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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

such foreign corporations or foreign partnerships) that you

Section references are to the Internal Revenue Code unless

treated as gifts.

otherwise noted.

Complete the identifying information on page 1 of the

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

What’s New

Note. You may also be required to file Form TD F 90-22.1,

Line 57 of the form is new. U.S. persons who receive a

Report of Foreign Bank and Financial Accounts.

covered gift or bequest of more than $12,000 from a

covered expatriate are subject to a new tax under section

Exceptions To Filing

2801. See the instructions for line 57 for details.

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

transactions.

General Instructions

•

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

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

Purpose of Form

•

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

to a foreign trust. However, some FMV transfers must

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

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

file Form 3520 to report:

•

exchange for obligations that are treated as qualified

Certain transactions with foreign trusts and

•

obligations, transfers of appreciated property to a foreign

Receipt of certain large gifts or bequests from certain

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

foreign persons.

recognize all of the gain on the property transferred,

A separate Form 3520 must be filed for transactions with

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

each foreign trust.

foreign trust). See Section III of Notice 97-34, 1997-25 I.R.B.

22.

Who Must File

•

Transfers to foreign trusts that have a current

determination letter from the IRS recognizing their status as

File Form 3520 if:

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

1. You are the responsible party for reporting a

•

Transfers to, ownership of, and distributions from a

reportable event that occurred during the current tax year, or

Canadian registered retirement savings plan (RRSP) or a

you held an outstanding obligation of a related foreign trust

Canadian registered retirement income fund (RRIF), where

(or a person related to the trust) that you treated as a

the U.S. citizen or resident alien holding an interest in such

qualified obligation during the current tax year. Responsible

RRSP or RRIF is eligible to file Form 8891, U.S. Information

party, reportable event, and qualified obligation are defined

Return for Beneficiaries of Certain Canadian Registered

on pages 3 and 4.

Retirement Plans, with respect to the RRSP or RRIF.

Complete the identifying information on page 1 of the

•

Distributions from foreign trusts that are taxable as

form and the relevant portions of Part I. See the instructions

compensation for services rendered (within the meaning of

for Part I.

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

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

recipient reports the distribution as compensation income on

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

its applicable federal income tax return.

foreign trust under the grantor trust rules.

•

Distributions from foreign trusts to domestic trusts that

Complete the identifying information on page 1 of the

have a current determination letter from the IRS recognizing

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

their status as exempt from income taxation under section

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

501(c)(3).

indirectly) a distribution from a foreign trust during the

•

Domestic trusts that become foreign trusts to the extent

current tax year or a related foreign trust held an

the trust is treated as owned by a foreign person, after

outstanding obligation issued by you (or a person related to

application of section 672(f).

you) that you treated as a qualified obligation (defined on

page 3) during the current tax year.

Joint Returns

Complete the identifying information on page 1 of the

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

Two transferors or grantors of the same foreign trust, or two

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

U.S. beneficiaries of the same foreign trust, may file a joint

year, received either:

Form 3520, but only if they file a joint income tax return.

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

individual or a foreign estate (including foreign persons

Additional Reporting Information

related to that nonresident alien individual or foreign estate)

that you treated as gifts or bequests; or

For more information on foreign trust reporting, including

abusive foreign trust schemes, go to the IRS website at

b. More than $13,561 from foreign corporations or

foreign partnerships (including foreign persons related to

Cat. No. 23068I

Instructions For Form 3520 - Annual Return To Report Transactions With Foreign Trusts And Receipt Of Certain Foreign Gifts - 2008

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