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A domestic trust that is treated as owned by a foreign

26.5

3.4471

. . . . . . . . . . . . . . . . . . . . .

person is not required to report the receipt of a

3.5452

. . . . . . . . . . . . . . . . . . . . . .

contribution to the trust from a foreign person. However, a

27.5

3.6433

. . . . . . . . . . . . . . . . . . . . .

U.S. beneficiary should report the receipt of a distribution

3.7414

. . . . . . . . . . . . . . . . . . . . . .

from a domestic trust that is treated as owned by a foreign

28.5

3.8395

. . . . . . . . . . . . . . . . . . . . .

person as a gift from a foreign person in Part IV, rather

3.9376

. . . . . . . . . . . . . . . . . . . . . .

than as a distribution to a U.S. beneficiary in Part III.

29.5

4.0357

. . . . . . . . . . . . . . . . . . . . .

4.1338

. . . . . . . . . . . . . . . . . . . . . .

Line 54. To calculate the threshold amount ($100,000),

30.5

4.2319

you must aggregate gifts from different foreign

. . . . . . . . . . . . . . . . . . . . .

4.3300

. . . . . . . . . . . . . . . . . . . . . .

nonresident aliens and foreign estates if you know (or

31.5

4.4281

have reason to know) that those persons are related to

. . . . . . . . . . . . . . . . . . . . .

4.5262

each other (see Related Person, earlier) or one is acting

. . . . . . . . . . . . . . . . . . . . . .

32.5

4.6243

as a nominee or intermediary for the other. For example, if

. . . . . . . . . . . . . . . . . . . . .

4.7224

you receive a gift of $75,000 from nonresident alien

. . . . . . . . . . . . . . . . . . . . . .

33.5

4.8205

individual A and a gift of $40,000 from nonresident alien

. . . . . . . . . . . . . . . . . . . . .

4.9186

individual B, and you know that A and B are related, you

. . . . . . . . . . . . . . . . . . . . . .

34.5

5.0167

must answer “Yes” and complete columns (a) through (c)

. . . . . . . . . . . . . . . . . . . . .

5.1148

for each gift.

. . . . . . . . . . . . . . . . . . . . . .

35.5

5.2129

. . . . . . . . . . . . . . . . . . . . .

If you answered “Yes” to the question on line 54 and

5.3110

. . . . . . . . . . . . . . . . . . . . . .

none of the gifts or bequests received exceeds $5,000, do

36.5

5.4091

. . . . . . . . . . . . . . . . . . . . .

not complete columns (a) through (c) of line 54. Instead,

5.5072

. . . . . . . . . . . . . . . . . . . . . .

enter in column (b) of the first line: “No gifts or bequests

37.5

5.6053

. . . . . . . . . . . . . . . . . . . . .

exceed $5,000.”

5.7034

. . . . . . . . . . . . . . . . . . . . . .

Line 55. Answer “Yes” if you received aggregate

38.5

5.8015

. . . . . . . . . . . . . . . . . . . . .

amounts in excess of $15,671 during the current tax year

5.8996

. . . . . . . . . . . . . . . . . . . . . .

that you treated as gifts from foreign corporations or

39+

5.9977

. . . . . . . . . . . . . . . . . . . . .

foreign partnerships (or any foreign persons that you know

(Note. Interest charges began in 1977.)

(or have reason to know) are related to such foreign

corporations or foreign partnerships).

Line 53. Report this amount as additional tax (ADT) on

the appropriate line of your income tax return (for

For example, if you, a calendar-year taxpayer during

example, for Form 1040 filers, include this amount as part

2016, received $8,000 from foreign corporation X that you

of the total for line 62 of your 2016 Form 1040; check box

treated as a gift, and $10,000 that you received from

c and enter “ADT” to the left of the line 62 entry space).

nonresident alien A that you treated as a gift, and you

know that X is wholly owned by A, you must complete

Part IV—U.S. Recipients of Gifts or

columns (a) through (g) for each gift.

Bequests Received During the

Note. Gifts from foreign corporations or foreign

Current Tax Year From Foreign

partnerships are subject to recharacterization by the IRS

Persons

under section 672(f)(4).

Line 56. If you answered “Yes” to the question on line 56

Note. Penalties may be imposed for failure to report gifts

and the ultimate donor on whose behalf the reporting

that should be reported. See Penalties, earlier.

donor is acting is a foreign corporation or foreign

A gift to a U.S. person does not include any amount

partnership, attach an explanation including the ultimate

paid for qualified tuition or medical payments made on

foreign donor's name, address, identification number, if

behalf of the U.S. person.

any, and status as a corporation or partnership.

If a foreign trust makes a distribution to a U.S.

If the ultimate donor is a foreign trust, treat the amount

beneficiary, the beneficiary must report the amount as a

received as a distribution from a foreign trust and

distribution in Part III, rather than as a gift in Part IV.

complete Part III.

Contributions of property by foreign persons to

Privacy Act and Paperwork Reduction Act Notice.

domestic or foreign trusts that have U.S. beneficiaries are

We ask for the information on this form to carry out the

not reportable by those beneficiaries in Part IV unless they

Internal Revenue laws of the United States. You are

are treated as receiving the contribution in the year of the

required to give us the information. We need it to ensure

transfer (e.g., if the U.S. beneficiary is treated as an owner

that you are complying with these laws and to allow us to

of that portion of the trust under section 678, then the

figure and collect the right amount of tax.

contribution must be reported by such U.S. beneficiary in

Our authority to ask for information is sections 6001,

Part IV).

6011, and 6012(a) and their regulations, which require

A domestic trust that is not treated as owned by

you to file a return or statement with us for any tax for

another person is required to report the receipt of a

which you are liable. Your response is mandatory under

contribution to the trust from a foreign person as a gift in

these sections. Section 6109 requires you to provide your

Part IV.

-13-

Instructions For Form 3520 - Annual Return To Report Transactions With Foreign Trusts - 2016 Page 13

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