U.S. Individual Income Tax Return

2010

Instructions for Form 3520

Department of the Treasury
Internal Revenue Service

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.

What’s New
• Section 535 of the Hiring Incentives to Restore

Employment (HIRE) Act has modified the penalty for failure
to file information for a foreign trust. For details, see
Penalties on page 2.
• Section 512 of the HIRE Act provides for a new penalty
for underpayments attributable to undisclosed foreign
financial asset understatements. For more information, see
Penalties on page 2.
• Section 532 of the HIRE Act creates a presumption that a
foreign trust will be treated as having a U. S. owner under
certain circumstances. For more information, see U.S.
Beneficiary on page 5.
• Section 533 of the HIRE Act expands the factors that may
cause a U.S. person to be treated as the owner of a foreign
trust. For more information, see the instructions for line 25
on page 8.
• Section 534 of the HIRE Act confirms that U.S. owners of
foreign trusts must file Form 3520 and complete Part II of
the Form 3520 even if there are no transactions with the
trust in the current tax year.

General Instructions

Note. You are required to complete Part II even if there
have been no transactions involving the trust during the tax
year.
3. You are a U.S. person who received (directly or
indirectly) a distribution from a foreign trust (including the
uncompensated use of trust property after March 18, 2010)
during the current tax year or a related foreign trust held an
outstanding obligation issued by you (or a person related to
you) that you treated as a qualified obligation (defined on
page 4) during the current tax year.
Complete the identifying information on page 1 of the
form and Part III. See the instructions for Part III.
4. You are a U.S. person who, during the current tax
year, received either:
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 $14,165 from foreign corporations or
foreign partnerships (including foreign persons related to
such foreign corporations or foreign partnerships) that you
treated as gifts.
Complete the identifying information on page 1 of the
form and Part IV. See the instructions for Part IV.
Note. You may also be required to file Form TD F 90-22.1,
Report of Foreign Bank and Financial Accounts.

Exceptions To Filing

Purpose of Form
U.S. persons (and executors of estates of U.S. decedents)
file Form 3520 to report:
• Certain transactions with foreign trusts,
• Ownership of foreign trusts under the rules of sections
671 through 679, and
• Receipt of certain large gifts or bequests from certain
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 applies:
1. You are the responsible party for reporting a
reportable event that occurred during the current tax year, or
you held an outstanding obligation of a related foreign trust
(or a person related to the trust) that you treated as a
qualified obligation during the current tax year. Responsible
party, reportable event, and qualified obligation are defined
on page 4.
Complete the identifying information on page 1 of the
form and the relevant portions of Part I. See the instructions
for Part I.
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.
Complete the identifying information on page 1 of the
form and Part II. See the instructions for Part II.

Form 3520 does not have to be filed to report the following
transactions.
• Transfers to foreign trusts described in sections 402(b),
404(a)(4), or 404A.
• Most fair market value (FMV) transfers by a U.S. person
to a foreign trust. However, some FMV transfers must
nevertheless be reported on Form 3520 (e.g., 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,
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.
• Transfers to foreign trusts that have a current
determination letter from the IRS recognizing their status as
exempt from income taxation under section 501(c)(3).
• Transfers to, ownership of, and distributions from a
Canadian registered retirement savings plan (RRSP) or a
Canadian registered retirement income fund (RRIF), where
the U.S. citizen or resident alien holding an interest in such
RRSP or RRIF is eligible to file Form 8891, U.S. Information
Return for Beneficiaries of Certain Canadian Registered
Retirement Plans, with respect to the RRSP or RRIF.
• Distributions from foreign trusts that are taxable as
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.

Cat. No. 23068I

• Distributions from foreign trusts to domestic trusts that

chief accounting officer, or any other corporate officer (such
as a tax officer) who is authorized to sign.

have a current determination letter from the IRS recognizing
their status as exempt from income taxation under section
501(c)(3).
• Domestic trusts that become foreign trusts to the extent
the trust is treated as owned by a foreign person, after
application of section 672(f).

The paid preparer must complete the required preparer
information at the bottom of page 1 of Form 3520 and must
be sure to:
• Sign the return in the space provided for the preparer’s
signature.
• Give a copy of the return to the filer.

Joint Returns
Two transferors or grantors of the same foreign trust, or two
U.S. beneficiaries of the same foreign trust, may file a joint
Form 3520, but only if they file a joint income tax return.

Inconsistent Treatment of Items
The U.S. beneficiary and U.S. owner’s tax return must be
consistent with the Form 3520-A, Annual Information Return
of Foreign Trust With a U.S. Owner, 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 Request (AAR). See Form 8082 for more
details.

Additional Reporting Information
For more information on foreign trust reporting, including
abusive foreign trust schemes, go to the IRS website at
IRS.gov.

When and Where To File
In general, Form 3520 is due on the date that your income
tax return is due, including extensions. In the case of a Form
3520 filed with respect to a U.S. decedent, Form 3520 is
due on the date that Form 706, United States Estate (and
Generation-Skipping Transfer) Tax Return, is due (including
extensions), or would be due if the estate were required to
file a return, even if the executor of the decedent’s estate
made the special election under section 301(c) of the Tax
Relief, Unemployment Insurance Reauthorization, and Job
Creation Act of 2010 (2010 Tax Relief Act).
Note. The due date for Form 706 for 2010 estates of
decedents who died after December 31, 2009, and before
December 17, 2010, is September 19, 2011. For decedents
who died on or after December 17, 2010, the due date is
nine months after the date of death.
Special election under section 301(c) of the 2010 Tax
Relief Act. The executor of an estate of a decedent dying
in 2010 may make the special election under section 301(c)
of the 2010 Tax Relief Act to elect out of the estate tax rules
and instead have the modified carryover basis rules of
section 1022 apply to property acquired from the decedent.
The election is made on Form 8939, Allocation of Increase
in Basis for Property Acquired From a Decedent. At the time
these instructions went to print, the IRS was still developing
Form 8939. When available, this form will be posted at
IRS.gov. For more information about making the election,
see the Instructions for Form 8939 and Pub. 4895, Tax
Treatment of Property Acquired From a Decedent Dying in
2010, when they become available.
Send Form 3520 to the Internal Revenue Service
Center, P.O. Box 409101, Ogden, UT 84409.
Form 3520 must have all required attachments to be
considered complete.
Note. 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).

Penalties
Section 6677. A penalty generally applies if Form 3520 is
not timely filed or if the information is incomplete or
incorrect. Generally, the initial penalty is equal to the greater
of $10,000 or:
• 35% of the gross value of any property transferred to a
foreign trust for failure by a U.S. transferor to report the
creation of or transfer to a foreign trust or
• 35% of the gross value of the distributions received from a
foreign trust for failure by a U.S. person to report receipt of
the distribution or
• 5% of the gross value of the portion of the trust’s assets
treated as owned by a U.S. person for failure by the U.S.
person to report the U.S. owner information.
Additional penalties will be imposed if the noncompliance
continues after the IRS mails a notice of failure to comply
with the required reporting. For more information, see
section 6677.
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 disclosure of required information is not
reasonable cause. See section 6677(d) for additional
information.
Section 6039F. In the case of a failure to report foreign
gifts described in section 6039F, 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.
Section 6662(j). For tax years beginning after March 18,
2010, penalties may be imposed under new section 6662(j)
for undisclosed foreign financial asset understatements. 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(j) and section 6664(c) for
additional information.

Who Must Sign
If the return is filed by:
• An individual or a fiduciary, it must be signed and dated
by that individual or fiduciary.
• A partnership, it must be signed and dated by a general
partner or limited liability company member.
• A corporation, it must be signed and dated by the
president, vice president, treasurer, assistant treasurer,

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Definitions

Foreign Trust and Domestic Trust
A foreign trust is any trust other than a domestic trust.
A domestic trust is any trust if:
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.

Distribution
A distribution is any gratuitous transfer of money or other
property from a trust, whether or not the trust is treated as
owned by another person under the 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).

Grantor
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.

A distribution also includes constructive transfers from a
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 received
exceeds the FMV of the property transferred or services
rendered, the excess will be treated as a distribution to you.
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.

Grantor Trust
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.

Note. Due to changes to section 679(c) made by the HIRE
Act, effective after March 18, 2010, a loan of cash or
marketable securities from a foreign trust with a U.S.
grantor, directly or indirectly, to a U.S. person, or the use of
any other trust property, directly or indirectly, by any U.S.
person (whether or not a beneficiary under the terms of the
trust) will cause a foreign trust to be treated as a grantor
trust, unless the U.S. person repays the loan at a market
rate of interest or pays the FMV of the use of such property
within a reasonable period of time. Thus, in the case of a
trust with a U.S. grantor that is treated as a grantor trust, the
following two paragraphs will generally not apply to loans
made to U.S. persons from such a foreign trust or to the use
of other trust property by U.S. persons from such a foreign
trust after March 18, 2010.

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 (e.g., a corporation or a partnership)
or (ii) in an investment trust described in Regulations section
301.7701-4(c), a liquidating trust described in Regulations
section 301.7701-4(d), or an environmental remediation
trust described in Regulations section 301.7701-4(e).
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 (i.e., sections 2501 through 2524).
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.
If you transfer property to a foreign trust in exchange for
an obligation of the trust (or a person related to the trust), it
will be a gratuitous transfer unless the obligation is a
qualified obligation. Obligation and qualified obligation are
defined on page 4.

If a U.S. grantor, a U.S. beneficiary, or a U.S. person
related to the U.S. grantor or U.S. beneficiary, directly or
indirectly, receive(s) a loan of cash or marketable securities
from a foreign nongrantor trust, the amount of such loan will
be treated as a distribution to the U.S. grantor or U.S.
beneficiary, unless the obligation issued by the U.S. grantor,
U.S. beneficiary, or U.S. person related to the U.S. grantor
or U.S. beneficiary, in exchange for the loan is a qualified
obligation. 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 section V(A) of Notice
97-34, 1997-25 I.R.B. 22.
After March 18, 2010, if a U.S. grantor, a U.S.
beneficiary, or any U.S. person related to the U.S. grantor or
U.S. beneficiary, directly or indirectly, use(s) any property of
a foreign nongrantor trust, and the U.S. grantor, U.S.
beneficiary, or U.S. person related to the U.S. grantor or the
U.S. beneficiary, does not compensate such trust at FMV for
the use of such property within a reasonable period of time,
the FMV of such use will be treated as a distribution by the
foreign nongrantor trust to the U.S. grantor or the U.S.
beneficiary, as the case may be.

Gross Reportable Amount
Gross reportable amount is:
• The gross value of property involved in the creation of a
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
owned by a U.S. person under the rules of sections 671

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through 679 or any part of a foreign trust that is included in
the gross estate of a U.S. citizen or resident;
• The gross value of assets deemed transferred at the time
a domestic trust to which a U.S. citizen or resident
previously transferred property becomes a foreign trust,
provided such U.S. citizen or resident is alive at the time the
trust becomes a foreign trust (see section 679(a)(5)); or
• The gross amount of distributions received from a foreign
trust.

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.

Gross Value
Gross value is the FMV of property as determined under
section 2031 and its regulations as if the owner had died on
the valuation date. Although formal appraisals are not
generally required, you should keep contemporaneous
records of how you arrived at your good faith estimate.

Related Person

A guarantee:
• Includes any arrangement under which a person, directly
or indirectly, assures, on a conditional or unconditional
basis, the payment of another’s obligation;
• Encompasses any form of credit support, and includes a
commitment to make a capital contribution to the debtor or
otherwise maintain its financial viability; or
• Includes an arrangement reflected in a “comfort letter,”
regardless of whether the arrangement gives rise to a legally
enforceable obligation. If an arrangement is contingent upon
the occurrence of an event, in determining whether the
arrangement is a guarantee, you must assume that the
event has occurred.

A related person generally includes any person who is
related to you for purposes of section 267 and 707(b). This
includes, but is not limited to:
• A member of your family — your brothers and sisters,
half-brothers and half-sisters, spouse, ancestors (parents,
grandparents, etc.), lineal descendants (children,
grandchildren, etc.), and the spouses of any of these
persons.
• A corporation in which you, directly or indirectly, own
more 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

Reportable Event

Guarantee

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. Thus, a nongrantor trust is treated as a taxable
entity. A trust may be treated as a nongrantor trust with
respect to only a portion of the trust assets. See Grantor
Trust on page 3.

A reportable event includes:
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).
3. The death of a citizen or resident of the United States
if:
• The decedent was treated as the owner of any portion
of a foreign trust under the rules of sections 671 through
679, or
• Any portion of a foreign trust was included in the gross
estate of the decedent.

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
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.

Responsible Party
Responsible party means:
• The grantor in the case of the creation of an inter vivos
trust,
• The transferor, in the case of a reportable event (defined
above) other than a transfer by reason of death, or
• The executor of the decedent’s estate in any other case
(whether or not the executor is a U.S. person).

Property
Property means any property, whether tangible or intangible,
including cash.

Qualified Obligation
A qualified obligation, for purposes of this form, is any
obligation only if:
1. The obligation is reduced to writing by an express
written agreement;
2. The term of the obligation does not exceed 5 years
(including options to renew and rollovers) and it is repaid
within the 5-year term;
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

U.S. Agent
A U.S. agent is a U.S. person (defined on page 5) that has a
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:
• Any request by the IRS to examine records or produce
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
corporation controlled by the grantor or beneficiary may act
as a U.S. agent. However, you may not treat the foreign

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• A U.S. person, directly or indirectly, uses property that is

trust as having a U.S. agent unless you enter the name,
address, and taxpayer identification number of the U.S.
agent on lines 3a through 3g on page 1 of the form. See
Identification numbers on page 6.

owned by the foreign trust and does not pay FMV of the use
of such property within a reasonable period of time.
Presumption that foreign trust has U.S. beneficiary. For
transfers of property after March 18, 2010, 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.

If the person identified as the 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.
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 resigns
or liquidates, or its responsibility as an agent of the trust is
terminated, see section IV(B) of Notice 97-34.

U.S. Person
A U.S. person is:
• A citizen or resident alien of the United States (see Pub.
519, U.S. Tax Guide for Aliens, for guidance on determining
resident alien status),
• A domestic partnership,
• A domestic corporation,
• Any estate (other than a foreign estate, within the
meaning of section 7701(a)(31)(A)), and
• Any domestic trust (defined on page 3).

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 named 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:
• A foreign corporation that is a controlled foreign
corporation (as defined in section 957(a)),
• A foreign partnership if a U.S. person is a partner of the
partnership, and
• A foreign estate or trust if the estate or trust has a U.S.
beneficiary.

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.
4. Is the executor of the estate of a U.S. person and:
a. The decedent made a testamentary transfer (a
transfer by reason of death) to a foreign trust,
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.

Foreign trust treated as having a U.S. beneficiary. In
general, a 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.
Special rule in case of discretion to identify
beneficiaries. For purposes of the general rule above, 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.

Generally, the person defined as the transferor is the
responsible party (defined on page 4) who must ensure that
required information be provided or pay appropriate
penalties.

Specific Instructions

Certain agreements and understandings treated as
terms of the trust. For purposes of the general rule above,
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.

Period Covered
File the 2010 return for calendar year 2010 and fiscal years
that begin in 2010 and end in 2011. For a fiscal year, fill in
the tax year space at the top of the form.

Item A—Initial Return, Final Return,
Amended Return

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 above, the trust
will be treated as having a U.S. beneficiary if, after March
18, 2010, either:
• 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

Initial return. If this is the first return you are filing
concerning the foreign trust identified, check the “Initial
return” box.
Final return. If no further returns for transactions with the
foreign trust are required, check the “Final return” box.
Example. If you annually filed Part II, Form 3520,
because you were the owner of the trust for U.S. income tax
purposes and the trust has terminated within the tax year,

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that year’s return would be a final return with respect to that
foreign trust.
Amended return. If this Form 3520 is filed to amend a
Form 3520 that you previously filed, check the “Amended
return” box.

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.

Identifying Information

Lines 5b and 5c. Enter the address and identification
number, if any, of the trust creator. See Identifying
Information above for specific information regarding the
entering of addresses and identification numbers 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.

Service Center. Generally, enter the name of the Service
Center where you file your income tax return in the entry
space provided above line 1a on page 1 of the form.
However, if you are an executor filing a Form 3520 with
respect to a U.S. decedent, provide both the name of the
Service Center where the decedent’s final income tax return
will be filed, and the name of the Service Center where
Form 706 or Form 8939 will be filed, if applicable. Please
enter the information as follows. First enter the name of the
Service Center where the decedent’s final income tax return
will be filed. Then, if applicable, enter the name of the
Service Center where Form 706 or Form 8939 is filed,
followed by “(estate tax return)” or “(allocation of basis),”
respectively. If your income tax return is filed electronically,
enter “e-filed.”
Note. The executor of an estate of a decedent dying in
2010 may elect not to have the estate tax rules apply, and
instead make the special election under section 301(c) of
the 2010 Tax Relief Act. See Special election under section
301(c) of the 2010 Tax Relief Act on page 2 for additional
information.
Identification numbers. Use social security numbers or
individual taxpayer identification numbers to identify
individuals. Use employer identification numbers to identify
estates, trusts, partnerships, and corporations.

Lines 6a and 6b. Enter the applicable two-letter code from
the list at: www.IRS.gov/countrycodes.
Lines 7, 8, and 10. If you are reporting multiple transfers to
a single foreign trust and the answers to lines 7, 8, or 10 are
different for various transfers, complete a separate line for
each transfer on duplicate copies of the relevant pages of
the form.
Line 7a. If “Yes,” 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. See Form
8865, Return of U.S. Persons With Respect to Certain
Foreign Partnerships.
Line 8. If the transfer was a completed gift (see
Regulations section 25.2511-2), you may have to file Form
709, United States Gift (and Generation-Skipping Transfer)
Tax Return.

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 1 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.
Line 1. This line identifies the person that is filing Form
3520. If you and your spouse are both making transfers to
the same trust and you file joint returns, you may file only
one Form 3520. Put the names and taxpayer identification
numbers in the same order as they appear on your Form
1040.
Line 4. 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.

!

If the transfer was a bequest, you may have to file Form
706. For a decedent dying in 2010, the executor of the
estate may make the special election under section 301(c)
of the 2010 Tax Relief Act. See Special election under
section 301(c) of the 2010 Tax Relief Act on page 2 for
additional information.
Line 9. See definition of U.S. beneficiary on page 5.
Line 10. If you are treated as the owner of any portion of
the foreign trust under the rules of sections 671 through 679,
answer “Yes” to this question and complete Part II.

Schedule A—Obligations of a Related Trust
Line 11a. The FMV of an obligation of the trust (or an
obligation of another person related to the trust) that you
receive in exchange for the transferred property equals zero,
unless the obligation meets the requirements of a qualified
obligation. See page 4 for the definitions of obligation,
qualified obligation, and person related to a foreign trust.

Part I—Transfers by U.S. Persons to a
Foreign Trust During the Current Tax
Year

Lines 12 and 26. If you answered “Yes” to the question on
line 11b (line 25, column (e)) with respect to any obligation,
you generally must answer “Yes” to the question on line 12
(line 26). 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. This form will be deemed
to be agreed upon and executed by the IRS for purposes of
Regulations section 301.6501(c)-1(d).

Complete Part I for information on a reportable event
(defined on page 4).
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.

If you answer “No” to the question on line 12 (line 26),
you generally may not treat an obligation as a qualified
obligation on line 11b (line 25, column (e)). 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.

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U.S. income tax principles. For example, the statements
must not treat capital gains as additions to trust corpus.

Schedule B—Gratuitous Transfers
Complete the applicable portions of Schedule B with respect
to all reportable events (defined on page 4) that took place
during the current tax year.
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
single line of line 13.
• If there is not enough space on the form, please attach a
statement.
• For transfers reported on attachments, you must enter
“Attachment” on one of the lines in column (b), and enter the
total amount of transfers reported on the attachment on line
13, columns (c), (d), (e), (f), (h), and (i).
Note. Penalties may be imposed for failure to report all
required information. See Penalties on page 2.
Line 13, column (d). Enter the U.S. adjusted basis of the
property transferred.
If the transfer was a bequest and the executor of the
estate made the special election under section 301(c) of the
2010 Tax Relief Act, there are special rules for determining
basis and holding period. See Special election under section
301(c) of the 2010 Tax Relief Act on page 2 for additional
information.
Line 13, column (e). Only include gain that is immediately
recognized at the time of the transfer.
Note. For any transfer by a U.S. person to a foreign
nongrantor trust after August 4, 1997, the transfer is treated
as a sale or exchange and the transferor must recognize as
a gain the excess of the FMV of the transferred property
over its adjusted basis. 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.
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.
Line 15. Enter the name, address, whether the person is a
U.S. beneficiary (defined on page 5), and taxpayer
identification number, if any, of all 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, please attach a statement.
Line 17. Enter the name, address, and taxpayer
identification number, if any, of any person, other than those
listed on line 16, that has significant powers over the trust
(e.g., “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.
Line 18. If you checked “No” on line 3 (or you did not
complete lines 3a through 3g) attach:
• A summary of the terms of the trust that includes a
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 his
or her wishes, and any similar documents.
• 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

Schedule C—Qualified Obligations
Outstanding in the Current Tax Year
Line 19. Provide information on the status of outstanding
obligations of the related foreign trust (or 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, Part I. See section III(C)(2) of Notice 97-34.

Part II—U.S. Owner of a Foreign Trust
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 a
taxpayer identification number for such foreign trust on line
2b on page 1 of the form.
Note. You are required to complete Part II even if there
have been no transactions involving the trust during the tax
year.
Line 20. Enter information regarding any person other than
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
that person to be considered an owner for U.S. income tax
purposes. See the grantor trust rules under sections 671
through 679.
Line 21. In columns (a) and (b), enter the applicable
two-letter code from the list at: www.IRS.gov/countrycodes.
Line 22. If “Yes,” the copy of the Foreign Grantor Trust
Owner Statement (page 3 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 section IV of Notice
97-34.
If “No,” to the best of your ability, complete and attach a
substitute Form 3520-A for the foreign trust. 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, plus additional penalties for
continuing failure to file after notice by the IRS. See section
6677. Also see Penalties on page 2.
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 may be imposed under section 6677.
See Penalties on page 2.

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 and you have correctly
reported any information required on Part II and the trust

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Line 26. See Lines 12 and 26 on page 6.
Line 27. Penalties may be imposed for failure to accurately
report all distributions received during the current tax year.
See Penalties on page 2.
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 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 distribution from the foreign trust, which must be
reported as such on line 25. See section V(A) of Notice
97-34.
Lines 29 and 30. If any of the six items required for the
Foreign Grantor Trust Beneficiary Statement (see Line 29
below) or for the Foreign Nongrantor Trust Beneficiary
Statement (see Line 30 below) 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.
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 4 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.
In addition to basic identifying information (i.e., 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.)
3. A statement identifying whether the owner of the trust
is an individual, 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
appointed a U.S. agent (defined on page 4). If the trust has
a U.S. agent, include the name, address, and taxpayer
identification number of the agent.

has filed a Form 3520-A with the IRS, do not separately
disclose distributions again 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 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
that must be reported on line 25. For example, if you are a
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.
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 six of the items specified
under the instructions for line 29 or 30 below.
Line 25. If you, a U.S. beneficiary, or a U.S. person related
to you or the U.S. beneficiary, received a loan of cash or
marketable securities, directly or indirectly, from a foreign
trust, the amount of such loan will be treated as a
distribution to you or the U.S. beneficiary, unless the
obligation issued by you, the U.S. beneficiary, or the U.S.
person related to you or the U.S. beneficiary, in exchange
for the loan, is a qualified obligation. 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 your obligation
given in exchange for the loan is a qualified obligation
(defined on page 4).
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, a U.S.
beneficiary, or a U.S. person related to you or the U.S.
beneficiary, directly or indirectly, received the use of any
property of a foreign trust, the FMV of such use will be
treated as a distribution to you or the U.S. beneficiary,
unless you, the U.S. beneficiary, or the U.S. person related
to you or the U.S. beneficiary compensate(s) the trust at
FMV for the use of such property within a reasonable period
of time. This rule is applicable for use of trust property after
March 18, 2010. See section 643(i) for additional
information. Report the FMV of the uncompensated use of
trust property in column (a) and the date of first
uncompensated use in column (b); skip columns (c) through
(f), and enter the amount from column (a) in column (g).
Note. Due to changes to section 679(c) made by the HIRE
Act, effective after March 18, 2010, if a foreign trust with a
U.S. grantor is not already treated as a grantor trust under
the rules of sections 671 through 679, the foreign trust will
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.

Line 30. If “Yes,” attach the Foreign Nongrantor Trust
Beneficiary Statement from the foreign trust. A Foreign
Nongrantor Trust Beneficiary Statement must include the
following items:

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• You answered “Yes” to line 30,
• You attach a copy of the Foreign Nongrantor Trust

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.
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 on page 8, as well as basic identifying
information (e.g., name, address, TIN, etc.) about the
foreign trust and its trustee.

Beneficiary Statement to this return, and
• You have never before used Schedule A for this foreign
trust or this foreign trust terminated during the tax year.
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 (e.g., Schedule E
(Form 1040), Part III).
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 (e.g., Schedule D (Form 1040)).
Line 45. Enter the foreign trust’s aggregate undistributed
net income (UNI). For example, assume that a trust was
created in 2004 and has made no distributions prior to 2010.
Assume the trust’s ordinary income was $0 in 2009, $60 in
2008, $124 in 2007, $87 in 2006, $54 in 2005, and $25 in
2004. Thus, for 2010, the trust’s UNI would be $350. If the
trust earned $100 and distributed $200 during 2010 (so that
$100 was distributed from accumulated earnings), the trust’s
2011 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 2010 would be $1,260,
calculated as follows:

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 the
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.)
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 less than 3). 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 (or the number of years the
trust has been a foreign trust if fewer than 3). Consider any
portion of a year to be a complete year. For example, a
foreign trust created on July 1, 2008, would be treated on a
2010 calendar year return as having 2 preceding years
(2008 and 2009). In this case, you would calculate the
amount on line 35 by dividing line 34 by 2. 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.
Line 36. Enter this amount as ordinary income on your tax
return. Report this amount on the appropriate schedule of
your tax return (e.g., Schedule E (Form 1040), Part III).
Note. 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.

Year
2009
2008
2007
2006
2005
2004
TOTAL

No. of years
since that
year
1
2
3
4
5
6

UNI from
each year

Weighted UNI

$ 0
60
124
87
54
25

$ 0
120
372
348
270
150

$350

$1,260

To calculate the trust’s weighted UNI for the following
year (2011), the trust could update this calculation, or the
weighted UNI shown on line 46 of the 2010 Form 3520
could simply be updated using the following steps:
1. Begin with the 2010 weighted UNI.
2. Add UNI at the beginning of 2010.
3. Add trust earnings in 2010.
4. Subtract trust distributions in 2010.
5. Subtract weighted trust accumulation distributions in
2010. (Weighted trust accumulation distributions are the
trust accumulation distributions in 2010 multiplied by the
applicable number of years from 2010.)
Using the example above, the trust’s 2011 weighted UNI
would be $1,150, calculated as follows.

Schedule B—Actual Calculation of Trust
Distributions
You may only use Schedule B if:

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2010 weighted UNI . . . . . . . . . . . . . . . . . . . . . . . .

$1,260

UNI at beginning of 2010 . . . . . . . . . . . . . . . . . . . . .

+ 350

Trust earnings in 2010 . . . . . . . . . . . . . . . . . . . . . .

+ 100

Trust distributions in 2010 . . . . . . . . . . . . . . . . . . . .

- 200

Weighted trust accumulation distributions in 2010
($100 X 3.6) . . . . . . . . . . . . . . . . . . . . . . . . . . .

- 360

2011 weighted UNI . . . . . . . . . . . . . . . . . . . . . . . .

$1,150

Table of Combined Interest Rate Imposed
on the Total Accumulation Distribution
Look up the applicable number of years of the foreign trust that you
entered on line 50. Read across to find the combined interest rate
to enter on line 51. Use this table only if you are a 2010 calendar
year taxpayer and are using June 30, 2010, as the applicable date.
Applicable number
of years of trust
(from line 50)

Line 47. Calculate the trust’s applicable number of years
by dividing line 46 by line 45. Using the examples in the
instructions for lines 45 and 46, the trust’s applicable
number of years would be 3.6 in 2010 (1,260/350) and 4.6 in
2011 (1,150/250).

1 ..
1.5 .
2 ..
2.5 .
3 ..
3.5 .
4 ..
4.5 .
5 ..
5.5 .
6 ..
6.5 .
7 ..
7.5 .
8 ..
8.5 .
9 ..
9.5 .
10 .
10.5
11 .
11.5
12 .
12.5
13 .
13.5
14 .
14.5
15 .
15.5
16 .
16.5
17 .
17.5
18 .
18.5
19 .
19.5
20 .
20.5
21 .
21.5
22 .
22.5
23 .
23.5
24 .
24.5
25 .
25.5
26 .
26.5
27 .
27.5
28 .
28.5

Note. Include as many decimal places as there are digits
in the UNI on line 45 (e.g., 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.
Line 49. Include the amount from line 48 of this form on
Form 4970, line 1. 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,
Tax on Accumulation Distribution of Trusts.
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
(e.g., in the case of a 2010 calendar year taxpayer, the
applicable date would be June 30, 2010). 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.
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
only on the tax, but also on the total simple interest
attributable to pre-1996 periods.
If you are a 2010 calendar year taxpayer and you use
June 30, 2010, as the applicable date for calculating
interest, use the table below to determine the combined
interest rate and enter it on line 51. If you are not a 2010
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.

-10-

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Combined
interest rate
(enter on line 51)
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0.0408
0.0643
0.0941
0.1301
0.1766
0.2242
0.2745
0.3195
0.3635
0.4012
0.4333
0.4657
0.4993
0.5370
0.5842
0.6320
0.6906
0.7634
0.8450
0.9246
1.0038
1.0798
1.1653
1.2585
1.3633
1.4712
1.5856
1.6972
1.7781
1.8590
1.9399
2.0208
2.1017
2.1827
2.2636
2.3445
2.4254
2.5063
2.5872
2.6681
2.7491
2.8300
2.9109
2.9918
3.0727
3.1536
3.2346
3.3155
3.3964
3.4773
3.5582
3.6391
3.7200
3.8010
3.8819
3.9628

29 . . . . . . . . . . . . . . . . . . . . . . . . . .
29.5 . . . . . . . . . . . . . . . . . . . . . . . . .
30 . . . . . . . . . . . . . . . . . . . . . . . . . .
30.5 . . . . . . . . . . . . . . . . . . . . . . . . .
31 . . . . . . . . . . . . . . . . . . . . . . . . . .
31.5 . . . . . . . . . . . . . . . . . . . . . . . . .
32 . . . . . . . . . . . . . . . . . . . . . . . . . .
32.5 . . . . . . . . . . . . . . . . . . . . . . . . .
33 . . . . . . . . . . . . . . . . . . . . . . . . . .
All Years Greater than 33 . . . . . . . . . .
(Note. Interest charges began in 1977.)

reason to know) are related to such foreign corporations or
foreign partnerships).
For example, if you, a calendar-year taxpayer during
2010, received $8,000 from foreign corporation X that you
treated as a gift, and $10,000 that you received from
nonresident alien A that you treated as a gift, and you know
that X is wholly owned by A, you must complete columns (a)
through (g) for each gift.
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, identification number, if any, and status as a
corporation or partnership.
If the ultimate donor is a foreign trust, treat the amount
received as a distribution from a foreign trust and complete
Part III.
Line 57. Answer “Yes” if, during the current tax year, you
received 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)).
Note. If you answer “Yes” to the question on line 57,
complete and file Form 708. At the time these instructions
went to print, the IRS was still developing Form 708. When
available, this form will be posted at IRS.gov. Your filing and
tax payment obligations with respect to any section 2801 tax
liability will not be due until the date to be indicated on the
Form 708 or in the related instructions, once they have been
issued. See Announcement 2009-57, 2009-29 I.R.B. 158,
for additional information.

4.0437
4.1246
4.2055
4.2865
4.3674
4.4483
4.5292
4.6101
4.6910
4.7719

Line 53. Report this amount as additional tax (ADT) on the
appropriate line of your income tax return (e.g., for Form
1040 filers, include this amount as part of the total for line 60
of your 2010 Form 1040 and enter “ADT” to the left of the
line 60 entry space).

Part IV—U.S. Recipients of Gifts or
Bequests Received During the
Current Tax Year From Foreign
Persons

Note. Penalties may be imposed for failure to report gifts
that should be reported. See Penalties on page 2.
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 a foreign trust makes a distribution to a U.S.
beneficiary, the beneficiary must report the amount as a
distribution in Part III, rather than as a gift in Part IV.
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 (e.g., the beneficiary is an owner of that portion of
the trust under section 678).
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 such a trust
as a gift from a foreign person in Part IV.
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 those persons are related to each other (see
definition of related person on page 4) or one is acting as a
nominee or intermediary for the other. For example, if you
receive a gift of $75,000 from nonresident alien individual A
and a gift of $40,000 from nonresident alien individual B,
and you know that A and B 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.”
Note. Include gifts or bequests from a “covered expatriate”
(as defined in section 877A(g)(1)) when calculating the
$100,000 threshold amount.
Line 55. Answer “Yes” if you received aggregate amounts
in excess of $14,165 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

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.
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
identification number. This is so we know who you are, and
can process your return and other papers. 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 Internal Revenue Service 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.

-11-

Please keep this notice with your records. It may help you
if we ask you for other information. If you have any
questions about the rules for filing and giving information,
please call or visit any Internal Revenue Service office.
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 . . . . . . . . . . . . . . . . . . . . . . . .

42 hr., 48 min.

Learning about the law or the form . . . . . . . . . .

4 hr., 50 min.

Preparing the form . . . . . . . . . . . . . . . . . . . . . .

6 hr., 40 min.

Sending the form to the IRS . . . . . . . . . . . . . . .

16 min.

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 write to the
Internal Revenue Service, Tax Products Coordinating
Committee, SE:W:CAR:MP:T:T:SP, 1111 Constitution Ave.
NW, IR-6526, Washington, DC 20224. Do not send the tax
form to this office. Instead, see When and Where To File on
page 2.

-12-