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

2015

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.

General Instructions
Future Developments

For the latest information about developments related to
Form 3520 and its instructions, such as legislation enacted
after they were published, go to www.irs.gov/form3520.

What's New
Item C. Item C adds a check box to be completed by a Form
3520 filer who satisfies his or her Form 8938, Statement of
Specified Foreign Financial Assets, reporting obligations by
filing Form 3520 and completing Part IV, Excepted Specified
Foreign Financial Assets, of Form 8938. For further
information, see the Instructions for Form 8938, generally,
and in particular, Duplicative reporting and Part IV. Excepted
Specified Foreign Financial Assets.

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 an
obligation of 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
later.
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.
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) during the current tax

Aug 24, 2015

year or a related foreign trust held an outstanding obligation
issued by you (or an obligation of a person related to you)
that you treated as a qualified obligation (defined later) 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 $15,601 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 FinCEN Form 114,
Report of Foreign Bank and Financial Accounts (FBAR).

Exceptions To Filing

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 Internal Revenue Service (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), a
Canadian registered retirement income fund (RRIF), or any
other Canadian retirement plan that is within the meaning of
section 3 of Rev. Proc. 2014-55. See Rev. Proc. 2014-55,
2014-44 I.R.B. 753, available at www.irs.gov/irb/
2014–44_IRB/ar10.html.
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.
Distributions from foreign trusts to domestic trusts that
have a current determination letter from the IRS recognizing

Cat. No. 23068I

Penalties

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).

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.

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.

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.

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.

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.

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.

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).

Who Must Sign

Section 6662(j). Penalties may be imposed under 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.

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

Definitions

The paid preparer must complete the required preparer
information at the bottom of page 6 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.

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).

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.

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.
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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.

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

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.
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.

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.

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 an obligation of 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 later.

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
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 the assets in a trust at the time the trust
becomes a foreign trust, if the trust was a domestic trust to
which a U.S. citizen or resident had previously transferred
property, and provided that 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.

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.

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.
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Gross Value

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 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.

Guarantee

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.

Related Person

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).

Nongrantor Trust

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, earlier.

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.

Obligation

Reportable Event

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.

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.

Property

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

Responsible Party

Qualified Obligation

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).

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
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

U.S. Agent

A U.S. agent is a U.S. person (defined later) 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.

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described earlier, 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.
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 earlier and 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
A U.S. person, directly or indirectly, uses property that is
owned by the foreign trust and does not pay FMV of the use
of such property within a reasonable period of time.

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 trust
as having a U.S. agent unless you enter the name, address,
and taxpayer identification number (TIN) of the U.S. agent on
lines 3a through 3g on page 1 of the form. See Identification
numbers, later.
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's responsibility as
an agent of the trust is terminated for any reason (e.g.,
agent's resignation, agent's liquidation, or agent's death), see
section IV(B) of Notice 97-34.

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.

In order to authorize a U.S. person to act as an agent for
purposes of section 6048(b)(2) or for purposes of section
6048(c)(2)(A), the trust and the agent must enter into a
binding agreement substantially in the format reflected under
AUTHORIZATION OF AGENT in the Instructions for Form
3520-A, amended as required. Attach a copy of the
authorization to Form 3520.

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. 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 earlier).

U.S. Transferor

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

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

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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 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 is filed, followed by “(estate tax return).”

Specific Instructions
Period Covered

File the 2015 return for calendar year 2015 and fiscal years
that begin in 2015 and end in 2016. For a fiscal year, fill in the
tax year in the space at the top of the form.

Item A—Initial Return, Initial Return
on Extension, Final Return, Amended
Return

Note. If your income tax return is filed electronically, enter
“e-filed” in lieu of the name of the Service Center.
Line 1k. If you filed an extension of time to file your income
tax return, check the box on line 1k. Also, enter the tax form
number of the original tax return that will be filed with the IRS.

Initial return. If this is the initial return you are filing
concerning the foreign trust identified, check the “Initial
return” box.

Example: You file Form 4868, Application for Automatic
Extension of Time To File U.S. Individual Income Tax Return,
to extend the time to file your individual income tax return,
Form 1040. Enter “1040” on the entry line.

Initial return on extension. If this is the initial return you
are filing concerning the foreign trust identified and you have
filed an extension with respect to your income tax return,
check the “Initial return (extension filed)” box.

Line 2b(2). A reference ID number is required on line 2b(2)
only in cases where the foreign trust has no employer
identification number, EIN. However, filers are permitted to
enter both an EIN on line 2b(1) and a reference ID number on
line 2b(2). If applicable, enter the reference ID number
(defined below) you have assigned to the foreign trust.
For Form 3520 purposes, a “reference ID number” with
respect to the foreign trust is a number established with
respect to the foreign trust by or on behalf of the U.S. person
that is engaged in a transaction with such foreign trust with
respect to which Form 3520 reporting is required. This
number is used to uniquely identify the foreign trust in order
to keep track of the trust from tax year to tax year. The
reference ID number must meet the requirements set forth
below.

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

Item C

Check the Item C check box only if the Form 3520 filer also
files Form 8938, Statement of Specified Foreign Financial
Assets, for the tax year and includes this form in the total
number of Forms 3520 reported on line 1 of Part IV,
Excepted Specified Foreign Financial Assets, of Form 8938.

Note. A reference ID number should only be provided with
respect to the foreign trust if you are completing Part I, II, or III
of the form. The reference ID number is not necessary if you
are completing Part IV of the form.

Identifying Information

Note. Because reference ID numbers are established by or
on behalf of the U.S. person engaged in a transaction with
the foreign trust and required to file Form 3520, there is no
need to apply to the IRS to request a reference ID number or
for permission to use such number.

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.
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 6 of
the form.

!

Note. In general, the reference ID number assigned to a
foreign trust on Form 3520 has relevance only on Form 3520
(and on any other form that is attached to or associated with
Form 3520, including the Form 3520-A in the case of a U.S.
owner of the foreign trust) and should not be used with
respect to the foreign trust on other IRS forms.

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.

Requirements. The reference ID number must be
alphanumeric (defined below) and no special characters are
permitted. The length of a given reference ID number is
limited to 50 characters.
For these purposes, the term “alphanumeric” means the
entry can be alphabetical, numeric, or any combination of the
two.
The same reference ID number must be used consistently
from tax year to tax year with respect to a given foreign trust.
If for any reason a reference ID number is not being used (for
example, the foreign trust is terminated and no longer exists),
the reference ID number used for that foreign trust cannot be

Foreign address. Do not abbreviate the country name.
Line 1a. 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, U.S. Individual Income Tax Return.
Line 1j. Generally, enter the name of the Service Center
where you file your income tax return in the entry space
provided on line 1j on page 1 of the form.
-6-

each transfer on duplicate copies of the relevant pages of the
form.

used again for another foreign trust for purposes of Form
3520 reporting.
There are some situations that warrant correlation of a
new reference ID number with a previous reference ID
number when assigning a new reference ID number to a
foreign trust.
For example, in the case of a trust that has received
assets from another trust, a Form 3520 filer must use a
reference ID number for the receiving trust which correlates
the previous reference ID number for the distributing trust
with the new reference ID number assigned to the receiving
foreign trust.
You must correlate the reference ID numbers as follows:
New reference ID number, Old reference ID number. If there
is more than one old reference ID number, you must enter a
space between each such number. As indicated above, the
length of a given reference ID number is limited to 50
characters and each number must be alphanumeric and no
special characters are permitted.

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. If
the transfer was a bequest, you may have to file Form 706.
Line 9. See U.S. Beneficiary, earlier.
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

Note. This correlation requirement applies only to the first
year the new reference ID number is used.

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 Obligation, Qualified Obligation, Person
related to a foreign trust, earlier.

Lines 4a through 4f. 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.

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).
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.

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

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

Schedule B—Gratuitous Transfers

Complete the applicable portions of Schedule B with respect
to all reportable events (defined earlier) that took place
during the current tax year.

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.

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 statements, you must enter
“Statement” on one of the lines in column (b), and enter the
total amount of transfers reported on the statement on
line 13, columns (c), (d), (e), (f), (h), and (i).

Lines 5b and 5c. Enter the address and identification
number, if any, of the trust creator. See Identifying
Information, earlier, 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.
Lines 6a and 6b. Enter the applicable two-letter country
code from the list at: www.IRS.gov/countrycodes.

Note. Penalties may be imposed for failure to report all
required information. See Penalties, earlier.

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

Line 13, column (d). Enter the U.S. adjusted basis of the
property transferred.
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Part II—U.S. Owner of a Foreign Trust

Line 13, column (e). Only include gain that is immediately
recognized at the time of the transfer.

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(1) or line 2b(2) on page 1 of the form.

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.

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 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 earlier), 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 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, earlier.

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

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, earlier.

Part III—Distributions to a U.S.
Person From a Foreign Trust During
the Current Tax Year

Schedule C—Qualified Obligations Outstanding
in 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 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 19. Provide information on the status of outstanding
obligations of the related foreign trust (or an obligation of a
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, in the year the obligation fails to meet the
criteria for a qualified obligation. See section III(C)(2) of
Notice 97-34.

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,
-8-

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.

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, later.

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.

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 earlier).
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. 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, trust, 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 earlier). If the trust has a
U.S. agent, include the name, address, and taxpayer
identification number of the agent.

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 26. See Lines 12 and 26, earlier.
Line 27. Penalties may be imposed for failure to accurately
report all distributions received during the current tax year.
See Penalties, earlier.

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:
1. An explanation of the appropriate U.S. tax treatment of
any distribution or deemed distribution for U.S. tax purposes,

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
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Schedule B—Actual Calculation of Trust
Distributions

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

You may only use Schedule B if:
You answered “Yes” to line 30,
You attach a copy of the Foreign Nongrantor Trust
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)).

Schedule A—Default Calculation of Trust
Distributions

Line 45. Enter the foreign trust's aggregate undistributed net
income (UNI). For example, assume that a trust was created
in 2009 and has made no distributions prior to 2015. Assume
the trust's ordinary income was $0 in 2014, $60 in 2013, $124
in 2012, $87 in 2011, $54 in 2010, and $25 in 2009. Thus, for
2015, the trust's UNI would be $350. If the trust earned $100
and distributed $200 during 2015 (so that $100 was
distributed from accumulated earnings), the trust's 2016
aggregate UNI would be $250 ($350 + $100 - $200).

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 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 2015 would be $1,260, calculated
as follows:

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).

Year
2014
2013
2012
2011
2010
2009

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, 2013, would be treated on a 2015 calendar
year return as having 2 preceding years (2013 and 2014). 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.

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
(2016), the trust could update this calculation, or the
weighted UNI shown on line 46 of the 2015 Form 3520 could
simply be updated using the following steps:
1. Begin with the 2015 weighted UNI.
2. Add UNI at the beginning of 2015.
3. Add trust earnings in 2015.
4. Subtract trust distributions in 2015.
5. Subtract weighted trust accumulation distributions in
2015. (Weighted trust accumulation distributions are the trust

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.
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interest rate using the above principles and enter it on
line 51.

accumulation distributions in 2015 multiplied by the
applicable number of years from 2015.)
Using the example above, the trust's 2016 weighted UNI
would be $1,150, calculated as follows.
2015 weighted UNI . . . . . . . . . . . . . . . . . . . . .

$1,260

UNI at beginning of 2015 . . . . . . . . . . . . . . . . .

+ 350

Trust earnings in 2015 . . . . . . . . . . . . . . . . . . .

+ 100

Trust distributions in 2015

. . . . . . . . . . . . . . . .

- 200

Weighted trust accumulation distributions in 2015
($100 X 3.6) . . . . . . . . . . . . . . . . . . . . . . .

– 360

2016 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 2015 calendar year taxpayer
and are using June 30, 2015, as the applicable date.

Line 47. Calculate the trust's applicable number of years by
dividing line 46 by line 45. This would be the weighted UNI
divided by the annual UNI. Using the examples in the
instructions for lines 45 and 46, the trust's applicable number
of years would be 3.6 in 2015 (1,260/350) and 4.6 in 2016
(1,150/250).
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
line 1 of Form 4970, Tax on Accumulation Distribution of
Trusts. 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.
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 2015 calendar year taxpayer, the
applicable date would be June 30, 2015). 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 2015 calendar year taxpayer and you use
June 30, 2015, 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 2015 calendar year
taxpayer or you choose to use the actual date of the
distribution as the applicable date, calculate the combined
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Applicable number
of years of trust
(from line 50)

Combined
interest rate
(enter on line 51)

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 .

0.0305
0.0459
0.0618
0.0777
0.0941
0.1106
0.1303
0.1501
0.1736
0.1971
0.2215
0.2490
0.2840
0.3262
0.3808
0.4366
0.4958
0.5486
0.6002
0.6444
0.6820
0.7201
0.7596
0.8037
0.8591
0.9153
0.9841
1.0694
1.1652
1.2587
1.3516
1.4407
1.5412
1.6505
1.7735
1.9001
2.0343
2.1653
2.2603
2.3552
2.4502
2.5451
2.6401
2.7351
2.8300
2.9250
3.0199
3.1149
3.2099
3.3048
3.3998

. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .

26.5 . . . . . . . . . . . . . . . . . . . . .
27 . . . . . . . . . . . . . . . . . . . . . .
27.5 . . . . . . . . . . . . . . . . . . . . .
28 . . . . . . . . . . . . . . . . . . . . . .
28.5 . . . . . . . . . . . . . . . . . . . . .
29 . . . . . . . . . . . . . . . . . . . . . .
29.5 . . . . . . . . . . . . . . . . . . . . .
30 . . . . . . . . . . . . . . . . . . . . . .
30.5 . . . . . . . . . . . . . . . . . . . . .
31 . . . . . . . . . . . . . . . . . . . . . .
31.5 . . . . . . . . . . . . . . . . . . . . .
32 . . . . . . . . . . . . . . . . . . . . . .
32.5 . . . . . . . . . . . . . . . . . . . . .
33 . . . . . . . . . . . . . . . . . . . . . .
33.5 . . . . . . . . . . . . . . . . . . . . .
34 . . . . . . . . . . . . . . . . . . . . . .
34.5 . . . . . . . . . . . . . . . . . . . . .
35 . . . . . . . . . . . . . . . . . . . . . .
35.5 . . . . . . . . . . . . . . . . . . . . .
36.0 . . . . . . . . . . . . . . . . . . . . .
36.5 . . . . . . . . . . . . . . . . . . . . .
37.0 . . . . . . . . . . . . . . . . . . . . .
37.5 . . . . . . . . . . . . . . . . . . . . .
38.0 . . . . . . . . . . . . . . . . . . . . .
38.0+ . . . . . . . . . . . . . . . . . . . .
(Note. Interest charges began in 1977.)

3.4947
3.5897
3.6847
3.7796
3.8746
3.9695
4.0645
4.1595
4.2544
4.3494
4.4443
4.5393
4.6342
4.7292
4.8242
4.9191
5.0141
5.1090
5.2040
5.2990
5.3939
5.4889
5.5838
5.6788
5.7738

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 Related Person,
earlier) 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.”
Line 55. Answer “Yes” if you received aggregate amounts in
excess of $15,601 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
reason to know) are related to such foreign corporations or
foreign partnerships).
For example, if you, a calendar-year taxpayer during
2015, 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.

Line 53. Report this amount as additional tax (ADT) on the
appropriate line of your income tax return (for example, for
Form 1040 filers, include this amount as part of the total for
line 62 of your 2015 Form 1040; check box c and enter “ADT”
to the left of the line 62 entry space).

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.

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, earlier.
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.

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.

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., if the U.S. beneficiary is treated as an owner of that
portion of the trust under section 678, then the contribution
must be reported by such U.S. beneficiary in Part IV).

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. You must fill in all parts of the tax form that apply to
you.

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.

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

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. beneficiary
should report the receipt of a distribution from a domestic
trust that is treated as owned by a foreign person as a gift
from a foreign person in Part IV, rather than as a distribution
to a U.S. beneficiary in Part III.
-12-

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.

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 send us
comments from www.irs.gov/formspubs/. Click on “More
Information” and then on “Give us feedback”. Or you can
send your comments to: Internal Revenue Service, Tax
Forms and Publications Division, 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, earlier.

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

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