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2016

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

Section references are to the Internal Revenue Code

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

unless otherwise noted.

year, received either:

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

General Instructions

individual or a foreign estate (including foreign persons

related to that nonresident alien individual or foreign

Future Developments

estate) that you treated as gifts or bequests; or

For the latest information about developments related to

b. More than $15,671 from foreign corporations or

Form 3520 and its instructions, such as legislation

foreign partnerships (including foreign persons related to

enacted after they were published, go to

such foreign corporations or foreign partnerships) that you

form3520.

treated as gifts.

Purpose of Form

Complete the identifying information on page 1 of the

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

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

decedents) file Form 3520 to report:

Note. You may also be required to file FinCEN Form 114,

Certain transactions with foreign trusts,

Report of Foreign Bank and Financial Accounts (FBAR).

Ownership of foreign trusts under the rules of sections

Exceptions To Filing

671 through 679, and

Receipt of certain large gifts or bequests from certain

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

foreign persons.

transactions.

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

A separate Form 3520 must be filed for transactions

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

with each foreign trust.

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

Who Must File

to a foreign trust. However, some FMV transfers must

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

File Form 3520 if any one or more of the following applies.

exchange for obligations that are treated as qualified

1. You are the responsible party for reporting a

obligations, transfers of appreciated property to a foreign

reportable event that occurred during the current tax year,

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

or you transferred property (including cash) to a foreign

recognize all of the gain on the property transferred,

trust in exchange for an obligation. Responsible party,

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

reportable event, and qualified obligation are defined

foreign trust). See section III of Notice 97-34, 1997-25

later.

I.R.B. 22.

Complete the identifying information on page 1 of the

Transfers to foreign trusts that have a current

form and the relevant portions of Part I. See the

determination letter from the IRS recognizing their status

instructions for Part I.

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

Transfers to, ownership of, and distributions from a

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

Canadian registered retirement savings plan (RRSP), a

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

Canadian registered retirement income fund (RRIF), or

foreign trust under the rules of sections 671 through 679.

any other Canadian retirement plan that is within the

Complete the identifying information on page 1 of the

meaning of section 3 of Rev. Proc. 2014-55. See Rev.

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

Proc. 2014-55, 2014-44 I.R.B. 753, available at

irb/2014-44_IRB/ar10.html.

Note. You are required to complete Part II even if there

Deemed transfers from domestic trusts that become

have been no transactions involving the trust during the

foreign trusts to the extent the trust is treated as owned by

tax year.

a foreign person, after application of section 672(f).

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

Distributions from foreign trusts that are taxable as

indirectly) a distribution from a foreign grantor or

compensation for services rendered (within the meaning

nongrantor trust (including the uncompensated use of

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

trust property) during the current tax year or you (or a U.S.

recipient reports the distribution as compensation income

person related to you) received a loan (including an

on its applicable federal income tax return.

extension of credit) from a foreign trust that could be

Distributions from foreign trusts to domestic trusts that

treated as a distribution to a U.S. person.

have a current determination letter from the IRS

Complete the identifying information on page 1 of the

recognizing their status as exempt from income taxation

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

under section 501(c)(3).

Oct 25, 2016

Cat. No. 23068I

Instructions For Form 3520 - Annual Return To Report Transactions With Foreign Trusts - 2016

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