3520 Annual Return to Report Transactions with Foreign Trusts

Caution: DRAFT—NOT FOR FILING
This is an early release draft of an IRS tax form, instructions, or
publication, which the IRS is providing for your information as a courtesy.
Do not file draft forms. Also, do not rely on draft forms, instructions, and
publications for filing. We generally do not release drafts of forms until we
believe we have incorporated all changes. However, unexpected issues
sometimes arise, or legislation is passed, necessitating a change to a draft
form. In addition, forms generally are subject to OMB approval before they
can be officially released. Drafts of instructions and publications usually
have at least some changes before being officially released.
Early release drafts are at IRS.gov/DraftForms, and may remain there
even after the final release is posted at IRS.gov/DownloadForms. All
information about all forms, instructions, and pubs is at IRS.gov/Forms.
Almost every form and publication also has its own page on IRS.gov. For
example, the Form 1040 page is at IRS.gov/Form1040; the Publication 17
page is at IRS.gov/Pub17; the Form W-4 page is at IRS.gov/W4; and the
Schedule A (Form 1040) page is at IRS.gov/ScheduleA. If typing in a link
above instead of clicking on it, be sure to type the link into the address bar
of your browser, not in a Search box. Note that these are friendly shortcut
links that will automatically go to the actual link for the page.
If you wish, you can submit comments about draft or final forms,
instructions, or publications at IRS.gov/FormsComments. We cannot
respond to all comments due to the high volume we receive. Please note that
we may not be able to consider many suggestions until the subsequent
revision of the product.

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

Go to www.irs.gov/Form3520 for instructions and the latest information.

2018

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 2018, or tax year beginning
, 2018, ending
, 20
A Check appropriate boxes:
Initial return
Initial return (extension filed)
Final return
Amended return
B Check box that applies to person filing return:
Individual
Partnership
Corporation
Executor
Trust
C Check if any excepted specified foreign financial assets are reported on this form (see instructions) . . . . . . . . .
Check all applicable boxes.

DRAFT AS OF
August 17, 2018
DO NOT FILE

(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. You may also need to complete Part III. See the instructions for Part III.
(a) You are a U.S. person (including a U.S. owner) who, during the current tax year, received a distribution from a foreign trust, or (b) You are a
U.S. person who is a U.S. owner or beneficiary of a foreign trust and such foreign trust (1) 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) provided you or a U.S. person related to you with 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.
1a

Name of U.S. person(s) with respect to whom this Form 3520 is being filed (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

i

Check the box if you are married and filing a joint 2018 income tax return, and you are filing a joint Form 3520 with your spouse.

j

Service center where U.S. person’s tax return is filed

k

If an extension was requested for the tax return, check this box

2a

f State or province

g ZIP or foreign postal code h Country

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

▶

and enter the form number of the tax return to be filed.

▶

Name of foreign trust (if applicable)

b(1) Employer identification number (if any)

c

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

b(2) Reference ID number (see instructions)

d

City or town

3

e State or province

f ZIP or foreign postal code 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? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
If “Yes,” complete lines 3a through 3g. If “No,” be sure to complete Part I, lines 15 through 18.

3a

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

d

Date of death

f

Check applicable box.

No

b Identification number (if any)

Name of U.S. agent

c

4a

Yes

f ZIP or postal code

g Country
c TIN of decedent
e EIN of estate

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

Cat. No. 19594V

Form 3520 (2018)

Page 2

Form 3520 (2018)

Part I

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

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

Yes

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

(v)
Relevant Code
section

b Address

c Identification number (if any)

b Country code of country whose law governs the trust

c Date trust was created

DRAFT AS OF
August 17, 2018
DO NOT FILE

b

8
9a
b
10

(ii)
Address

(iii)
Country of residence

(iv)
Identification number, if any

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

.
.
.
.

.
.
.
.

Yes

.
.
.
.

Yes
Yes
Yes

No

No
No
No
No

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

11a

b

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

Yes

No

Were any of the obligations you received (with respect to a transfer described in line 11a above) qualified obligations? .

Yes

No

If “Yes,” complete the rest of Schedule A and attach a copy of each loan document entered into with respect to each qualified obligation
reported on line 11(b). If these documents have been attached to a Form 3520 filed within the previous 3 years, attach only relevant updates.
If “No,” go to Schedule B.
(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: You have the right to refuse to extend the period of limitations or limit this extension to a mutually agreed-upon
issue(s) or mutually agreed-upon period of time. Generally, if you refuse to extend the period of limitations with respect
to each qualified obligation you reported on line 11b, then such obligation is not a qualified obligation and you cannot
check “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. When completing columns (a) through (i) with
respect to each nonqualified obligation, enter “-0-” in column (h).
If “No,” go to Schedule C.
(a)
Date of
transfer

Totals
14

a
b
c

(b)
Description
of property
transferred

(c)
FMV of property
transferred

(d)
U.S. adjusted
basis 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,
if any

(g)
Description
of property
received,
if any

$

▶

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

(h)
FMV of property
received

$

You are required to attach a copy of each sale or loan document entered into in connection with a transfer reported on line 13. If these
documents have been attached to a Form 3520 filed within the previous 3 years, attach only relevant updates.
Attached
Year
Yes
No
Previously
Attached
Are you attaching a copy of:
Sale document? . . . . . . . . . . . . .
Loan document? . . . . . . . . . . . . .
Subsequent variances to original sale or loan documents? .

.
.
.

.
.
.

.
.
.

.
.
.

.
.
.

.
.
.

.
.
.

.
.
.

.
.
.
Form 3520 (2018)

Page 3

Form 3520 (2018)

Part I

Schedule B—Gratuitous Transfers (continued)

Note: Complete lines 15 through 18 only if you answered “No” to line 3, acknowledging that the foreign trust did not appoint a U.S. agent to
provide the IRS with all relevant trust information.
15

(a)
Name of beneficiary

(c)
U.S. beneficiary?

(b)
Address of beneficiary

Yes

16

17

18

a
b
c
d
e
f
19

(d)
Identification number, if any

No

DRAFT AS OF
August 17, 2018
DO NOT FILE
(a)
Name of trustee

(a)
Name of other persons
with trust powers

(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, 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 or Form 3520 filed within the previous 3 years, attach only relevant updates.
Attached
Year
Yes
No
Previously
Attached
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? . . . . . . . . . . . . . . . . . .

.
.
.
.
.
.

.
.
.
.
.
.

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

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

(b)
Tax year qualified
obligation first reported

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

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

Yes

No

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

No

Form 3520 (2018)

Page 4

Form 3520 (2018)

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 tax residence

(e)
Relevant Code
section

DRAFT AS OF
August 17, 2018
DO NOT FILE

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

21

(d)
Identification number, if any

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

(c)
Date foreign trust was created

22

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 for failing to complete and attach a substitute Form 3520-A.

23

Enter the gross value of the portion of the foreign trust that you are treated as owning at the end of your tax year ▶ $

Part III

.

.

.

.

Yes

No

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

Note: If you received an amount from a portion of a foreign trust of which you are treated as the owner, only complete lines 24 and 27.
24

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

(a)
Date of distribution

Totals

.

.

.

(c)
(d)
FMV of property received
Description of property
(determined on date of distribution)
transferred, if any

(b)
Description of property received

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

(e)
FMV of property
transferred

.

.

.

.

.

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

$

▶

25 During your current tax year, did you (or a person related to you) receive a loan from a related foreign trust (including an
extension of credit upon the purchase of property from the trust)? . . . . . . . . . . . . . . . . .
If “Yes,” complete columns (a) through (g) below for each such loan.

Yes

No

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 .

.

.

.

.

(c)
Maximum term of
repayment of
obligation

(b)
Date of original
loan transaction

(a)
FMV of loan proceeds

.

.

.

.

.

.

.

.

.

.

.

(d)
Interest rate
of obligation

.

.

.

.

.

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

.

.

No

.

.

.

.

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

(f)
FMV of qualified
obligation

.

.

.

.

.

.

▶

$

26 With respect to each obligation you reported as a “qualified obligation” on line 25: Do you agree to extend the period of
assessment of any income or transfer tax attributable to the transaction, and any consequential income tax changes for
each year that the obligation is outstanding, to a date 3 years after the maturity date of the obligation? . . . . . .

Yes

No

Yes

No

Note: You have the right to refuse to extend the period of limitations or limit this extension to a mutually agreed-upon
issue(s) or mutually agreed-upon period of time. Generally, if you refuse to extend the period of limitations with respect to
an obligation that you reported as a “qualified obligation” on line 25, then such obligation is not a qualified obligation and
you cannot check “Yes” in column (e) of line 25.
27 Total distributions received during your current tax year. Add line 24, column (f), and line 25, column (g) .

.

▶

$

28 Did the trust, at any time during the current tax year, hold an outstanding obligation of yours (or a person related to you)
that you reported as a “qualified obligation”? . . . . . . . . . . . . . . . . . . . . . . .
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 your tax year

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

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

No

Form 3520 (2018)

Page 5

Form 3520 (2018)

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? . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
If “Yes,” attach the statement and do not complete the remainder of Part III with respect to that distribution.

Yes

No

N/A

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

DRAFT AS OF
August 17, 2018
DO NOT FILE

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

Yes

No

N/A

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) .

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

.

▶

39

Enter amount from line 27

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

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 .
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
28% rate gain . . . . . . . . . . . . . . . .
Unrecaptured section 1250 gain
. . . . . . . . . .

.
.

.
.

.
.

.
.

.
.

.
.

.
.

b
42a
b
c
d
43
44

.
.

.
.

.
.

.
.

.

.

.

.

.

.

.

.

.

▶

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

.

.

.

.

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)
.

.

.

.

.

.

.

.

.

.
.
.
.

.
.
.
.

.
.
.
.

.
.
.
.

.
.
.
.

▶

.
.

.
.

▶
▶

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 .

.

.

.

.

.

.

.

.

46
47

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

.

.

.

.

.

.

.

48
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) . . . . . . . . . . . . . . . . . . . ▶

.
.

.
.

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

.

.

.

.

.

.

.

Schedule C—Calculation of Interest Charge (see instructions)

. . . .
. . . .
tax” on your
. . . .
Form 3520 (2018)

Page 6

Form 3520 (2018)

Part IV
54

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

During your current tax year, did you receive more than $100,000 that you treated as gifts or bequests from a
nonresident alien (including a distribution received from a domestic trust treated as owned by a foreign person) 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 a statement.

DRAFT AS OF
August 17, 2018
DO NOT FILE

(a)
Date of gift
or bequest

Total .
55

.

.

.

(b)
Description of property received

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

(b)
Name of foreign donor

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

.

.

.

.

.

.

.

.

.

.

.

.

▶

$

Yes

No

(d)
Identification number,
if any

(c)
Address of foreign donor

(f)
Description of property received

(g)
FMV of property received

Partnership

Corporation

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

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

Preparer’s signature

▲

Paid
Preparer
Use Only

▲

▲

Sign
Here

.

During your current tax year, did you receive more than $16,076 that you treated as gifts from a foreign corporation or a
foreign partnership (including a distribution received from a domestic trust treated as owned by a foreign person)? See
instructions regarding related donors . . . . . . . . . . . . . . . . . . . . . . . . .
If “Yes,” complete columns (a) through (g) with respect to each such gift. If more space is needed, attach a statement.
(a)
Date of gift

56

.

(c)
FMV of property received

Title
Date

Check
if
self-employed

Firm’s name

▶

Firm’s EIN ▶

Firm’s address

▶

Phone no.

Date

PTIN

Form 3520 (2018)