Form 3520-A - Annual Information Return Of Foreign Trust With A U.s. Owner - 2015 Page 3

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