Form 3520 Annual Return TO Report Transactions With Foreign Trusts

Form

3520

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

Department of the Treasury
Internal Revenue Service

©

OMB No. 1545-0159

2009

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 2009, or tax year beginning
, 2009, ending
, 20
Initial return
Final return
Amended return
A Check appropriate boxes:
B Check box that applies to person filing return:
Individual
Partnership
Corporation
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.
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)

g

Country

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

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)
3

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

b

Address

f ZIP or postal code

d Date of death

f

g

Country

c

TIN of decedent

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

(2009)

Form 3520 (2009)

Part I

Page

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

b

6a Country code of country where trust was created

Address

b

Country code of country whose law governs the trust

c

Identification number (if any)

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

No

(v)
Relevant
Code section

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?

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

Yes

No

Yes

No

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

(2009)

Form 3520 (2009)

Part I

Page

3

Schedule B—Gratuitous Transfers (Continued)

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

(2009)

Form 3520 (2009)

Part II

Page

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

20

(b)
Address

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

21

22

4

U.S. Owner of a Foreign Trust (see instructions)
(d)
Identification number,
if any

(c)
Country of residence

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

(e)
Relevant
Code section

(c)
Date foreign trust was created

Yes

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

No

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

23

Part III
24

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).
(a)
Date of distribution

(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

25

(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

$

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

(2009)

Form 3520 (2009)

Part III
29

Page

5

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

Did you receive a Foreign Grantor Trust Beneficiary Statement from the foreign trust with respect to a distribution?

Yes

No

Yes

No

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.
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 41a.
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.

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

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 ©

37
38

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

Enter amount from line 27

40a
b

Amount treated as ordinary income in the current tax year
Qualified dividends

41a

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

b
42a

Amount of line 41a that is tax-exempt

©

©

Amount treated as net short-term capital gain in the current tax year

b

Amount treated as net long-term capital gain in the current tax year

c

28% rate gain

©

d

Unrecaptured section 1250 gain

©

43

Amount treated as distribution from trust corpus

44

Enter any other distributed amount received from the foreign trust not included on lines 40a, 41a, 42a, 42b, 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 41a, 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)

©

Schedule C—Calculation of Interest Charge (see instructions)

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
Form

3520

(2009)

Form 3520 (2009)

Part IV
54

Page

6

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

During the current tax year, did you receive more than $100,000 that you treated as gifts or bequests from a
nonresident alien or a foreign estate? See instructions for special rules regarding related donors and gifts or bequests
from “covered expatriates”

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 $14,139 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 foreign donor

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

(c)
Address of foreign donor

(f)
Description of property received

(d)
Identification number,
if any

(g)
FMV of property received

Partnership

56

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

57

During the current tax year, did you receive a “covered gift or bequest” (as defined in section 2801(e)) of more than $13,000
from a “covered expatriate” (as defined in section 877A(g)(1)) (see instructions)?
If “Yes,” complete and file Form 708, U.S. Return of Tax for Gifts and Bequests Received From Expatriates.

Yes

No

Yes

No

Form

3520

(2009)