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

2011

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 2011, or tax year beginning
, 2011, ending
, 20
A Check appropriate boxes:
Initial return
Final return
Amended return
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. Complete all applicable
identifying information requested below and Part I of the form and 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. Complete all applicable identifying information
requested below and Part II of the form and 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 who is also a
grantor or beneficiary of a foreign trust (1) that has made a loan of cash or marketable securities, directly or indirectly, to you or a U.S. person
related to you during the current tax year, or (2) from which you or a U.S. person related to you received the uncompensated use of trust property.
Complete all applicable identifying information requested below and Part III of the form and 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. Complete all applicable
identifying information requested below and Part IV of the form and see the instructions for Part IV.
Service Center where U.S. person’s income tax return is filed ▶
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)

d Spouse’s identification number

e

City or town

1a

2a

h Country
b Employer identification number (if any)

Name of foreign trust (if applicable)

c

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

d

City or town

3

g ZIP or postal code

f State or province

f ZIP or postal code

e State or province

g Country

Did the foreign trust appoint a U.S. agent (defined in the instructions) who can provide the IRS with all relevant trust
information? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Yes

No

If “Yes,” complete lines 3a through 3g. If “No,” be sure to complete Part I, lines 15 through 18.
3a

b Identification number (if any)

Name of U.S. agent

c

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

d

City or town

e State or province

Name of U.S. decedent (see instr.)

b Address

4a

f ZIP or postal code

g Country
c TIN of decedent
e EIN of estate

d

Date of death

f

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
Print/Type preparer’s name

Firm’s name

▶

Firm’s address

▶

Preparer’s signature

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

▲

Paid
Preparer
Use Only

▲

▲

Sign
Here

Title
Date

Check
if
self-employed

Date

PTIN

Firm’s EIN ▶
Phone no.
Cat. No. 19594V

Form 3520 (2011)

Page 2

Form 3520 (2011)

Part I

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

5a

Name of trust creator

6a

Country code of country where 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?

(i)
b Name of other
foreign

b
10

c Date trust was created

b Country code of country whose law governs the trust

(ii)
Address

trust owners, if any

8
9a

c Identification number (if any)

(iii)
Country of residence

(iv)
Identification number, if any

b

No

(v)
Relevant Code
section

Yes

No

Yes
Yes
Yes

No
No
No

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)? . . . . . . . . .

Yes

No

If “Yes,” complete the rest of Schedule A, as applicable. If “No,” go to Schedule B.
Were any of the obligations you received (with respect to a transfer described in 11a above) qualified obligations?

Yes

No

Was the transfer a completed gift or bequest? If “Yes,” see instructions . . . . . . . . .
Now or in the future, can any part of the income or corpus of the trust benefit any U.S. beneficiary? .

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If “No,” could the trust be revised or amended to benefit a U.S. beneficiary?. . . . .
Will you continue to be treated as the owner of the transferred asset(s) after the transfer? .

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

11a

Yes

.

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

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

(c)
FMV of property
transferred

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

(e)
Gain recognized
at time of
transfer

(g)
Description
of property
received,
if any

(h)
FMV of property
received

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

$
$
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.

▶

Yes

a

Are you attaching a copy of:
Sale document? . . . .

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b
c

Loan document? . . . . . . . . . . . . .
Subsequent variances to original sale or loan documents? .

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No

Attached
Previously

Year
Attached

Form 3520 (2011)

Page 3

Form 3520 (2011)

Part I

Schedule B—Gratuitous Transfers (Continued)

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

(a)
Name of beneficiary

16

(a)
Name of trustee

17

(a)
Name of other persons
with trust powers

18

a
b
c
d
e
f
19

(c)
U.S. beneficiary?

(b)
Address of beneficiary

Yes

(d)
Identification number, if any

No

(b)
Address of trustee

(c)
Identification number, if any

(c)
Description of
powers

(b)
Address of other persons with trust 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.
Are you attaching a copy of:
Summary of all written and oral agreements and understandings relating to the trust?
The trust instrument? . . . . . . . . . . . . . . . . . . .
Memoranda or letters of wishes? . . . . . . . . . . . . . . .
Subsequent variances to original trust documents? . . . . . . . . . .
Trust financial statements? . . . . . . . . . . . . . . . . .
Other trust documents? . . . . . . . . . . . . . . . . . .

Yes
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No

Attached
Previously

Year
Attached

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

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? . . . . . . . . . . . .

Yes

No

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

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

No

Form 3520 (2011)

Page 4

Form 3520 (2011)

Part II
20

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

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

(b)
Address

(c)
Country of residence

(d)
Identification number, if any

(e)
Relevant Code
section

21

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

22

23

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

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).

Part III

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

(c)
Date foreign trust was created

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▶

$

Yes

No

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

(a)
Date of distribution

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

(b)
Description of property received

(d)
Description of
property transferred,
if any

(e)
FMV of property
transferred

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

Totals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ▶ $
25 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)? . . . . . . . . . . . . . . . .

Yes

No

If “Yes,” complete columns (a) through (g) below for each such loan.
Note. You are considered to have received a loan if you (or a U.S. person related to you) were permitted the
uncompensated use of trust property (as described in section 643(i)). See instructions for additional information,
including how to complete columns (a) through (g) for such transactions.

Total .

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(c)
Maximum term of
repayment of
obligation

(b)
Date of original
loan transaction

(a)
FMV of loan proceeds

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26 With respect to each obligation you
period of assessment of any income
tax changes for each year that the
obligation? . . . . . . .

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(e)
Is the obligation a
“qualified obligation?”

(d)
Interest rate
of obligation

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Yes

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No

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

(f)
FMV of qualified
obligation

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▶

$

reported as a “qualified obligation” on line 25: Do you agree to extend the
or transfer tax attributable to the transaction, and any consequential income
obligation is outstanding, to a date 3 years after the maturity date of the
. . . . . . . . . . . . . . . . . . . . . . .

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? . . . . . . . . . . . . . .

Yes

No

Yes

No

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 (2011)

Page 5

Form 3520 (2011)

Part III
29

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

N/A

Yes

No

N/A

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
32
33

Enter amount from line 27 . . . . . . . . . . . .
Number of years the trust has been a foreign trust (see instructions)
Enter total distributions received from the foreign trust during the 3
years the trust has been a foreign trust, if fewer than 3) . . . .

34
35

Multiply line 33 by 1.25 . . . . . . . . . . . . . . . . . . . . . . . . . . .
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

Amount treated as ordinary income earned in the current year. Enter the smaller of line 31 or line 35.

38

Applicable number of years of trust. Divide line 32 by 2 and enter the result here

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39

Enter amount from line 27

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40a
b
41a

Amount treated as ordinary income in the current tax year . . . . . . . . . .
Qualified dividends . . . . . . . . . . . . . . . . . . . ▶
Amount treated as accumulation distribution. If -0-, do not complete Schedule C, Part III .

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b
42a
b

Amount of line 41a that is tax-exempt . . . . . . . . . .
Amount treated as net short-term capital gain in the current tax year .
Amount treated as net long-term capital gain in the current tax year .

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c
d
43
44

28% rate gain . . . . . . . . . . . . . . . . . . . . . ▶
Unrecaptured section 1250 gain
. . . . . . . . . . . . . . . ▶
Amount treated as distribution from trust corpus . . . . . . . . . . . . . . . . . . . .
Enter any other distributed amount received from the foreign trust not included on lines 40a, 41a, 42a, 42b, and 43
(attach explanation) . . . . . . . . . . . . . . . . . . . . . . . . . . . .

45

Amount of foreign trust’s aggregate undistributed net income .

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46
47

Amount of foreign trust’s weighted undistributed net income

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Applicable number of years of trust. Divide line 46 by line 45 and enter the result here

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48
49
50

Enter accumulation distribution from line 37 or 41a, as applicable . . . . . . . . . . . . .
Enter tax on total accumulation distribution from line 28 of Form 4970 (attach Form 4970—see instructions)
Enter applicable number of years of foreign trust from line 38 or 47, as applicable (round
to nearest half-year) . . . . . . . . . . . . . . . . . . . ▶

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51
52
53

Combined interest rate imposed on the total accumulation distribution (see instructions) . . . .
Interest charge. Multiply the amount on line 49 by the combined interest rate on line 51 . . . .
Tax attributable to accumulation distributions. Add lines 49 and 52. Enter here and as “additional
income tax return . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . .
. . . . . ▶
preceding tax years (or during the number of
. . . . . . . . . . . . . .

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Amount treated as accumulation distribution. Subtract line 36 from line 31. If -0-, do not complete the rest of Part III

Schedule B—Actual Calculation of Trust Distributions (see instructions)
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Schedule C—Calculation of Interest Charge (see instructions)

. . . .
. . . .
tax” on your
. . . .
Form 3520 (2011)

Page 6

Form 3520 (2011)

Part IV
54

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
. . . . . .

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

Total .
55

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(b)
Description of property received

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(c)
FMV of property received

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$
During the current tax year, did you receive more than $14,375 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

56

(d)
Identification number,
if any

(c)
Address of foreign donor

(f)
Description of property received

(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 . . . . . . . . .

Yes

No

Form 3520 (2011)