3520 Annual Return TO Report Transactions With Foreign Trusts

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I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTERS
FORM 3520, PAGE 1 OF 6
MARGINS; TOP 13mm (1⁄ 2 "), CENTER SIDES. PRINTS: HEAD TO HEAD
PAPER: WHITE WRITING, SUB. 20.
INK: BLACK
FLAT SIZE: 216mm (81⁄ 2 ") x 279mm (11")
PERFORATE: ON FOLD
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3520

Action

Date

O.K. to print
Revised proofs
requested

Annual Return To Report Transactions With
Foreign Trusts and Receipt of Certain Foreign Gifts

Department of the Treasury
Internal Revenue Service

©

Signature

OMB No. 1545-0159

2006

See separate instructions.

Note: All information must be in English. Show all amounts in U.S. dollars. File a separate Form 3520 for each foreign trust.
For calendar year 2006, or tax year beginning
A Check appropriate boxes:
Initial return
B Check box that applies to person filing return:

Final return
Individual

, 2006, ending
Amended return
Partnership
Corporation

, 20
Trust

Executor

Check all applicable boxes:
(a) You are a U.S. transferor who, directly or indirectly, transferred money or other property during the current tax year to a
foreign trust, (b) You held an outstanding obligation of a related foreign trust (or a person related to the trust) issued during
the current tax year, that you reported as a “qualified obligation” (defined in the instructions) during the current tax year, or
(c) You are the executor of the estate of a U.S. decedent and (1) the decedent made a transfer to a foreign trust by reason
of death, (2) the decedent was treated as the owner of any portion of a foreign trust immediately prior to death, or (3) the
decedent’s estate included any portion of the assets of a foreign trust. See the instructions for Part I.
You are a U.S. owner of all or any portion of a foreign trust at any time during the tax year. See the instructions for Part II.
(a) You are a U.S. person who, during the current tax year, received a distribution from a foreign trust, or (b) You are a U.S.
person and you are also a grantor or beneficiary of a foreign trust that has made a loan of cash or marketable securities
directly or indirectly to you during the current tax year that you reported as a “qualified obligation” (defined in the
instructions) during the current tax year. See the instructions for Part III.
You are a U.S. person who, during the current tax year, received certain gifts or bequests from a foreign person. See the
instructions for Part IV.

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Service Center where U.S. person’s income tax return is filed ©
1a Name of person(s) filing return (see instructions)

b Identification number

c Number, street, and room or suite no. (if a P.O. box, see instructions)
e City or town
2a

f

State or province

d Spouse’s identification number

g ZIP or postal code

Name of foreign trust (if applicable)

h Country

b Employer identification number (if any)

c Number, street, and room or suite no. (if a P.O. box, see instructions)
d City or town

e State or province

f

ZIP or postal code

g Country

3

Did the foreign trust appoint a U.S. agent (defined in the instructions) who can provide the IRS with all relevant trust
information?
Yes
If “Yes,” complete lines 3a through 3g.
3a Name of U.S. agent
b Identification number (if any)

No

c Number, street, and room or suite no. (if a P.O. box, see instructions)
d City or town
4a Name of U.S. decedent (see instr.)

e State or province

f

ZIP or postal code

b Address

c TIN of decedent

d Date of death

f

g Country

e EIN of estate

Check applicable box:
U.S. decedent made transfer to a foreign trust by reason of death.
U.S. decedent treated as owner of foreign trust immediately prior to death.
Assets of foreign trust were included in estate of U.S. decedent.

Under penalties of perjury, I declare that I have examined this return, including any accompanying reports, schedules, or statements, and to the best of my
knowledge and belief, it is true, correct, and complete.

©
©

Signature

Title

Date

Preparer’s signature

Preparer’s SSN or PTIN

Date

For Privacy Act and Paperwork Reduction Act Notice, see instructions.

Cat. No. 19594V

Form

3520

(2006)

2
I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTERS
FORM 3520, PAGE 2 OF 6
MARGINS; TOP 13mm (1⁄ 2 "), CENTER SIDES. PRINTS: HEAD TO HEAD
PAPER: WHITE WRITING, SUB. 20.
INK: BLACK
FLAT SIZE: 216mm (81⁄ 2 ") x 279mm (11")
PERFORATE: ON FOLD
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT

Form 3520 (2006)

Part I

Page

5a Name of trust creator (if different
from line 1a)

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b Address

6a Country code of country where trust was created

c Identification number (if any)

b Country code of country whose law governs the trust

c Date trust was created

7a Will any person (other than the U.S. transferor or the foreign trust) be treated as the owner of the transferred assets after the transfer?
b

8

2

Transfers by U.S. Persons to a Foreign Trust During the Current Tax Year (see instructions)

(i)
Name of other foreign
trust owners, if any

(ii)
Address

(iii)
Country of residence

Yes

(iv)
Identification number,
if any

Was the transfer a completed gift or bequest? If “Yes,” see instructions

9a Now or in the future, can any part of the income or corpus of the trust benefit any U.S. beneficiary?
b If “No,” could the trust be revised or amended to benefit a U.S. beneficiary?
10
Will you continue to be treated as the owner of the transferred asset(s) after the transfer?

No

(v)
Relevant
code section

Yes

No

Yes
Yes
Yes

No
No
No

Yes

No

Yes

No

Schedule A—Obligations of a Related Trust (see instructions)

11a During the current tax year, did you transfer property (including cash) to a related foreign trust in exchange for an
obligation of the trust or an obligation of a person related to the trust? See instructions
If “Yes,” complete the rest of Schedule A, as applicable. If “No,” go to Schedule B.

b Were any of the obligations you received (with respect to a transfer described in 11a above) qualified obligations?
If “Yes,” complete the rest of Schedule A with respect to each qualified obligation.
If “No,” go to Schedule B and, when completing columns (a) through (i) of line 13 with respect to each nonqualified
obligation, enter “-0-” in column (h).
(i)
Date of transfer giving rise to obligation

12

(ii)
Maximum term

(iii)
Yield to maturity

(iv)
FMV of obligation

With respect to each qualified obligation you reported on line 11b: Do 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?

Yes

No

Yes

No

Note: Generally, you must answer “Yes,” if you checked “Yes” to the question on line 11b.

Schedule B—Gratuitous Transfers (see instructions)
13

During the current tax year, did you make any transfers (directly or indirectly) to the trust and receive less than
FMV, or no consideration at all, for the property transferred?
If “Yes,” complete columns (a) through (i) below and the rest of Schedule B, as applicable.
If “No,” go to Schedule C.
(a)
Date of
transfer

Totals
14

(b)
Description
of property
transferred

(c)
FMV of property
transferred

(d)
U.S. adjusted
basis of
property
transferred

(e)
Gain recognized
at time of
transfer

©

(f)
Excess, if any,
of column (c)
over the sum of
columns (d)
and (e)

(g)
Description
of property
received,
if any

(i)
Excess of
column (c) over
column (h)

(h)
FMV of property
received

$

$

You are required to attach a copy of each sale or loan document entered into in connection with a transfer reported on line 13. If these
documents have been attached to a Form 3520 filed within the previous 3 years, attach only relevant updates.
Are you attaching a copy of:

Yes

No

Attached
Previously

Year
Attached

a Sale document?
b Loan document?
c Subsequent variances to original sale or loan documents?
Form

3520

(2006)

2
I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTERS
FORM 3520, PAGE 3 OF 6
MARGINS; TOP 13mm (1⁄ 2 "), CENTER SIDES. PRINTS: HEAD TO HEAD
PAPER: WHITE WRITING, SUB. 20.
INK: BLACK
FLAT SIZE: 216mm (81⁄ 2 ") x 279mm (11")
PERFORATE: ON FOLD
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT

Form 3520 (2006)

Part I

Page

3

Schedule B—Gratuitous Transfers (Continued)

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Note: Complete lines 15 through 18 only if you answered “No” to line 3.
15

(a)
Name of beneficiary

(b)
Address of beneficiary

(c)
U.S. beneficiary?
Yes

16

(a)
Name of trustee

17

(a)
Name of other persons
with trust powers

18

No

(b)
Address of trustee

(b)
Address of other persons with trust powers

(d)
Identification number, if any

(c)
Identification number, if any

(c)
Description of
powers

(d)
Identification number, if any

If you checked “No” on line 3 (or did not complete lines 3a through 3g) you are required to attach a copy of all trust documents as indicated
below. If these documents have been attached to a Form 3520-A filed within the previous 3 years, attach only relevant updates.
Yes

Are you attaching a copy of:
a

Summary of all written and oral agreements and understandings relating to the trust?

b

The trust instrument?

c

Memoranda or letters of wishes?

d
e
f

Subsequent variances to original trust documents?
Trust financial statements?
Other trust documents?

No

Attached
Previously

Year
Attached

Schedule C—Qualified Obligations Outstanding in the Current Tax Year (see instructions)
19

Did you, at any time during the tax year, hold an outstanding obligation of a related foreign trust (or a person
related to the trust) that you reported as a “qualified obligation” in the current tax year?
If “Yes,” complete columns (a) through (e) below.

(a)
Date of original
obligation

(b)
Tax year qualified
obligation first reported

(c)
Amount of principal
payments made during
the tax year

(d)
Amount of interest
payments made during
the tax year

Yes

No

(e)
Does the obligation
still meet the
criteria for a
qualified obligation?
Yes

Form

No

3520

(2006)

2
I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTERS
FORM 3520, PAGE 4 OF 6
MARGINS; TOP 13mm (1⁄ 2 "), CENTER SIDES. PRINTS: HEAD TO HEAD
PAPER: WHITE WRITING, SUB. 20.
INK: BLACK
FLAT SIZE: 216mm (81⁄ 2 ") x 279mm (11")
PERFORATE: ON FOLD
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT

Form 3520 (2006)

Part II
20

Page

(a)
Name of other foreign
trust owners, if any

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(b)
Address

(a)
Country code of country where foreign trust
was created

21

(d)
Identification number,
if any

(c)
Country of residence

(b)
Country code of country whose law governs the foreign trust

22

Did the foreign trust file Form 3520-A for the current year?

23

If “Yes,” attach the Foreign Grantor Trust Owner Statement you received from the foreign trust.
If “No,” to the best of your ability, complete and attach a substitute Form 3520-A for the foreign trust.
See instructions for information on penalties.
Enter the gross value of the portion of the foreign trust that you are treated as owning

Part III
24

(c)
Date foreign trust was created

Yes

©

No

$

Cash amounts or FMV of property received, directly or indirectly, during the current tax year, from the foreign trust (exclude loans included on line 25).
(b)
Description of property received

(c)
FMV of property received
(determined on date of
distribution)

(d)
Description of
property transferred,
if any

(e)
FMV of property
transferred

(f)
Excess of column (c)
over column (e)

©

Totals

$

During the current tax year, did you (or a person related to you) receive a loan from a related foreign trust (including
an extension of credit upon the purchase of property from the trust)?
If “Yes,” complete columns (a) through (g) below for each such loan.
Note: The FMV of an obligation (column (f)) is -0- unless it is a “qualified obligation.”

(a)
FMV of loan proceeds

(b)
Date of original
loan transaction

(c)
Maximum term of
repayment of
obligation

(d)
Interest rate
of obligation

(e)
Is the obligation a
“qualified obligation?”
Yes
No

Yes

No

(g)
Amount treated as distribution
from the trust (subtract
column (f) from column (a))

(f)
FMV of obligation

© $

Total
26

(e)
Relevant
code section

Distributions to a U.S. Person From a Foreign Trust During the Current Tax Year (see instructions)

(a)
Date of distribution

25

4

U.S. Owner of a Foreign Trust (see instructions)

With respect to each obligation you reported as a “qualified obligation” on line 25: Do you agree to extend the
period of assessment of any income or transfer tax attributable to the transaction, 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?

Yes

No

Yes

No

Note: Generally, you must answer “Yes” if you checked “Yes” in column (e) of line 25.
©

27

Total distributions received during the current tax year. Add line 24, column (f), and line 25, column (g)

28

Did the trust, at any time during the tax year, hold an outstanding obligation of yours (or a person related to you)
that you reported as a “qualified obligation” in the current tax year?
If “Yes,” complete columns (a) through (e) below for each obligation.
(a)
Date of original loan
transaction

(b)
Tax year
qualified obligation
first reported

(c)
Amount of principal
payments made during
the tax year

(d)
Amount of
interest payments
made during
the tax year

$

(e)
Does the loan still meet the
criteria of a qualified
obligation?
Yes

No

Form

3520

(2006)

2
I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTERS
FORM 3520, PAGE 5 OF 6
MARGINS; TOP 13mm (1⁄ 2 "), CENTER SIDES. PRINTS: HEAD TO HEAD
PAPER: WHITE WRITING, SUB. 20.
INK: BLACK
FLAT SIZE: 216mm (81⁄ 2 ") x 279mm (11")
PERFORATE: ON FOLD
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT

Form 3520 (2006)

Part III

Page

5

Distributions to a U.S. Person From a Foreign Trust During the Current Tax Year(Continued)

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29

Did you receive a Foreign Grantor Trust Beneficiary Statement from the foreign trust with respect to a distribution?
If “Yes,” attach the statement and do not complete the remainder of Part III with respect to that distribution.
If “No,” complete Schedule A with respect to that distribution. Also complete Schedule C if you enter an amount
greater than zero on line 37.

Yes

No

30

Did you receive a Foreign Nongrantor Trust Beneficiary Statement from the foreign trust with respect to a distribution?
If “Yes,” attach the statement and complete either Schedule A or Schedule B below (see instructions). Also complete
Schedule C if you enter an amount greater than zero on line 37 or line 41.
If “No,” complete Schedule A with respect to that distribution. Also complete Schedule C if you enter an amount
greater than zero on line 37.

Yes

No

Schedule A—Default Calculation of Trust Distributions (see instructions)
31

Enter amount from line 27

32

Number of years the trust has been a foreign trust (see instructions).

33

Enter total distributions received from the foreign trust during the 3 preceding tax years (or during the number of
years the trust has been a foreign trust, if fewer than 3)

34

Multiply line 33 by 1.25

35

Average distribution. Divide line 34 by 3 (or the number of years the trust has been a foreign trust, if fewer than
3) and enter the result

36
37
38

Amount treated as ordinary income earned in the current year. Enter the smaller of line 31 or line 35
Amount treated as accumulation distribution. Subtract line 36 from line 31. If -0-, do not complete the rest of Part III
Applicable number of years of trust. Divide line 32 by 2 and enter the result here ©

©

Schedule B—Actual Calculation of Trust Distributions (see instructions)
39

Enter amount from line 27

40

Amount treated as ordinary income in the current tax year

41

Amount treated as accumulation distribution. If -0-, do not complete Schedule C, Part III

42

Amount treated as capital gains in the current tax year

43

Amount treated as distribution from trust corpus

44

Enter any other distributed amount received from the foreign trust not included on lines 40, 41, 42, and 43 (attach explanation)

45
46
47

Amount of foreign trust’s aggregate undistributed net income
Amount of foreign trust’s weighted undistributed net income
Applicable number of years of trust. Divide line 46 by line 45 and enter the result here

48

Enter accumulation distribution from line 37 or 41, as applicable

49

Enter tax on total accumulation distribution from line 28 of Form 4970

50

Enter applicable number of years of foreign trust from line 38 or 47, as applicable (round to nearest half-year).

51

Combined interest rate imposed on the total accumulation distribution (see instructions)

52

Interest charge. Multiply the amount on line 49 by the combined interest rate on line 51

53

Tax attributable to accumulation distributions. Add lines 49 and 52. Enter here and as “additional tax” on your
income tax return

©

Schedule C—Calculation of Interest Charge (see instructions)

©

Form

3520

(2006)

2
I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTERS
FORM 3520, PAGE 6 OF 6
MARGINS; TOP 13mm (1⁄ 2 "), CENTER SIDES. PRINTS: HEAD TO HEAD
PAPER: WHITE WRITING, SUB. 20.
INK: BLACK
FLAT SIZE: 216mm (81⁄ 2 ") x 279mm (11")
PERFORATE: ON FOLD
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT

Form 3520 (2006)

Part IV
54

Page

6

U.S. Recipients of Gifts or Bequests Received During the Current Tax Year From Foreign Persons
(see instructions)

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During the current tax year, did you receive more than $100,000 during the tax year that you treated as gifts or
bequests from a nonresident alien or a foreign estate? See instructions regarding related donors

Yes

No

If “Yes,” complete columns (a) through (c) with respect to each such gift or bequest in excess of $5,000. If more
space is needed, attach schedule.
(a)
Date of gift
or bequest

(b)
Description of property received

©

Total
55

(c)
FMV of property received

During the current tax year, did you receive more than $12,760 that you treated as gifts from a foreign corporation
or a foreign partnership? See instructions regarding related donors

$

Yes

No

If “Yes,” complete columns (a) through (g) with respect to each such gift. If more space is needed, attach schedule.

(a)
Date of gift

(b)
Name of donor

(e)
Check the box that applies to the foreign donor
Corporation

56

(c)
Address of donor

(f)
Description of property received

(d)
Identification number,
if any

(g)
FMV of property received

Partnership

Do you have any reason to believe that the foreign donor, in making any gift or bequest described in lines 54 and
55, was acting as a nominee or intermediary for any other person? If “Yes,” see instructions.
Printed on recycled paper

Yes
Form

No

3520

(2006)