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

transferred property, and provided that such U.S. citizen

3. All payments on the obligation are denominated in

or resident is alive at the time the trust becomes a foreign

U.S. dollars;

trust (see section 679(a)(5)); or

4. The yield to maturity of the obligation is not less

The gross amount of distributions received from a

than 100% of the applicable federal rate under section

foreign trust.

1274(d) for the day on which the obligation is issued and

not greater than 130% of the applicable federal rate;

Gross Value

5. The U.S. person agrees to extend the period for

Gross value is the value of property as determined under

assessment of any income or transfer tax attributable to

section 2512 and its regulations, without regard to any

the transfer and any consequential income tax changes

prohibitions or restrictions on a person's interest in the

for each year that the obligation is outstanding, to a date

property. See section VII of Notice 97-34. Although formal

not earlier than 3 years after the maturity date of the

appraisals are not generally required, you should keep

obligation, unless the maturity date of the obligation does

contemporaneous records of how you arrived at your

not extend beyond the end of the U.S. person's tax year

good faith estimate.

and is paid within such period (this is done on Part I,

Schedule A, line 12, and Part III, line 26, as applicable);

Guarantee

and

A guarantee:

6. The U.S. person reports the status of the obligation,

Includes any arrangement under which a person,

including principal and interest payments, on Part I,

directly or indirectly, assures, on a conditional or

Schedule C, line 19, and Part III, line 28, as applicable, for

unconditional basis, the payment of another's obligation;

each year that the obligation is outstanding.

Encompasses any form of credit support, and includes

a commitment to make a capital contribution to the debtor

Related Person

or otherwise maintain its financial viability; or

A related person generally includes any person who is

Includes an arrangement reflected in a “comfort letter,”

related to you for purposes of sections 267 and 707(b).

regardless of whether the arrangement gives rise to a

This includes, but is not limited to:

legally enforceable obligation. If an arrangement is

A member of your family—your brothers and sisters,

contingent upon the occurrence of an event, in

half-brothers and half-sisters, spouse, ancestors (parents,

determining whether the arrangement is a guarantee, you

grandparents, etc.), lineal descendants (children,

must assume that the event has occurred.

grandchildren, etc.), and the spouses of any of these

Nongrantor Trust

persons; or

A corporation in which you, directly or indirectly, own

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

more than 50% in value of the outstanding stock.

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

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

See section 643(i)(2)(B) and the regulations under

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

sections 267 and 707(b).

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

Person related to a foreign trust. A person is related to

Grantor Trust, earlier.

a foreign trust if such person, without regard to the

transfer at issue, is a grantor of the trust, a beneficiary of

Obligation

the trust, or is related to any grantor or beneficiary of the

An obligation includes any bond, note, debenture,

trust. See the definition of related person above.

certificate, bill receivable, account receivable, note

receivable, open account, or other evidence of

Reportable Event

indebtedness, and, to the extent not previously described,

A reportable event includes the following.

any annuity contract.

1. The creation of a foreign trust by a U.S. person.

Owner

2. The transfer of any money or property, directly or

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

indirectly, to a foreign trust by a U.S. person, including a

owning any of the assets of a foreign trust under the rules

transfer by reason of death. This includes transfers that

of sections 671 through 679.

are deemed to have occurred under sections 679(a)(4)

and (5).

Property

3. The death of a citizen or resident of the United

Property means any property, whether tangible or

States if:

intangible, including cash.

The decedent was treated as the owner of any portion

of a foreign trust under the rules of sections 671 through

Qualified Obligation

679, or

A qualified obligation, for purposes of this form, is any

Any portion of a foreign trust was included in the gross

obligation only if:

estate of the decedent.

1. The obligation is reduced to writing by an express

Responsible Party

written agreement;

Responsible party means:

2. The term of the obligation does not exceed 5 years

The grantor in the case of the creation of an inter vivos

(including options to renew and rollovers);

trust;

-4-

Instructions For Form 3520 - Annual Return To Report Transactions With Foreign Trusts - 2016 Page 4

Related Articles

Related forms

Related Categories