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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
the occurrence of an event, in determining whether the • A corporation in which you, directly or indirectly, own more
arrangement is a guarantee, you must assume that the event than 50% in value of the outstanding stock.
has occurred. 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 Person related to a foreign trust. A person is related to a
the trust are not treated as owned by a person other than the foreign trust if such person, without regard to the transfer at
trust under the grantor trust rules in sections 671 through issue, is a grantor of the trust, a beneficiary of the trust, or is
679. Thus, a nongrantor trust is treated as a taxable entity. A related to any grantor or beneficiary of the trust. See the
trust may be treated as a nongrantor trust with respect to only definition of related person above.
a portion of the trust assets. See Grantor Trust, earlier.
Reportable Event
Obligation A reportable event includes the following.
An obligation includes any bond, note, debenture, certificate, 1. The creation of a foreign trust by a U.S. person.
bill receivable, account receivable, note receivable, open 2. The transfer of any money or property, directly or
account, or other evidence of indebtedness, and, to the indirectly, to a foreign trust by a U.S. person, including a
extent not previously described, any annuity contract. transfer by reason of death. This includes transfers that are
deemed to have occurred under sections 679(a)(4) and (5).
Owner
3. The death of a U.S. citizen or resident if:
An owner of a foreign trust is the person that is treated as The decedent was treated as the owner of any portion of a
•
owning any of the assets of a foreign trust under the rules of foreign trust under the rules of sections 671 through 679, or
sections 671 through 679. Any portion of a foreign trust was included in the gross
•
estate of the decedent.
Property
Property means any property, whether tangible or intangible, Responsible Party
including cash. Responsible party means:
Qualified Obligation • The grantor in the case of the creation of an inter vivos
trust;
A qualified obligation, for purposes of this form, is any • The transferor, in the case of a reportable event (defined
obligation only if: above) other than a transfer by reason of death; or
1. The obligation is reduced to writing by an express • The executor of the decedent's estate in any other case
written agreement; (whether or not the executor is a U.S. person).
2. The term of the obligation does not exceed 5 years
(including options to renew and rollovers); U.S. Agent
3. All payments on the obligation are denominated in U.S. A U.S. agent is a U.S. person (defined later) that has a
dollars; binding contract with a foreign trust that allows the U.S.
person to act as the trust's authorized U.S. agent in applying
4. The yield to maturity of the obligation is not less than sections 7602, 7603, and 7604 with respect to:
100% of the applicable federal rate under section 1274(d) for • Any request by the IRS to examine records or produce
the day on which the obligation is issued and not greater than testimony related to the proper U.S. tax treatment of amounts
130% of the applicable federal rate; distributed, or required to be taken into account under the
5. The U.S. person agrees to extend the period for rules of sections 671 through 679, with respect to a foreign
assessment of any income or transfer tax attributable to the trust; or
transfer and any consequential income tax changes for each • Any summons by the IRS for such records or testimony.
year that the obligation is outstanding to a date not earlier A U.S. grantor, a U.S. beneficiary, or a domestic
than 3 years after the maturity date of the obligation, unless corporation controlled by the grantor or beneficiary may act
the maturity date of the obligation does not extend beyond as a U.S. agent. However, you may not treat the foreign trust
the end of the U.S. person's tax year and is paid within such as having a U.S. agent unless you enter the name, address,
period (this is done on Part I, Schedule A, line 12, and Part III, and taxpayer identification number (TIN) of the U.S. agent on
line 26, as applicable); and lines 3a through 3g on page 1 of the form. See Taxpayer
6. The U.S. person reports the status of the obligation, identification numbers (TINs), later.
including principal and interest payments, on Part I,
Schedule C, line 19, and Part III, line 28, as applicable, for If a foreign trust with a U.S. owner does not have a U.S.
each year that the obligation is outstanding. agent, the IRS may redetermine the amounts required to be
taken into account with respect to the foreign trust by the U.S.
Related Person owner. See section 6048(b)(2).
A related person generally includes any person who is The agency relationship must be established by the time
related to you for purposes of sections 267 and 707(b). This the U.S. person files Form 3520 for the relevant tax year and
includes, but is not limited to: must continue as long as the statute of limitations remains
• A member of your family—your brothers and sisters, open for the relevant tax year. If the agent's responsibility as
half-brothers and half-sisters, spouse, ancestors (parents, an agent of the trust is terminated for any reason (for
grandparents, etc.), lineal descendants (children, example, agent's resignation, agent's liquidation, or agent's
grandchildren, etc.), and the spouses of any of these death), see section IV.B of Notice 97-34.
persons; or 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
Instructions for Form 3520 (Rev. 12-2023) -5-
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