Формуляр 3520 Инструкции
Инструкции за Form 3520, Годишна възвръщаемост за докладване на сделки с чуждестранни тръстове и получаване на някои чуждестранни подаръци
Ревизия декември 2023 г
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- Формуляр 3520 - Годишен репортаж за сделки с чуждестранни тръстове и получаване на някои чуждестранни подаръци
Department of the Treasury
Internal Revenue Service
Instructions for Form 3520
(Rev. December 2023)
Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain
Foreign Gifts
Section references are to the Internal Revenue Code unless
otherwise noted.
Note. You are required to complete Part II even if there have
been no transactions involving the trust during the tax year.
You may also be required to complete a substitute Form
3520-A, Annual Information Return of Foreign Trust With a
later.
3. You are a U.S. person (including a U.S. owner) or an
executor of the estate of a U.S. person who received, directly
or indirectly, a distribution from a foreign trust during the
current tax year; or you are a U.S. person who is a U.S. owner
or beneficiary of a foreign trust and in the current tax year you
or a U.S. person related to you received (1) a loan of cash or
marketable securities (including an extension of credit)
directly or indirectly from such foreign trust, or (2) the
uncompensated use of trust property; or you are a U.S.
person who is a U.S. owner or beneficiary of a foreign trust
and in the current tax year such foreign trust holds an
outstanding qualified obligation of yours or a U.S. person
Future Developments
For the latest information about developments related to
Form 3520 and its instructions, such as legislation enacted
What’s New
Continuous-use form and instructions. Form 3520 and
these instructions have been converted from an annual
revision to continuous use. Both the form and instructions will
be updated as needed. For the most recent version, go to
Reminder
Exemption from information reporting under section
6048. Rev. Proc. 2020-17 exempts from foreign trust
information reporting certain eligible individuals’ transactions
Complete the identifying information on page 1 of the form
and Part III. In the case of a U.S. person that is an estate,
check “Executor” on line B on page 1. See the instructions for
General Instructions
4. You are a U.S. person who, during the current tax year,
Purpose of Form
received either:
U.S. persons (and executors of estates of U.S. decedents)
file Form 3520 with the IRS to report:
a. More than $100,000 from a nonresident alien
individual or a foreign estate (including foreign persons
related to that nonresident alien individual or foreign estate)
that you treated as gifts or bequests; or
b. More than the section 6039F threshold amount from
foreign corporations or foreign partnerships (including foreign
persons related to such foreign corporations or foreign
partnerships) that you treated as gifts. The threshold amount
release, then click on the Rev. Proc. link and search for
section 6039F to see the threshold amount under Notice of
Large Gifts Received from Foreign Persons.
Certain transactions with foreign trusts,
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Ownership of foreign trusts under the rules of sections 671
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through 679, and
Receipt of certain large gifts or bequests from certain
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foreign persons.
A separate Form 3520 must be filed for transactions with
each foreign trust.
Who Must File
File Form 3520 if any one or more of the following apply.
1. You are the responsible party for reporting a reportable
event that occurred during the current tax year, or you are a
U.S. person who transferred property (including cash) to a
related foreign trust (or a person related to the trust) in
exchange for an obligation or you hold a qualified obligation
from that trust that is currently outstanding. For definitions,
Complete the identifying information on page 1 of the form
Note. You may be required to file Financial Crimes
Enforcement Network (FinCEN) Form 114, Report of Foreign
Bank and Financial Accounts (FBAR). In addition, you may
be required to file Form 8938, Statement of Specified Foreign
Complete the identifying information on page 1 of the form
and the relevant portions of Part I. See the instructions for
2. You are a U.S. person who, during the current tax year,
is treated as the owner of any part of the assets of a foreign
trust under the rules of sections 671 through 679. U.S.
Exceptions To Filing
Form 3520 does not have to be filed to report the following
transactions.
Transfers to foreign trusts described in section 402(b),
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404(a)(4), or 404A.
Most fair market value (FMV) transfers by a U.S. person to
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a foreign trust. However, some FMV transfers must
nevertheless be reported on Form 3520 (for example,
Complete the identifying information on page 1 of the form
Oct 10, 2023
Cat. No. 23068I
transfers in exchange for obligations that are treated as
qualified obligations, transfers of appreciated property to a
foreign trust for which the U.S. transferor does not
immediately recognize all of the gain on the property
transferred, and 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. 22, available at IRS.gov/pub/irs-irbs/
If you are an individual who is a U.S. citizen or resident
who satisfies one of the following conditions on the due date
of your income tax return, then your Form 3520, which would
generally be due on the 15th day of the 4th month (April 15)
following the end of your tax year for income tax purposes, is
instead due on the 15th day of the 6th month (June 15)
following the end of that year. You must include a statement
on the Form 3520 showing that you are a U.S. citizen or
resident who meets one of these conditions.
Transfers to foreign trusts that have a current determination
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letter from the IRS recognizing their status as exempt from
income taxation under section 501(c)(3).
You live outside of the United States and Puerto Rico and
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your place of business or post of duty is outside the United
States and Puerto Rico.
Transfers to, ownership of, and distributions from a
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Canadian registered retirement savings plan (RRSP), a
Canadian registered retirement income fund (RRIF), or any
other Canadian retirement plan that is within the meaning of
section 3 of Rev. Proc. 2014-55. See Rev. Proc. 2014-55,
2014-44 I.R.B. 753, available at IRS.gov/IRB/
You are in the military or naval service on duty outside the
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United States and Puerto Rico.
If you are an individual who is a U.S. citizen or resident
and are granted an extension of time to file your income tax
return, the due date for filing Form 3520 is no later than the
15th day of the 10th month (October 15) following the end of
your tax year.
Certain eligible individuals’ transfers to, ownership of, and
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distributions from certain tax-favored foreign retirement trusts
and certain tax-favored foreign nonretirement savings trusts,
as described in section 5 of Rev. Proc. 2020-17. For more
information about whether you are an eligible individual and
whether your foreign trust qualifies for an exemption from
foreign trust information reporting, see Rev. Proc. 2020-17,
2020-12 I.R.B. 539, available at IRS.gov/IRB/
If you are filing a Form 3520 for a U.S. decedent, the due
date is the 15th day of the 4th month (April 15) following the
end of the decedent's last tax year for income tax purposes. If
the U.S. decedent is granted an extension of time to file their
income tax return, then the due date for filing Form 3520 is no
later than the 15th day of the 10th month (October 15)
following the end of decedent’s last tax year.
Deemed transfers from domestic trusts that become
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foreign trusts to the extent the trust is treated as owned by a
foreign person, after application of section 672(f).
If you are filing a Form 3520 for a U.S. decedent's estate,
the due date is the 15th day of the 4th month following the
end of the estate's tax year for income tax purposes. If the
U.S. decedent’s estate is granted an extension of time to file
its income tax return, then the due date for filing Form 3520 is
no later than the 15th day of the 10th month following the end
of the estate’s tax year.
Distributions from foreign trusts that are taxable as
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compensation for services rendered (within the meaning of
section 672(f)(2)(B) and its regulations), so long as the
recipient reports the distribution as compensation income on
its applicable federal income tax return.
Distributions from foreign trusts to domestic trusts that
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have a current determination letter from the IRS recognizing
their status as exempt from income taxation under section
501(c)(3).
If the due date falls on a Saturday, Sunday, or legal
holiday, file by the next day that is not a Saturday, Sunday, or
legal holiday.
Joint Returns
Send Form 3520 to the following address.
If you and your spouse are filing a joint income tax return for
the current tax year, and you are both transferors, grantors, or
beneficiaries of the same foreign trust, then you may file a
joint Form 3520 for the same tax year. If you and your spouse
are filing a joint Form 3520, check the box on line 1i on
page 1.
Internal Revenue Service Center
P.O. Box 409101
Ogden, UT 84409
Form 3520 must have all required attachments to be
considered complete.
Additional Reporting and Tax
Information
If a complete Form 3520 is not filed by the due date,
including extensions, the time for assessment of any tax
imposed with respect to any event or period to which the
information required to be reported in Parts I through III of
such Form 3520 relates will not expire before the date that is
3 years after the date on which the required information is
reported. See section 6501(c)(8).
For more information on foreign trust reporting and tax
consequences, go to the IRS website at IRS.gov/
When and Where To File
In general, a U.S person’s Form 3520 is due on the 15th day
of the 4th month following the end of such person’s tax year
for income tax purposes. If a U.S. person is granted an
extension of time to file an income tax return, Form 3520 is
due no later than the 15th day of the 10th month following the
end of the U.S. person’s tax year.
Who Must Sign
If the return is filed by:
An individual or a fiduciary, it must be signed and dated by
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that individual or fiduciary;
A partnership, it must be signed and dated by a general
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partner or limited liability company member; or
Note. This may differ from and is not tied to the due date of
A corporation, it must be signed and dated by the
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the U.S. person’s income tax return.
president, vice president, treasurer, assistant treasurer, chief
accounting officer, or any other corporate officer (such as a
tax officer) who is authorized to sign.
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Instructions for Form 3520 (Rev. 12-2023)
The paid preparer must complete the required preparer
information at the bottom of page 6 of Form 3520 and must
be sure to:
disclosure of required information is not reasonable cause.
See section 6677(d) for additional information.
Section 6039F. In the case of a failure to timely report
foreign gifts described in section 6039F, the IRS may
determine the income tax consequences of the receipt of
such gift, and a penalty equal to 5% of the amount of such
foreign gifts applies for each month for which the failure to
report continues (not to exceed a total of 25%). No penalty
will be imposed if the taxpayer can demonstrate that the
failure to comply was due to reasonable cause and not willful
neglect. See section 6039F for additional information.
Sign the return in the space provided for the preparer's
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signature, and
Give a copy of the return to the filer.
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Inconsistent Treatment of Items
The U.S. beneficiary’s and U.S. owner's tax returns must be
consistent with the Form 3520-A filed by the foreign trust
unless you report the inconsistency to the IRS. If you are
treating items on your tax return differently from the way the
foreign trust treated them on its return, file Form 8082, Notice
of Inconsistent Treatment or Administrative Adjustment
Section 6662(j). If a U.S. owner of a foreign trust is subject
to a penalty imposed under section 6662 for an
underpayment of tax required to be shown on a return, then
such penalty may be increased under section 6662(j) for any
portion of an underpayment which is attributable to any
transaction involving any asset with respect to which
information was required to be provided on Form 3520-A. For
more information about undisclosed foreign financial asset
understatements, see section 6662(j). No penalty will be
imposed with respect to any portion of an underpayment if
the taxpayer can demonstrate that the failure to comply was
due to reasonable cause with respect to such portion of the
underpayment and the taxpayer acted in good faith with
respect to such portion of the underpayment. See section
6662 and section 6664(c) for additional information.
Penalties
Section 6677. A penalty applies if Form 3520 is not timely
filed or if the information is incomplete or incorrect (see below
for an exception if there is reasonable cause). Generally, the
initial penalty is equal to the greater of $10,000 or the
following (as applicable).
35% of the gross value of any property transferred to a
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foreign trust for failure by a U.S. transferor to report the
creation of or transfer to a foreign trust in Part I.
35% of the gross value of the distributions received from a
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foreign trust for failure by a U.S. person to report receipt of
the distribution in Part III.
Definitions
Distribution
5% of the gross value of the portion of the foreign trust's
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assets treated as owned by a U.S. person under the grantor
trust rules (sections 671 through 679), if the foreign trust (a)
fails to file a timely Form 3520-A and furnish the required
annual statements to its U.S. owners and U.S. beneficiaries,
or (b) does not furnish all of the information required by
section 6048(b) or includes incorrect information. If a foreign
trust fails to file Form 3520-A, the U.S. owner must complete
and attach a substitute Form 3520-A to the U.S. owner’s
Form 3520 by the due date of the U.S. owner’s Form 3520
(and not the due date for the Form 3520-A, which is
otherwise due by the 15th day of the 3rd month after the end
of the trust’s tax year) in order to avoid being subject to the
penalty for the foreign trust’s failure to timely file Form
3520-A. For example, a substitute Form 3520-A that, to the
best of the U.S. owner’s ability, is completed and attached to
the U.S. owner’s Form 3520 by the due date for the Form
3520 (such as April 15 for U.S. owners who are individuals),
is considered to be timely filed. See section 6677(a) through
3520-A.
A distribution received directly or indirectly from a foreign
trust for section 6048(c) reporting purposes is any gratuitous
transfer of money or other property from a foreign trust,
whether or not a portion of such trust is treated as a grantor
trust under the grantor trust rules of sections 671 through
679, and without regard to whether the recipient is
designated as a beneficiary by the terms of the trust. A
distribution includes the receipt of trust corpus and the
receipt of a gift or bequest described in section 663(a).
A distribution also includes constructive transfers from a
foreign trust. For example, if charges you make on a credit
card are paid by a foreign trust or guaranteed or secured by
the assets of a foreign trust, the amount charged will be
treated as a distribution to you by the foreign trust. Similarly, if
you write checks on a foreign trust's bank account, the
amount will be treated as a distribution. Also, if you receive a
payment from a foreign trust in exchange for property
transferred to the trust or services rendered to the trust, and
the FMV of the payment you received exceeds the FMV of
the property transferred or services rendered, the excess will
be treated as a distribution to you. See section V of Notice
Additional penalties will be imposed if the noncompliance
continues for more than 90 days after the IRS mails a notice
of failure to comply with the required reporting. If the IRS can
the penalties will be reduced as necessary to assure that the
aggregate amount of such penalties does not exceed the
gross reportable amount. For more information, see section
6677.
Examples.
1. If you sell stock with an FMV of $100 to a foreign trust
and receive $150 in exchange, you have received a
distribution of $50.
2. If you receive $100 from the trust for services
performed by you for the trust, and the services have an FMV
of $20, you have received a distribution of $80.
Reasonable cause. No penalties will be imposed if the
taxpayer can demonstrate that the failure to comply was due
to reasonable cause and not willful neglect.
Note. The fact that a foreign country would impose penalties
for disclosing the required information is not reasonable
cause. Similarly, reluctance on the part of a foreign fiduciary
or provisions in the trust instrument that prevent the
If you are a grantor or beneficiary of a foreign trust and you
(or a U.S. person related to you) directly or indirectly received
a loan of cash or marketable securities from a foreign trust, or
you (or a U.S. person related to you) used any property
owned by a foreign trust without paying FMV within a
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Instructions for Form 3520 (Rev. 12-2023)
reasonable amount of time, the amount of such loan or the
FMV of the use of trust property will be treated as a
distribution for reporting purposes. For this purpose, a loan
by an unrelated third party that is guaranteed by a foreign
trust is generally treated as a loan from the trust. See
described in Regulations section 301.7701-4(d), or an
environmental remediation trust described in Regulations
section 301.7701-4(e). A gratuitous transfer includes any
indirect transfer that is structured with a principal purpose of
avoiding the application of section 679 or 6048.
A transfer of property to a trust may be considered a
gratuitous transfer without regard to whether the transfer is a
gift for gift tax purposes. See chapter 12 of subtitle B of the
Code (that is, sections 2501 through 2524).
Foreign Trust and Domestic Trust
A foreign trust is any trust other than a domestic trust.
A domestic trust is any trust if:
For purposes of this determination, if a U.S. person
contributes property to a trust in exchange for any type of
interest in the trust, such interest in the trust will be
disregarded in determining whether FMV has been received.
In addition, a U.S. person will not be treated as making a
transfer for FMV merely because the transferor is deemed to
recognize gain on the transaction.
1. A court within the United States is able to exercise
primary supervision over the administration of the trust, and
2. One or more U.S. persons have the authority to control
all substantial decisions of the trust.
Grantor
If you transfer property to a related foreign trust in
exchange for an obligation of the trust (or an obligation of a
person related to the trust), it will be a gratuitous transfer
unless the obligation is a qualified obligation. Any transfer in
exchange for an obligation (whether or not a qualified
obligation) must be reported under section 6048(a). For
sections 679 and 684 for additional information.
A grantor includes any person who creates a trust or directly
or indirectly makes a gratuitous transfer of cash or other
property to a trust. A grantor includes any person treated as
the owner of any part of a foreign trust's assets under
sections 671 through 679, excluding section 678.
Note. If a partnership or corporation makes a gratuitous
transfer to a trust, the partners or shareholders are generally
treated as the grantors of the trust, unless the partnership or
corporation made the transfer for a business purpose of the
partnership or corporation.
If a trust makes a gratuitous transfer to another trust, the
grantor of the transferor trust is treated as the grantor of the
transferee trust, except that if a person with a general power
of appointment over the transferor trust exercises that power
in favor of another trust, such person is treated as the grantor
of the transferee trust, even if the grantor of the transferor
trust is treated as the owner of the transferor trust.
Gross Reportable Amount
Gross reportable amount is:
The gross value of property involved in the creation of a
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foreign trust or the transfer of property to a foreign trust
(including a transfer by reason of death);
The gross value of any portion of a foreign trust treated as
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owned by a U.S. person under the rules of sections 671
through 679 or any part of a foreign trust that is included in
the gross estate of a U.S. citizen or resident;
Grantor Trust
The gross value of the assets in a trust at the time the trust
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becomes a foreign trust, if the trust was a domestic trust to
which a U.S. citizen or resident had previously transferred
property, and provided that such U.S. citizen or resident is
alive at the time the trust becomes a foreign trust (see section
679(a)(5)); or
A grantor trust is any trust to the extent that the assets of the
trust are treated as owned by a person other than the trust.
See the grantor trust rules in sections 671 through 679. A
part of the trust may be treated as a grantor trust to the extent
that only a portion of the trust assets are owned by a person
other than the trust.
The gross amount of distributions received from a foreign
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trust.
Note. Under the HIRE Act, effective after March 18, 2010, if
a foreign trust directly or indirectly loans cash or marketable
securities to a U.S. person who does not repay the loan at a
market rate of interest, or allows a U.S. person to use trust
property without paying FMV within a reasonable period of
time, the trust will be treated as having a U.S. beneficiary and
is therefore treated as a grantor trust under the grantor trust
rules.
Reporting by U.S. owners receiving distributions from
receives, directly or indirectly, a distribution from a foreign
trust of which the U.S. person is treated as the owner, the
U.S. owner must only complete lines 24 and 27 in Part III.
Gross Value or Amount
For purposes of determining the gross reportable amount,
the gross value or gross amount of property is the value of
property as determined under section 2512 and its
regulations, without regard to any prohibitions or restrictions
on a person's interest in the property. See section VII of
Notice 97-34. Although formal appraisals are not generally
required, you should keep contemporaneous records of how
you arrived at your good faith estimate.
Guarantee
A guarantee:
Includes any arrangement under which a person, directly
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or indirectly, assures, on a conditional or unconditional basis,
the payment of another's obligation;
Gratuitous Transfer
A gratuitous transfer to a foreign trust is any transfer to the
trust other than (a) a transfer for FMV; or (b) a distribution to
the trust with respect to an interest held by the trust (i) in an
entity other than a trust (for example, a corporation or a
partnership), or (ii) in an investment trust described in
Regulations section 301.7701-4(c), a liquidating trust
Encompasses any form of credit support, and includes a
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commitment to make a capital contribution to the debtor or
otherwise maintain its financial viability; or
Includes an arrangement reflected in a “comfort letter,”
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regardless of whether the arrangement gives rise to a legally
enforceable obligation. If an arrangement is contingent upon
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Instructions for Form 3520 (Rev. 12-2023)
the occurrence of an event, in determining whether the
arrangement is a guarantee, you must assume that the event
has occurred.
A corporation in which you, directly or indirectly, own more
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than 50% in value of the outstanding stock.
See section 643(i)(2)(B) and the regulations under
sections 267 and 707(b).
Person related to a foreign trust. A person is related to a
foreign trust if such person, without regard to the transfer at
issue, is a grantor of the trust, a beneficiary of the trust, or is
related to any grantor or beneficiary of the trust. See the
definition of related person above.
Nongrantor Trust
A nongrantor trust is any trust to the extent that the assets of
the trust are not treated as owned by a person other than the
trust under the grantor trust rules in sections 671 through
679. Thus, a nongrantor trust is treated as a taxable entity. A
trust may be treated as a nongrantor trust with respect to only
Reportable Event
A reportable event includes the following.
1. The creation of a foreign trust by a U.S. person.
2. The transfer of any money or property, directly or
indirectly, to a foreign trust by a U.S. person, including a
transfer by reason of death. This includes transfers that are
deemed to have occurred under sections 679(a)(4) and (5).
Obligation
An obligation includes any bond, note, debenture, certificate,
bill receivable, account receivable, note receivable, open
account, or other evidence of indebtedness, and, to the
extent not previously described, any annuity contract.
Owner
3. The death of a U.S. citizen or resident if:
An owner of a foreign trust is the person that is treated as
owning any of the assets of a foreign trust under the rules of
sections 671 through 679.
The decedent was treated as the owner of any portion of a
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foreign trust under the rules of sections 671 through 679, or
Any portion of a foreign trust was included in the gross
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estate of the decedent.
Property
Property means any property, whether tangible or intangible,
including cash.
Responsible Party
Responsible party means:
The grantor in the case of the creation of an inter vivos
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Qualified Obligation
trust;
A qualified obligation, for purposes of this form, is any
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obligation only if:
above) other than a transfer by reason of death; or
1. The obligation is reduced to writing by an express
written agreement;
The executor of the decedent's estate in any other case
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(whether or not the executor is a U.S. person).
2. The term of the obligation does not exceed 5 years
U.S. Agent
(including options to renew and rollovers);
binding contract with a foreign trust that allows the U.S.
person to act as the trust's authorized U.S. agent in applying
sections 7602, 7603, and 7604 with respect to:
3. All payments on the obligation are denominated in U.S.
dollars;
4. The yield to maturity of the obligation is not less than
100% of the applicable federal rate under section 1274(d) for
the day on which the obligation is issued and not greater than
130% of the applicable federal rate;
5. The U.S. person agrees to extend the period for
assessment of any income or transfer tax attributable to the
transfer and any consequential income tax changes for each
year that the obligation is outstanding to a date not earlier
than 3 years after the maturity date of the obligation, unless
the maturity date of the obligation does not extend beyond
the end of the U.S. person's tax year and is paid within such
period (this is done on Part I, Schedule A, line 12, and Part III,
line 26, as applicable); and
6. The U.S. person reports the status of the obligation,
including principal and interest payments, on Part I,
Schedule C, line 19, and Part III, line 28, as applicable, for
each year that the obligation is outstanding.
Any request by the IRS to examine records or produce
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testimony related to the proper U.S. tax treatment of amounts
distributed, or required to be taken into account under the
rules of sections 671 through 679, with respect to a foreign
trust; or
Any summons by the IRS for such records or testimony.
A U.S. grantor, a U.S. beneficiary, or a domestic
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corporation controlled by the grantor or beneficiary may act
as a U.S. agent. However, you may not treat the foreign trust
as having a U.S. agent unless you enter the name, address,
and taxpayer identification number (TIN) of the U.S. agent on
identification numbers (TINs), later.
If a foreign trust with a U.S. owner does not have a U.S.
agent, the IRS may redetermine the amounts required to be
taken into account with respect to the foreign trust by the U.S.
owner. See section 6048(b)(2).
The agency relationship must be established by the time
the U.S. person files Form 3520 for the relevant tax year and
must continue as long as the statute of limitations remains
open for the relevant tax year. If the agent's responsibility as
an agent of the trust is terminated for any reason (for
example, agent's resignation, agent's liquidation, or agent's
Related Person
A related person generally includes any person who is
related to you for purposes of sections 267 and 707(b). This
includes, but is not limited to:
A member of your family—your brothers and sisters,
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half-brothers and half-sisters, spouse, ancestors (parents,
grandparents, etc.), lineal descendants (children,
grandchildren, etc.), and the spouses of any of these
persons; or
In order to authorize a U.S. person to act as an agent for
purposes of section 6048(b)(2) or for purposes of section
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Instructions for Form 3520 (Rev. 12-2023)
6048(c)(2)(A), the trust and the agent must enter into a
binding agreement substantially in the format reflected under
AUTHORIZATION OF AGENT in the Instructions for Form
3520-A, amended as required.
Presumption that foreign trust has U.S. beneficiary. If a
U.S. person, directly or indirectly, transfers property to a
foreign trust (other than a deferred compensation or
charitable trust described in section 6048(a)(3)(B)(ii)), the
IRS may treat such trust as having a U.S. beneficiary for
purposes of applying section 679(d) to such transfer if the
IRS requests information with respect to the transfer and the
U.S. person fails to demonstrate to the satisfaction of the IRS
that no portion of the income or corpus of the trust may ever
be paid to or accumulated for the benefit of a U.S. person.
U.S. Beneficiary
A U.S. beneficiary generally includes any U.S. person that
could possibly benefit, directly or indirectly, from the trust
(including an amended trust) at any time, whether or not the
person is designated in the trust instrument as a beneficiary
and whether or not the person can receive a distribution from
the trust in the current year. In addition, a U.S. beneficiary
includes:
U.S. Person
A U.S. person is:
A foreign corporation that is a controlled foreign
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A citizen or resident of the United States, including dual
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corporation (as defined in section 957(a)),
A foreign partnership if a U.S. person is a partner of the
residents who claim the benefits under an income tax treaty
determining resident alien status);
•
partnership, and
A foreign estate or trust if the estate or trust has a U.S.
•
A domestic partnership;
•
•
•
A domestic corporation;
under section 679 for additional information.
Any estate (other than a foreign estate, within the meaning
of section 7701(a)(31)(A)); and
Foreign trust treated as having a U.S. beneficiary. In
general, if a U.S. person, directly or indirectly, transfers
property to a foreign trust (other than a deferred
•
U.S. Transferor
A U.S. transferor is any U.S. person who:
1. Creates or settles a foreign trust;
2. Directly or indirectly transfers money or property to a
foreign trust (this includes deemed transfers under section
679(a)(4) or section 679(a)(5));
3. Makes a sale to a foreign trust if the sale was at other
than arm's-length terms or was to a related foreign trust, or
makes (or guarantees) a loan to a related foreign trust; or
compensation or charitable trust described in section 6048(a)
(3)(B)(ii)), the foreign trust will be treated as having a U.S.
beneficiary unless the terms of the trust instrument
specifically prohibit any distribution of income or corpus to 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
cannot be amended or revised to allow such a distribution.
For these purposes, an amount will be treated as
accumulated for the benefit of a U.S. person even if the U.S.
person's interest in the trust is contingent on a future event
and regardless of whether anything is actually distributed to a
U.S. person during that tax year.
4. Is the executor of the estate of a U.S. person and:
a. The decedent made a testamentary transfer (a transfer
Special rule in case of discretion to identify
by reason of death) to a foreign trust;
beneficiaries. For purposes of the general rule described
earlier, if any person has the discretion of making a
distribution from the trust to, or for the benefit of, any person,
the trust will be treated as having a beneficiary who is a U.S.
person unless the terms of the trust specifically identify the
class of persons to whom such distributions may be made,
and none of those persons are U.S. persons during the tax
year.
b. Immediately prior to death, the decedent was treated
as the owner of any portion of a foreign trust under the rules
of sections 671 through 679; or
c. Any portion of a foreign trust's assets were included in
the estate of the decedent.
Generally, the person defined as the transferor is the
responsible party (defined earlier) who must ensure that
required information be provided or pay appropriate
penalties.
Certain agreements and understandings treated as
terms of the trust. For purposes of the general rule
described earlier, if any U.S. person who directly or indirectly
transfers property to the trust is directly or indirectly involved
in any agreement or understanding (whether written, oral, or
otherwise) that may result in the income or corpus of the trust
being paid or accumulated to, or for the benefit of, a U.S.
person, such agreement or understanding will be treated as a
term of the trust.
Certain loans or uncompensated use of trust
property. If a foreign trust is not already treated as having a
U.S. beneficiary under the rules described earlier, the trust
will be treated as having a U.S. beneficiary if, after March 18,
2010, either:
Specific Instructions
Period Covered
For calendar-year filers, fill in the "calendar year" space at the
top of the form. For fiscal-year filers, fill in the "tax year
beginning" and "ending" spaces at the top of the form.
Item A—Initial Return, Final Return,
Amended Return
Initial return. If this is the initial return you are filing
concerning the foreign trust identified, check the “Initial
return” box.
The foreign trust loans cash or marketable securities,
•
directly or indirectly, to a U.S. person, and the U.S. person
does not repay the loan at a market rate of interest within a
reasonable period of time; or
Final return. If no further returns for transactions with the
A U.S. person, directly or indirectly, uses property that is
•
foreign trust are required, check the “Final return” box.
owned by the foreign trust and does not pay FMV of the use
of such property within a reasonable period of time.
-6-
Instructions for Form 3520 (Rev. 12-2023)
Example. If you filed Form 3520 concerning transactions
with a foreign trust and that trust terminated within the tax
year, then the Form 3520 for the year in which the trust
terminated would be a final return.
Amended return. If this Form 3520 is filed to amend a Form
3520 that you previously filed for the same tax year, check
the “Amended return” box.
to extend the time to file your individual income tax return,
Form 1040. Enter “1040” on the entry line.
Line 2b. Enter the EIN, if any, of the foreign trust. Do not
enter an SSN or ITIN. Only EINs should be used to identify
the foreign trust.
Line 3. If the foreign trust did not appoint a U.S. agent who
can provide the IRS with all relevant trust information, check
“No” and if you are required to complete Part I, complete lines
15 through 18.
Lines 4a through 4f. If you are the executor of the estate of
a U.S. citizen or resident, you must provide information about
the decedent on lines 4a through 4e. You must also check the
applicable box on line 4f to indicate which of the following
applies: the U.S. decedent made a transfer to a foreign trust
by reason of death, the U.S. decedent was treated as the
owner of a portion of a foreign trust immediately prior to
death, or the estate of the U.S. decedent included assets of a
foreign trust.
Item C—Excepted Specified Foreign
Financial Assets Reported
Check the box in item C only if the Form 3520 filer also files
Form 8938 for the same tax year and includes this form in the
total number of Forms 3520 reported on line 15 of Part IV,
Excepted Specified Foreign Financial Assets, of Form 8938.
generally, and in particular, Duplicative reporting and the
specific instructions for Part IV.
Identifying Information
Part I—Transfers by U.S. Persons to a
Foreign Trust During the Current Tax
Year
Taxpayer identification numbers (TINs). Use social
security numbers (SSNs) or individual taxpayer identification
numbers (ITINs) to identify individuals. Use employer
identification numbers (EINs) to identify estates, trusts,
partnerships, and corporations. Don’t use an SSN in place of
an EIN.
earlier).
Applying for an EIN. If the foreign trust does not have an
EIN, the trustee or the U.S. owner may apply for one online at
IRS.gov/EIN. If the principal business was created or
Note. Although the basic reporting requirements for Form
3520 are contained in section 6048 (and are clarified by
Notice 97-34), the reporting requirements have been clarified
by the regulations under sections 679 and 684. Accordingly,
the regulations under sections 679 and 684 should be
referred to for additional clarification for transfers that are
required to be reported in Part I of Form 3520.
Line 5a. Enter the name of the trust creator. If you are the
trust creator, enter "Same as line 1a" on line 5a. If you are not
the trust creator, enter the name of the person who created or
originally settled the foreign trust.
Lines 5b and 5c. Enter the address and TIN, if any, of the
information regarding the entering of addresses and TINs on
Form 3520. If you are the trust creator, enter "Same as lines
1c, 1e, 1f, 1g, and 1h" on line 5b, and enter "Same as line 1b"
on line 5c.
Lines 6a and 6b. Enter the applicable two-letter country
Lines 7 and 8. If you are reporting multiple transfers to a
single foreign trust and the answers to line 7 or 8 are different
for various transfers, complete a separate line for each
transfer on duplicate copies of the relevant pages of the form.
Lines 7a and 7b. Check “Yes” if you are treated as a U.S.
owner of any portion of the foreign trust under the grantor
trust rules (sections 671 through 679) and complete line 7b
and Part II of this form. In addition, if another person is
treated as an owner of the transferred assets, you must
comply with the reporting requirements that would apply to a
direct transfer to that other person. For example, if that other
person is a foreign partnership, you must comply with the
reporting requirements for transfers to foreign partnerships.
Certain Foreign Partnerships.
organized outside of the United States or U.S. territories, you
may also apply for an EIN by calling 267-941-1099 (toll call).
Do not enter a preparer tax identification number
(PTIN) in any entry space on Form 3520 other than
!
CAUTION
the entry space for “PTIN” at the bottom of page 6 of
the form.
Address. Include the room, suite, or other unit number after
the street address. If the post office does not deliver mail to
the street address and the U.S. person has a P.O. box, show
the box number instead.
Foreign address. Do not abbreviate the country name.
Lines 1a and 1i. Line 1a identifies the person that is filing
Form 3520. If you and your spouse are filing a joint Form
3520, put your names and TINs in the same order as they
appear on your Form 1040, U.S. Individual Income Tax
Return, or Form 1040-SR, U.S. Tax Return for Seniors, and
check the box on line 1i.
Line 1j. If an automatic 2-month extension applies for your
tax return because you meet one of the following conditions,
check the box and attach a statement to the Form 3520
showing that you are a U.S. citizen or resident who meets
one of these conditions.
You live outside of the United States and Puerto Rico and
•
your place of business or post of duty is outside the United
States and Puerto Rico.
You are in the military or naval service on duty outside the
•
United States and Puerto Rico.
Line 1k. If you filed for an extension of time to file your
income tax return, check the box on line 1k. Also, enter the
tax form number of the original tax return that will be filed with
the IRS.
Line 8. If the transfer was a completed gift (see Regulations
Example. You file Form 4868, Application for Automatic
section 25.2511-2), you may have to file Form 709, United
Extension of Time To File U.S. Individual Income Tax Return,
-7-
Instructions for Form 3520 (Rev. 12-2023)
States Gift (and Generation-Skipping Transfer) Tax Return. If
the transfer was a bequest, you may have to file Form 706,
U.S. Estate Tax Return.
to the foreign trust immediately prior to becoming a foreign
trust. Although the gain is not recognized on Form 3520, it
must be reported on the appropriate form or schedule of the
transferor's income tax return. See section 684. The transfer
of assets, however, is reported on Part I of this Form 3520.
Schedule A—Obligations of a Related Trust
Line 13, column (f). Generally, if the reported transaction is
a sale, you should report the gain on the appropriate form or
schedule of your income tax return.
Lines 15 through 18. If you checked “No” on line 3,
acknowledging that the foreign trust did not appoint a U.S.
agent who can provide the IRS with all relevant trust
information, and you are required to complete Part I,
complete lines 15 through 18.
Line 15. Enter the name; address; whether the person is a
reportable beneficiaries. Include specified beneficiaries,
classes of discretionary beneficiaries, and names or classes
of any beneficiaries that could be named as additional
beneficiaries. If there is not enough space on the form, attach
a statement.
Line 17. Enter the name; address; and TIN, if any, of any
person, other than those listed on line 16, that has significant
powers over the trust (for example, “protectors,” “enforcers,”
any person that must approve trustee decisions or otherwise
direct trustees, any person with a power of appointment, any
person with powers to remove or appoint trustees, etc.).
Include a description of each person's powers. If there is not
enough space, attach a statement.
Complete the applicable portions of Schedule A with respect
to all transfers to a related foreign trust in exchange for an
obligation of the trust or a person related to the trust that took
place during the current tax year.
Line 12. If you answered "Yes" to the question on line 11b
with respect to any obligation, you must generally answer
“Yes” to the question on line 12. By so doing, you agree to
extend the period of assessment of any income or transfer
tax attributable to the transfer and any consequential income
tax changes for each year that the obligation is outstanding to
a date 3 years after the maturity date of the obligation. You
have the right to refuse to extend the period of assessment.
more detailed explanation of your rights and the
consequences of the choices you may make. When executed
and filed, this form will be deemed to be agreed upon and
executed by the IRS for purposes of Regulations section
301.6501(c)-1(d).
Note. If you answer “No” to the question on line 12, you
generally may not treat an obligation as a qualified obligation
on line 11b. The one exception to this is if the maturity date of
the obligation does not extend beyond the end of your tax
year for which you are reporting and such obligation is paid
within that tax year.
Line 18. Attach a copy of the following documents. If these
documents have been previously attached to a Form 3520-A
or Form 3520 filed within the previous 3 years, attach only
relevant updates.
A summary of the terms of the trust that includes a
•
Schedule B—Gratuitous Transfers
Complete the applicable portions of Schedule B with respect
the current tax year.
summary of any oral agreements or understandings you have
with the trustee, whether or not legally enforceable.
A copy of all trust documents (and any revisions), including
•
the trust instrument, any memoranda of wishes prepared by
the trustees summarizing the settlor's wishes, any letter of
wishes prepared by the settlor summarizing the wishes, and
any similar documents.
Line 13.
In your column (b) description, indicate whether the
•
property is tangible or intangible.
You may aggregate transfers of cash during the year on a
A copy of the trust's financial statements, including a
•
•
balance sheet and an income statement similar to those
shown on Form 3520-A. These financial statements must
reasonably reflect the trust's accumulated income under U.S.
income tax principles. For example, the statements must not
treat capital gains as additions to trust corpus.
single line of line 13.
If there is not enough space on the form, attach a
•
statement.
For transfers reported on statements, you must enter
•
“Statement” on one of the lines in column (b), and enter the
total amount of transfers reported on the statement on
line 13, columns (c), (d), (e), (f), (h), and (i).
A copy of the trust’s organizational chart, including
•
ownership structure and percentage of ownership.
Schedule C—Qualified Obligations Outstanding
in the Current Tax Year
Note. Penalties may be imposed for failure to report all
Line 19. Provide information on the status of outstanding
obligations of the related foreign trust (or an obligation of a
person related to the foreign trust) that you reported as a
qualified obligation in the current tax year. This information is
required in order to retain the obligation's status as a qualified
obligation. If relevant, attach a statement describing any
changes in the terms of the qualified obligation.
If the obligation fails to retain the status of a qualified
obligation, you will be treated as having made a gratuitous
transfer to the foreign trust, which must be reported on
Schedule B of this Part I in the year the obligation fails to
Line 13, column (d). Enter the U.S. adjusted basis of the
property transferred.
Line 13, column (e). Only include gain that is immediately
recognized at the time of the transfer.
Note. Any transfer of appreciated assets by a U.S. person to
a foreign nongrantor trust is treated as a sale or exchange
and the transferor must recognize as gain the excess of the
FMV of the transferred property over its adjusted basis. This
rule applies to a domestic trust that becomes a foreign trust,
provided that the foreign trust is not a grantor trust. The
domestic trust is treated as having transferred all of its assets
-8-
Instructions for Form 3520 (Rev. 12-2023)
meet the criteria for a qualified obligation. See section III.C.2
partner in a partnership that receives a distribution from a
foreign trust, you must report your allocable share of such
payment as an indirect distribution from the trust.
Part II—U.S. Owner of a Foreign Trust
Line 24, column (c). The filer is permitted to enter the
basis of the property in the hands of the beneficiary (as
determined under section 643(e)(1)), if lower than the FMV of
the property, but only if the taxpayer is not required to
complete Schedule A (lines 31 through 38) due to lack of
documentation. For these purposes, lack of documentation
refers to a situation in which the filer checked “No” on line 29
or 30 because (a) the beneficiary did not receive a Foreign
Grantor Trust Beneficiary Statement or a Foreign Nongrantor
Trust Beneficiary Statement from the trust, or (b) such
statement did not contain all of the items specified under the
instructions for line 29 or 30, later.
Complete Part II if you are considered the owner of any
assets of a foreign trust under the rules of sections 671
through 679 during the tax year. You are required to enter an
EIN for such foreign trust on line 2b on page 1 of the form.
Note. Complete Part II even if there have been no
transactions involving the trust during the tax year. You may
also need to complete Part III if you receive a distribution from
the foreign trust. See the instructions for Part III.
Line 20. Enter information regarding any person, including
yourself, who is considered the owner of any portion of the
trust under the rules of sections 671 through 679. Also, enter
in column (e) the specific Code section that causes you or
any other person (as applicable) to be considered an owner
for U.S. income tax purposes. See the grantor trust rules
under sections 671 through 679.
Lines 21a and 21b. Enter the applicable two-letter code
Line 22. If “Yes,” the copy of the Foreign Grantor Trust
Owner Statement (pages 3 and 4 of Form 3520-A) should
show the amount of the foreign trust's income that is
attributable to you for U.S. income tax purposes. See
If “No,” to the best of your ability, complete and attach a
substitute Form 3520-A for the foreign trust to your Form
3520 by the due date of your Form 3520 (and not the due
date for the Form 3520-A). Otherwise, you may be liable for a
penalty equal to the greater of $10,000 or 5% of the gross
value of the portion of trust assets that you are treated as
owning. There are additional penalties for continuing failure
to file after notice by the IRS. See section 6677(a) through
Line 23. Enter the FMV of the trust assets that you are
treated as owning. Include all assets at FMV as of the end of
the tax year. For this purpose, disregard all liabilities. The
trust should send you this information in connection with its
Form 3520-A. If you did not receive such information (line 9 of
the Foreign Grantor Trust Owner Statement) from the trust,
complete line 23 to the best of your ability. At a minimum,
include the value of all assets that you have transferred to the
trust. Also, use Form 8082 to notify the IRS that you did not
receive a Foreign Grantor Trust Owner Statement. However,
filing Form 8082 does not relieve you of any penalties that
Line 25. If you or a U.S. person related to you received a
loan of cash or marketable securities, directly or indirectly,
from a related foreign trust, or the uncompensated use of
trust property (defined later), the amount of such loan or the
FMV of the use of trust property will be treated as a
reportable distribution, whether or not taxable. For this
purpose, a loan to you by an unrelated third party that is
guaranteed by a foreign trust is generally treated as a loan
from the trust.
Line 25, column (e). Answer “Yes” if an obligation given
earlier).
Line 25, column (f). The FMV of an obligation is zero
unless it is a qualified obligation. Therefore, in the case of
obligations that are not qualified obligations, enter “-0-” in
column (f).
Uncompensated use of trust property. If you or a U.S.
person related to you, directly or indirectly, used any property
of a foreign trust, the FMV of such use will be treated as a
reportable distribution whether or not taxable. Report the
FMV of the use of trust property in column (a) and the date of
first use in column (b), skip columns (c) through (e), report
the amount paid for such use in column (f), and enter the
amount treated as a taxable distribution from the trust in
column (g) by subtracting column (f) from column (a). See
section 643(i) for more information.
Note. Under the HIRE Act, effective after March 18, 2010, if
a foreign trust with a U.S. transferor is not already treated as
a grantor trust under the rules of sections 671 through 679,
the foreign trust will be treated as having acquired a U.S.
beneficiary, and will therefore be treated as a grantor trust, if it
makes a loan of cash or marketable securities, directly or
indirectly, to a U.S. person or allows a U.S. person, directly or
indirectly, to use trust property, and the U.S. person does not
repay the loan at a market rate of interest or pay the trust the
FMV of the use of the property within a reasonable period of
time. Accordingly, the loan or use of trust property will not be
treated as a taxable distribution under section 643(i) but will
remain reportable on Part III of this Form 3520.
(e)” should replace “line 11b,” and “line 26” should replace
“line 12.”
Line 27. Penalties may be imposed for failure to accurately
report all distributions received during the current tax year.
Part III—Distributions to a U.S. Person
From a Foreign Trust During the
Current Tax Year
If you received an amount from a portion of a foreign trust of
which you are treated as the owner, complete lines 24 and 27
in Part III. If you received an amount from a foreign trust that
would require a report under both Parts III and IV (gifts or
bequests) of Form 3520, report the amount only in Part III.
Line 24. Report any cash or the FMV of other property that
you received (actually or constructively, directly or indirectly)
from a foreign trust during the current tax year, whether or not
taxable, unless the amount is a loan to you from the trust or
constitutes uncompensated use of trust property, both of
which must be reported on line 25. For example, if you are a
Line 28. Provide information on the status of any
outstanding obligation to the foreign trust that you reported as
a qualified obligation in the current tax year. This information
-9-
Instructions for Form 3520 (Rev. 12-2023)
is required in order to retain the obligation's status as a
qualified obligation. If relevant, attach a statement describing
any changes to the terms of the qualified obligation. If the
obligation fails to retain the status of a qualified obligation,
you will be treated as having received a taxable distribution
under section 643(i) from the foreign trust. See section V.A of
Nongrantor Trust Beneficiary Statement must include the
following items.
1. An explanation of the appropriate U.S. tax treatment of
any distribution or deemed distribution for U.S. tax purposes,
or sufficient information to enable the U.S. beneficiary to
establish the appropriate treatment of any distribution or
deemed distribution for U.S. tax purposes.
Lines 29 and 30. If any of the items required for the Foreign
the Foreign Nongrantor Trust Beneficiary Statement (see
Line 30, later) is missing, you must check “No” on line 29 or
line 30, as applicable.
Also, if you answer “Yes” to line 29 or line 30, and the
foreign trust or U.S. agent does not produce records or
testimony when requested or summoned by the IRS, the IRS
may redetermine the tax consequences of your transactions
with the trust and impose appropriate penalties under section
6677. See section 6048(c)(2)(A).
2. A statement identifying whether any grantor of the trust
is a partnership or a foreign corporation. If so, attach an
explanation of the relevant facts.
3. A statement that the trust will permit either the IRS or
the U.S. beneficiary to inspect and copy the trust's
permanent books of account, records, and such other
documents that are necessary to establish the appropriate
treatment of any distribution or deemed distribution for U.S.
tax purposes. This statement is not necessary if the trust has
appointed a U.S. agent.
4. The Foreign Nongrantor Trust Beneficiary Statement
must also include items (1), (4), and (6), as listed in the
Line 29 instructions, earlier, as well as basic identifying
information (for example, name, address, TIN, etc.) about the
foreign trust and its trustee.
Note. If the question on line 29 or 30 is not applicable, check
the “N/A” box.
Line 29. If “Yes,” attach the Foreign Grantor Trust Beneficiary
Statement (page 5 of Form 3520-A) from the foreign trust and
do not complete the rest of Part III with respect to the
distribution. If a U.S. beneficiary receives a complete Foreign
Grantor Trust Beneficiary Statement with respect to a
distribution during the tax year, the beneficiary should treat
the distribution for income tax purposes as if it came directly
from the owner. For example, if the distribution is a gift, the
beneficiary should not include the distribution in gross
income.
If a foreign grantor trust, check "N/A."
!
CAUTION
Schedule A—Default Calculation of Trust
Distributions
If you answered “Yes” to line 30, you may complete either
Schedule A or Schedule B. Generally, however, if you
complete Schedule A in the current year (or did so in prior
years), you must continue to complete Schedule A for all
future years, even if you are able to answer “Yes” to line 30 in
that future year. (The only exception to this consistency rule
is that you may use Schedule B in the year that a trust
terminates, but only if you are able to answer “Yes” to line 30
in the year of termination.)
In addition to basic identifying information (that is, name,
address, TIN, etc.) about the foreign trust and its trustee, this
statement must contain these items.
1. The first and last day of the tax year of the foreign trust
to which this statement applies.
2. An explanation of the facts necessary to establish that
the foreign trust should be treated for U.S. tax purposes as
owned by another person. (The explanation should identify
the Code section that treats the trust as owned by another
person.)
Line 32. To the best of your knowledge, state the number of
years the trust has been in existence as a foreign trust and
attach an explanation of your basis for this statement.
Consider any portion of a year to be a complete year. If this is
the first year that the trust has been a foreign trust, do not
complete the rest of Part III (you do not have an accumulation
distribution).
Line 33. Enter the total amount of distributions that you
received during the 3 preceding tax years (or the number of
years the trust has been a foreign trust if fewer than 3 years).
For example, if a trust distributed $50 in year 1, $120 in year
2, and $150 in year 3, the amount reported on line 33 would
be $320 ($50 + $120 + $150).
Line 35. Divide line 34 by 3.0 (or the number of years the
trust has been a foreign trust if fewer than 3 years). Consider
any portion of a year to be a complete year. For example, a
foreign trust created on July 1, 2021, would be treated on a
2023 calendar year return as having 2 preceding years (2021
and 2022). In this case, you would calculate the amount on
line 35 by dividing line 34 by 2.0. Do not disregard tax years
in which no distributions were made. The IRS will consider
your proof of these prior distributions as adequate records to
demonstrate that any distribution up to the amount on line 31
is not an accumulation distribution in the current tax year.
3. A statement identifying whether the owner of the trust
is an individual, trust, corporation, or partnership.
4. A description of property (including cash) distributed or
deemed distributed to the U.S. person during the tax year,
and the FMV of the property distributed.
5. A statement that the trust will permit either the IRS or
the U.S. beneficiary to inspect and copy the trust's
permanent books of account, records, and such other
documents that are necessary to establish that the trust
should be treated for U.S. tax purposes as owned by another
person. This statement is not necessary if the trust has
appointed a U.S. agent.
6. A statement as to whether the foreign trust has
U.S. agent, include the name, address, and TIN of the agent.
If a foreign nongrantor trust, check "N/A."
!
CAUTION
Line 30. If “Yes,” attach the Foreign Nongrantor Trust
Beneficiary Statement from the foreign trust. A Foreign
-10-
Instructions for Form 3520 (Rev. 12-2023)
line 46 of the 2021 Form 3520 could simply be updated using
the following steps.
Line 36. Enter this amount as ordinary income on your tax
return. Report this amount on the appropriate schedule of
your tax return (for example, Schedule E (Form 1040), Part
III).
Line 37. If there is an amount on line 37, you must also
complete line 38 and Schedule C—Calculation of Interest
Charge to determine the amount of any interest charge you
may owe.
1. Begin with the 2021 weighted UNI.
2. Add UNI at the beginning of 2021.
3. Add trust earnings in 2021.
4. Subtract trust distributions in 2021.
5. Subtract weighted trust accumulation distributions in
2021. (Weighted trust accumulation distributions are the trust
accumulation distributions in 2021 multiplied by the
applicable number of years from 2021.)
Schedule B—Actual Calculation of Trust
Distributions
You may only use Schedule B if:
Using the example above, the trust's 2022 weighted UNI
would be $1,150, calculated as follows.
You answered “Yes” to line 30,
•
You attach a copy of the Foreign Nongrantor Trust
•
Beneficiary Statement to this return, and
2021 weighted UNI
UNI at beginning of 2021
Trust earnings in 2021
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$1,260
+ 350
+ 100
− 200
You have never before used Schedule A for this foreign
•
trust or this foreign trust terminated during the tax year.
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Line 40a. Enter on line 40a the amount received by you from
the foreign trust that is treated as ordinary income of the trust
in the current tax year. Ordinary income is all income that is
not capital gains. Report this amount on the appropriate
schedule of your tax return (for example, Schedule E (Form
1040), Part III).
Trust distributions in 2021
Weighted trust accumulation distributions in 2021
($100 X 3.6)
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– 360
2022 weighted UNI
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$1,150
Lines 42a through 42d. Enter on these lines the applicable
amounts received by you from the foreign trust that are
treated as capital gain income of the trust in the current tax
year. Report these amounts on the appropriate schedule of
your tax return (for example, Schedule D (Form 1040)).
Line 47. Calculate the trust's applicable number of years by
dividing line 46 by line 45. This would be the weighted UNI
divided by the annual UNI. Using the examples in the
instructions for lines 45 and 46, the trust's applicable number
of years would be 3.6 (1,260/350) in 2021 and 4.6
(1,150/250) in 2022.
Line 45. Enter the foreign trust's aggregate undistributed net
income (UNI). For example, assume that a trust was created
in 2015 and has made no distributions prior to 2021. Assume
the trust's ordinary income was $0 in 2020, $60 in 2019, $124
in 2018, $87 in 2017, $54 in 2016, and $25 in 2015. Thus, for
2021, the trust's UNI would be $350. If the trust earned $100
and distributed $200 during 2021 (so that $100 was
Note. Include as many decimal places as there are digits in
the UNI on line 45 (for example, using the example in the
instructions for line 45, include three decimal places).
Schedule C—Calculation of Interest Charge
Complete Schedule C if you entered an amount on line 37 or
line 41a.
distributed from accumulated earnings), the trust's 2022
aggregate UNI would be $250 ($350 + $100 − $200).
Line 46. Enter the foreign trust's weighted undistributed net
income (weighted UNI). The trust's weighted UNI is its
accumulated income that has not been distributed, weighted
by the years that it has accumulated income. To calculate
weighted UNI, multiply the undistributed income from each of
the trust's years by the number of years since that year, and
then add each year's result. Using the example from line 45,
the trust's weighted UNI in 2021 would be $1,260, calculated
as follows.
Line 49. Include the amount from line 48 of this form on
line 1 of Form 4970, Tax on Accumulation Distribution of
Trusts. Then, compute the tax on the total accumulation
distribution using lines 1 through 28 of Form 4970. Enter on
line 49 the tax from line 28 of Form 4970.
Note. Use Form 4970 as a worksheet and attach it to Form
3520.
Line 51. Interest accumulates on the tax (line 49) for the
period beginning on the date that is the applicable number of
years (as rounded on line 50) prior to the applicable date and
ending on the applicable date. For purposes of making this
interest calculation, the applicable date is the date that is
mid-year through the tax year for which reporting is made (for
example, in the case of a 2023 calendar-year taxpayer, the
applicable date would be June 30, 2023). Alternatively, if you
received only a single distribution during the tax year that is
treated as an accumulation distribution, you may use the date
of that distribution as the applicable date.
No. of
years
since that
year
UNI from
each year
Year
Weighted UNI
2020
2019
2018
2017
2016
2015
1
2
3
4
5
6
$ 0
60
$
0
120
372
348
270
150
124
87
54
25
For portions of the interest accumulation period that are
prior to 1996 (and after 1976), interest accumulates at a
simple rate of 6% annually, without compounding. For
portions of the interest accumulation period that are after
1995, interest is compounded daily at the rate imposed on
underpayments of tax under section 6621(a)(2). This
compounded interest for periods after 1995 is imposed not
TOTAL
$350
$1,260
To calculate the trust's weighted UNI for 2022, the trust
could update this calculation, or the weighted UNI shown on
-11-
Instructions for Form 3520 (Rev. 12-2023)
only on the tax, but also on the total simple interest
attributable to pre-1996 periods.
Line 55. Answer “Yes” if you received aggregate amounts in
excess of the section 6039F threshold amount during the
current tax year that you treated as gifts from foreign
corporations or foreign partnerships (or any foreign persons
that you know (or have reason to know) are related to such
foreign corporations or foreign partnerships). The threshold
amount is available at IRS.gov/Newsroom/Inflation-Adjusted-
release, then click on the Rev. Proc. link and search for
section 6039F to see the threshold amount under Notice of
Large Gifts Received from Foreign Persons.
For example, if you, a calendar-year taxpayer during 2023,
received $8,000 from Xander Corp (a foreign corporation)
that you treated as a gift, and $15,000 that you received from
Allison (a nonresident alien) that you treated as a gift, and
you know that Xander Corp is wholly owned by Allison, you
must complete columns (a) through (g) for each gift.
If you are a calendar-year taxpayer and you use June 30 of
the calendar year as the applicable date for calculating
interest, use the table found on IRS.gov/
CombinedInterestRate to determine the combined interest
rate and enter it on line 51. If you are not a calendar-year
taxpayer or you choose to use the actual date of the
distribution as the applicable date, calculate the combined
interest rate using the above principles and enter it on line 51.
Line 53. Report this amount as additional tax (ADT) on the
appropriate line of your income tax return (for example, for
Form 1040 filers, include this amount as part of the total for
the "Any other taxes" line on Schedule 2 (Form 1040)).
Part IV—U.S. Recipients of Gifts or
Bequests Received During the
Current Tax Year From Foreign
Persons
Note. Gifts from foreign corporations or foreign partnerships
are subject to recharacterization by the IRS under section
672(f)(4).
Line 56. If you answered “Yes” to the question on line 56 and
the ultimate donor on whose behalf the reporting donor is
acting is a foreign corporation or foreign partnership, attach
an explanation including the ultimate foreign donor's name;
address; TIN, if any; and status as a corporation or
partnership.
Note. If you fail to timely report foreign gifts that should be
reported under section 6039F, the IRS may determine the
income tax consequences of the receipt of such gift and
A gift to a U.S. person does not include any amount paid
for qualified tuition or medical payments made on behalf of
the U.S. person.
If the ultimate donor is a foreign trust, treat the amount
received as a distribution from a foreign trust and complete
Part III.
If a foreign trust makes a distribution to a U.S. person, the
U.S. person must report the amount as a distribution in Part
III, rather than as a gift in Part IV.
Privacy Act and Paperwork Reduction Act Notice. We
ask for the information on this form to carry out the Internal
Revenue laws of the United States. You are required to give
us the information. We need it to ensure that you are
complying with these laws and to allow us to figure and
collect the right amount of tax.
Contributions of property by foreign persons to domestic
or foreign trusts that have U.S. beneficiaries are not
reportable by those beneficiaries in Part IV unless they are
treated as receiving the contribution in the year of the transfer
(for example, if the U.S. beneficiary is treated as an owner of
that portion of the trust under section 678, then the
contribution must be reported by such U.S. beneficiary in Part
IV).
A domestic trust that is not treated as owned by another
person is required to report the receipt of a contribution to the
trust from a foreign person as a gift in Part IV.
A domestic trust that is treated as owned by a foreign
person is not required to report the receipt of a contribution to
the trust from a foreign person. However, a U.S. person
should report the receipt of a distribution from a domestic
trust that is treated as owned by a foreign person as a gift
from a foreign person in Part IV, rather than as a distribution
to a U.S. person in Part III.
Line 54. To calculate the threshold amount ($100,000), you
must aggregate gifts from different foreign nonresident aliens
and foreign estates if you know (or have reason to know) that
earlier) or one is acting as a nominee or intermediary for the
other. For example, if you receive a gift of $75,000 from Abby
(a nonresident alien individual) and a gift of $40,000 from
Brian (a nonresident alien individual), and you know that
Abby and Brian are related, you must answer “Yes” and
complete columns (a) through (c) for each gift.
If you answered “Yes” to the question on line 54 and none
of the gifts or bequests received exceeds $5,000, do not
complete columns (a) through (c) of line 54. Instead, enter in
column (b) of the first line, “No gifts or bequests exceed
$5,000.”
Our authority to ask for information is sections 6001, 6011,
and 6012(a) and their regulations, which require you to file a
return or statement with us for any tax for which you are
liable. Your response is mandatory under these sections.
Section 6109 requires you to provide your TIN. You must fill in
all parts of the tax form that apply to you.
You are not required to provide the information requested
on a form that is subject to the Paperwork Reduction Act
unless the form displays a valid OMB control number. Books
or records relating to a form or its instructions must be
retained as long as their contents may become material in the
administration of any Internal Revenue law. Generally, tax
returns and return information are confidential, as required by
section 6103. However, section 6103 allows or requires the
IRS to disclose or give the information shown on your tax
return to others as described in the Code. For example, we
may disclose your tax information to the Department of
Justice to enforce the tax laws, both civil and criminal, and to
cities, states, the District of Columbia, and U.S.
commonwealths or possessions to carry out their tax laws.
We may also disclose this information to other countries
under a tax treaty, to federal and state agencies to enforce
federal nontax criminal laws, or to federal law enforcement
and intelligence agencies to combat terrorism. Failure to
provide this information, or providing false information, may
subject you to fines or penalties.
-12-
Instructions for Form 3520 (Rev. 12-2023)
Keep this notice with your records. It may help you if we
ask you for other information.
If you have comments concerning the accuracy of these
time estimates or suggestions for making this form simpler,
we would be happy to hear from you. You can send us
your comments to Internal Revenue Service, Tax Forms and
Publications Division, 1111 Constitution Ave. NW, IR-6526,
Washington, DC 20224. Do not send the tax form to this
The time needed to complete and file this form and related
schedules will vary depending on individual circumstances.
The estimated burden for individual taxpayers filing this form
is approved under OMB control number 1545-0074 and is
included in the estimates shown in the instructions for their
individual income tax return. The estimated burden for all
other taxpayers who file this form is shown below.
Recordkeeping .
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42 hr., 34 min.
4 hr., 50 min.
6 hr., 40 min.
16 min.
Learning about the law or the form.
Preparing the form
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Sending the form to the IRS
-13-
Instructions for Form 3520 (Rev. 12-2023)