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Department of the Treasury
Internal Revenue Service
2022

Instructions for Form 3520

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

Section references are to the Internal Revenue Code unless 3. You are a U.S. person (including a U.S. owner) or an
otherwise noted. executor of the estate of a U.S. person who received, directly
or indirectly, a distribution from a foreign trust during the
Future Developments current tax year; or you are a U.S. person who is a U.S.
owner or beneficiary of a foreign trust and in the current tax
For the latest information about developments related to year you or a U.S. person related to you received (1) a loan
Form 3520 and its instructions, such as legislation enacted of cash or marketable securities (including an extension of
after they were published, go to IRS.gov/Form3520. credit) directly or indirectly from such foreign trust, or (2) the
uncompensated use of trust property; or you are a U.S.
Reminder person who is a U.S. owner or beneficiary of a foreign trust
and in the current tax year such foreign trust holds an
Exemption from information reporting under section outstanding qualified obligation of yours or a U.S. person
6048. Rev. Proc. 2020-17 exempts from foreign trust related to you. For definitions, see U.S. Person Owner, ,
information reporting certain eligible individuals’ transactions Distribution U.S. Beneficiary, , and Related Person, later.
and ownership. See Exceptions To Filing, later.
Complete the identifying information on page 1 of the form
and Part III. In the case of a U.S. person that is an estate,
General Instructions check “Executor” on line B on page 1. See the instructions for
Part III.
Purpose of Form 4. You are a U.S. person who, during the current tax
U.S. persons (and executors of estates of U.S. decedents) year, received either:
file Form 3520 with the IRS to report: a. More than $100,000 from a nonresident alien
• Certain transactions with foreign trusts, individual or a foreign estate (including foreign persons
• Ownership of foreign trusts under the rules of sections 671 related to that nonresident alien individual or foreign estate)
through 679, and that you treated as gifts or bequests; or
• Receipt of certain large gifts or bequests from certain
foreign persons. b. More than the section 6039F threshold amount from
foreign corporations or foreign partnerships (including foreign
A separate Form 3520 must be filed for transactions with persons related to such foreign corporations or foreign
each foreign trust. partnerships) that you treated as gifts. The threshold amount
from Rev. Proc. 2021-45, I.R.B. 2021-48 764, is available at
Who Must File IRS.gov/Newsroom/IRS-Provides-Tax-Inflation-Adjustments-
File Form 3520 if any one or more of the following apply. for-Tax-Year-2022.
1. You are the responsible party for reporting a reportable Complete the identifying information on page 1 of the form
event that occurred during the current tax year, or you are a and Part IV. See the instructions for Part IV.
U.S. person who transferred property (including cash) to a
related foreign trust (or a person related to the trust) in Note. You may be required to file Financial Crimes
exchange for an obligation or you hold a qualified obligation Enforcement Network (FinCEN) Form 114, Report of Foreign
from that trust that is currently outstanding. For definitions, Bank and Financial Accounts (FBAR). In addition, you may
see Responsible Party Reportable Event Qualified , , be required to file Form 8938, Statement of Specified Foreign
Obligation, and Person related to a foreign trust, later. Financial Assets. For more information, go to IRS.gov/FBAR.

Complete the identifying information on page 1 of the form Exceptions To Filing
and the relevant portions of Part I. See the instructions for
Part I. Form 3520 does not have to be filed to report the following
transactions.
2. You are a U.S. person who, during the current tax Transfers to foreign trusts described in section 402(b),
•
year, is treated as the owner of any part of the assets of a 404(a)(4), or 404A.
foreign trust under the rules of sections 671 through 679. Most fair market value (FMV) transfers by a U.S. person to
•
U.S. person and owner are defined later. a foreign trust. However, some FMV transfers must
Complete the identifying information on page 1 of the form nevertheless be reported on Form 3520 (for example,
and Part II. See the instructions for Part II. transfers in exchange for obligations that are treated as
qualified obligations, transfers of appreciated property to a
Note. You are required to complete Part II even if there have foreign trust for which the U.S. transferor does not
been no transactions involving the trust during the tax year. immediately recognize all of the gain on the property
You may also be required to complete a substitute Form transferred, and transfers involving a U.S. transferor that is
3520-A, Annual Information Return of Foreign Trust With a related to the foreign trust). See section III. of Notice 97-34,
U.S. Owner, and attach it to your Form 3520. See Penalties,
later.

Jan 27, 2023 Cat. No. 23068I

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1997-25 I.R.B. 22, available at IRS.gov/pub/irs-irbs/                 the 4th month following the end of the decedent's last tax 
irb97-25.pdf.                                                         year for income tax purposes (April 15). If the U.S. person's 
• Transfers to foreign trusts that have a current                     estate is also required to file a Form 3520, the estate will 
determination letter from the IRS recognizing their status as         have to file by the 15th day of the 4th month following the end 
exempt from income taxation under section 501(c)(3).                  of the estate's tax year for income tax purposes, just like any 
• Transfers to, ownership of, and distributions from a                other U.S. person.
Canadian registered retirement savings plan (RRSP), a                   If the due date falls on a Saturday, Sunday, or legal 
Canadian registered retirement income fund (RRIF), or any             holiday, file by the next day that is not a Saturday, Sunday, or 
other Canadian retirement plan that is within the meaning of          legal holiday.
section 3 of Rev. Proc. 2014-55. See Rev. Proc. 2014-55, 
2014-44 I.R.B. 753, available at IRS.gov/IRB/                         Note. If a U.S. person is granted an extension of time to file 
2014-44_IRB#RP-2014-55  .                                             an income tax return, the due date for filing Form 3520 is the 
• Certain eligible individuals’ transfers to, ownership of, and       15th day of the 10th month (October 15) following the end of 
distributions from certain tax-favored foreign retirement trusts      the U.S. person’s tax year.
and certain tax-favored foreign nonretirement savings trusts, 
as described in section 5 of Rev. Proc. 2020-17. For more               Send Form 3520 to the following address.
information about whether you are an eligible individual and            Internal Revenue Service Center
whether your foreign trust qualifies for an exemption from              P.O. Box 409101
foreign trust information reporting, see Rev. Proc. 2020-17,            Ogden, UT 84409
2020-12 I.R.B. 539, available at IRS.gov/IRB/
2020-12_IRB#REV-PROC-2020-17.
• Deemed transfers from domestic trusts that become                     Form 3520 must have all required attachments to be 
foreign trusts to the extent the trust is treated as owned by a       considered complete.
foreign person, after application of section 672(f).                    If a complete Form 3520 is not filed by the due date, 
• Distributions from foreign trusts that are taxable as               including extensions, the time for assessment of any tax 
compensation for services rendered (within the meaning of             imposed with respect to any event or period to which the 
section 672(f)(2)(B) and its regulations), so long as the             information required to be reported in Parts I through III of 
recipient reports the distribution as compensation income on          such Form 3520 relates will not expire before the date that is 
its applicable federal income tax return.                             3 years after the date on which the required information is 
• Distributions from foreign trusts to domestic trusts that           reported. See section 6501(c)(8).
have a current determination letter from the IRS recognizing 
their status as exempt from income taxation under section             Who Must Sign
501(c)(3).                                                            If the return is filed by:
                                                                      • An individual or a fiduciary, it must be signed and dated by 
Joint Returns                                                         that individual or fiduciary;
If you and your spouse are filing a joint income tax return for       • A partnership, it must be signed and dated by a general 
tax year 2022, and you are both transferors, grantors, or             partner or limited liability company member; or
beneficiaries of the same foreign trust, then you may file a          • A corporation, it must be signed and dated by the 
joint Form 3520. If you and your spouse are filing a joint Form       president, vice president, treasurer, assistant treasurer, chief 
3520, check the box on line 1i on page 1.                             accounting officer, or any other corporate officer (such as a 
                                                                      tax officer) who is authorized to sign.
Additional Reporting and Tax                                            The paid preparer must complete the required preparer 
Information                                                           information at the bottom of page 6 of Form 3520 and must 
For more information on foreign trust reporting and tax               be sure to:
consequences, go to the IRS website at IRS.gov/                       • Sign the return in the space provided for the preparer's 
ForeignTrust.                                                         signature, and
                                                                      • Give a copy of the return to the filer.
When and Where To File
                                                                      Inconsistent Treatment of Items
In general, a U.S. person's Form 3520 is due on the 15th day 
of the 4th month following the end of such person's tax year          The U.S. beneficiary’s and U.S. owner's tax returns must be 
for income tax purposes, which, for individuals, is April 15. If,     consistent with the Form 3520-A filed by the foreign trust 
however, on the due date of your income tax return, you are           unless you report the inconsistency to the IRS. If you are 
a U.S. citizen or resident who qualifies for one of the               treating items on your tax return differently from the way the 
following conditions, then your Form 3520 is due on the 15th          foreign trust treated them on its return, file Form 8082, Notice 
day of the 6th month (June 15) following the end of your tax          of Inconsistent Treatment or Administrative Adjustment 
year for income tax purposes. You must include a statement            Request (AAR). See Form 8082 for more details.
on the Form 3520 showing that you are a U.S. citizen or 
                                                                      Penalties
resident who meets one of these conditions.
• You live outside of the United States and Puerto Rico and           Section 6677. A penalty applies if Form 3520 is not timely 
your place of business or post of duty is outside the United          filed or if the information is incomplete or incorrect (see below 
States and Puerto Rico.                                               for an exception if there is reasonable cause). Generally, the 
• You are in the military or naval service on duty outside the        initial penalty is equal to the greater of $10,000 or the 
United States and Puerto Rico.                                        following (as applicable).
                                                                      • 35% of the gross value of any property transferred to a 
  In the case of a Form 3520 filed with respect to a U.S.             foreign trust for failure by a U.S. transferor to report the 
decedent, the due date to file a Form 3520 is the 15th day of         creation of or transfer to a foreign trust in Part I.

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• 35% of the gross value of the distributions received from a respect to such portion of the underpayment. See section
foreign trust for failure by a U.S. person to report receipt of 6662 and section 6664(c) for additional information.
the distribution in Part III.
• 5% of the gross value of the portion of the foreign trust's Definitions
assets treated as owned by a U.S. person under the grantor
trust rules (sections 671 through 679), if the foreign trust (a) Distribution
fails to file a timely Form 3520-A and furnish the required A distribution received directly or indirectly from a foreign
annual statements to its U.S. owners and U.S. beneficiaries, trust for section 6048(c) reporting purposes is any gratuitous
or (b) does not furnish all of the information required by transfer of money or other property from a foreign trust,
section 6048(b) or includes incorrect information. If a foreign whether or not a portion of such trust is treated as a grantor
trust fails to file Form 3520-A, the U.S. owner must complete trust under the grantor trust rules of sections 671 through
and attach a substitute Form 3520-A to the U.S. owner’s 679, and without regard to whether the recipient is
Form 3520 by the due date of the U.S. owner’s Form 3520 designated as a beneficiary by the terms of the trust. A
(and not the due date for the Form 3520-A, which is distribution includes the receipt of trust corpus and the
otherwise due by the 15th day of the 3rd month after the end receipt of a gift or bequest described in section 663(a).
of the trust’s tax year) in order to avoid being subject to the
penalty for the foreign trust’s failure to timely file Form A distribution also includes constructive transfers from a
3520-A. For example, a substitute Form 3520-A that, to the foreign trust. For example, if charges you make on a credit
best of the U.S. owner’s ability, is completed and attached to card are paid by a foreign trust or guaranteed or secured by
the U.S. owner’s Form 3520 by the due date for the Form the assets of a foreign trust, the amount charged will be
3520 (such as April 15 for U.S. owners who are individuals), treated as a distribution to you by the foreign trust. Similarly,
is considered to be timely filed. See section 6677(a) through if you write checks on a foreign trust's bank account, the
(c) and the instructions for Part II of this form and Form amount will be treated as a distribution. Also, if you receive a
3520-A. payment from a foreign trust in exchange for property
transferred to the trust or services rendered to the trust, and
Additional penalties will be imposed if the noncompliance the FMV of the payment you received exceeds the FMV of
continues for more than 90 days after the IRS mails a notice the property transferred or services rendered, the excess will
of failure to comply with the required reporting. If the IRS can be treated as a distribution to you. See section V. of Notice
determine the gross reportable amount (defined later), then 97-34.
the penalties will be reduced as necessary to assure that the
aggregate amount of such penalties does not exceed the Examples.
gross reportable amount. For more information, see section 1. If you sell stock with an FMV of $100 to a foreign trust
6677. and receive $150 in exchange, you have received a
Reasonable cause. No penalties will be imposed if the distribution of $50.
taxpayer can demonstrate that the failure to comply was due 2. If you receive $100 from the trust for services
to reasonable cause and not willful neglect. performed by you for the trust, and the services have an FMV
of $20, you have received a distribution of $80.
Note. The fact that a foreign country would impose penalties
for disclosing the required information is not reasonable If you are a grantor or beneficiary of a foreign trust and you
cause. Similarly, reluctance on the part of a foreign fiduciary (or a U.S. person related to you) directly or indirectly received
or provisions in the trust instrument that prevent the a loan of cash or marketable securities from a foreign trust, or
disclosure of required information is not reasonable cause. you (or a U.S. person related to you) used any property
See section 6677(d) for additional information. owned by a foreign trust without paying FMV within a
reasonable amount of time, the amount of such loan or the
Section 6039F. In the case of a failure to timely report
FMV of the use of trust property will be treated as a
foreign gifts described in section 6039F, the IRS may
distribution for reporting purposes. For this purpose, a loan
determine the income tax consequences of the receipt of
by an unrelated third party that is guaranteed by a foreign
such gift, and a penalty equal to 5% of the amount of such
trust is generally treated as a loan from the trust. See
foreign gifts applies for each month for which the failure to
section V. A. of Notice 97-34.
report continues (not to exceed a total of 25%). No penalty
will be imposed if the taxpayer can demonstrate that the Foreign Trust and Domestic Trust
failure to comply was due to reasonable cause and not willful
neglect. See section 6039F for additional information. A foreign trust is any trust other than a domestic trust.
Section 6662(j). If a U.S. owner of a foreign trust is subject A domestic trust is any trust if:
to a penalty imposed under section 6662 for an 1. A court within the United States is able to exercise
underpayment of tax required to be shown on a return, then primary supervision over the administration of the trust, and
such penalty may be increased under section 6662(j) for any 2. One or more U.S. persons have the authority to control
portion of an underpayment which is attributable to any all substantial decisions of the trust.
transaction involving any asset with respect to which
information was required to be provided on Form 3520-A. For Grantor
more information about undisclosed foreign financial asset A grantor includes any person who creates a trust or directly
understatements, see section 6662(j). No penalty will be or indirectly makes a gratuitous transfer of cash or other
imposed with respect to any portion of an underpayment if property to a trust. A grantor includes any person treated as
the taxpayer can demonstrate that the failure to comply was the owner of any part of a foreign trust's assets under
due to reasonable cause with respect to such portion of the sections 671 through 679, excluding section 678.
underpayment and the taxpayer acted in good faith with

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Note. If a partnership or corporation makes a gratuitous definitions, see Obligation and Qualified Obligation, later.
transfer to a trust, the partners or shareholders are generally See section III. B. of Notice 97-34, and the regulations under
treated as the grantors of the trust, unless the partnership or sections 679 and 684 for additional information.
corporation made the transfer for a business purpose of the
partnership or corporation. Gross Reportable Amount
If a trust makes a gratuitous transfer to another trust, the Gross reportable amount is:
grantor of the transferor trust is treated as the grantor of the • The gross value of property involved in the creation of a
transferee trust, except that if a person with a general power foreign trust or the transfer of property to a foreign trust
of appointment over the transferor trust exercises that power (including a transfer by reason of death);
in favor of another trust, such person is treated as the grantor • The gross value of any portion of a foreign trust treated as
of the transferee trust, even if the grantor of the transferor owned by a U.S. person under the rules of sections 671
trust is treated as the owner of the transferor trust. through 679 or any part of a foreign trust that is included in
the gross estate of a U.S. citizen or resident;
Grantor Trust • The gross value of the assets in a trust at the time the trust
A grantor trust is any trust to the extent that the assets of the becomes a foreign trust, if the trust was a domestic trust to
trust are treated as owned by a person other than the trust. which a U.S. citizen or resident had previously transferred
See the grantor trust rules in sections 671 through 679. A property, and provided that such U.S. citizen or resident is
part of the trust may be treated as a grantor trust to the extent alive at the time the trust becomes a foreign trust (see section
that only a portion of the trust assets are owned by a person 679(a)(5)); or
other than the trust. • The gross amount of distributions received from a foreign
trust.
Note. Under the HIRE Act, effective after March 18, 2010, if
a foreign trust directly or indirectly loans cash or marketable Gross Value or Amount
securities to a U.S. person who does not repay the loan at a For purposes of determining the gross reportable amount,
market rate of interest, or allows a U.S. person to use trust the gross value or gross amount of property is the value of
property without paying FMV within a reasonable period of property as determined under section 2512 and its
time, the trust will be treated as having a U.S. beneficiary and regulations, without regard to any prohibitions or restrictions
is therefore treated as a grantor trust under the grantor trust on a person's interest in the property. See section VII. of
rules. Notice 97-34. Although formal appraisals are not generally
Reporting by U.S. owners receiving distributions from required, you should keep contemporaneous records of how
foreign grantor trust. If a U.S. owner (defined later) you arrived at your good faith estimate.
receives, directly or indirectly, a distribution from a foreign
Guarantee
trust of which the U.S. person is treated as the owner, the
U.S. owner must only complete lines 24 and 27 in Part III. A guarantee:
• Includes any arrangement under which a person, directly
Gratuitous Transfer or indirectly, assures, on a conditional or unconditional basis,
A gratuitous transfer to a foreign trust is any transfer to the the payment of another's obligation;
trust other than (a) a transfer for FMV; or (b) a distribution to • Encompasses any form of credit support, and includes a
the trust with respect to an interest held by the trust (i) in an commitment to make a capital contribution to the debtor or
entity other than a trust (for example, a corporation or a otherwise maintain its financial viability; or
partnership), or (ii) in an investment trust described in • Includes an arrangement reflected in a “comfort letter,”
Regulations section 301.7701-4(c), a liquidating trust regardless of whether the arrangement gives rise to a legally
described in Regulations section 301.7701-4(d), or an enforceable obligation. If an arrangement is contingent upon
environmental remediation trust described in Regulations the occurrence of an event, in determining whether the
section 301.7701-4(e). A gratuitous transfer includes any arrangement is a guarantee, you must assume that the event
indirect transfer that is structured with a principal purpose of has occurred.
avoiding the application of section 679 or 6048.
Nongrantor Trust
A transfer of property to a trust may be considered a A nongrantor trust is any trust to the extent that the assets of
gratuitous transfer without regard to whether the transfer is a the trust are not treated as owned by a person other than the
gift for gift tax purposes. See chapter 12 of subtitle B of the trust under the grantor trust rules in sections 671 through
Code (that is, sections 2501 through 2524). 679. Thus, a nongrantor trust is treated as a taxable entity. A
trust may be treated as a nongrantor trust with respect to only
For purposes of this determination, if a U.S. person a portion of the trust assets. See Grantor Trust, earlier.
contributes property to a trust in exchange for any type of
interest in the trust, such interest in the trust will be Obligation
disregarded in determining whether FMV has been received.
In addition, a U.S. person will not be treated as making a An obligation includes any bond, note, debenture, certificate,
transfer for FMV merely because the transferor is deemed to bill receivable, account receivable, note receivable, open
recognize gain on the transaction. account, or other evidence of indebtedness, and, to the
extent not previously described, any annuity contract.
If you transfer property to a related foreign trust in
exchange for an obligation of the trust (or an obligation of a Owner
person related to the trust), it will be a gratuitous transfer An owner of a foreign trust is the person that is treated as
unless the obligation is a qualified obligation. Any transfer in owning any of the assets of a foreign trust under the rules of
exchange for an obligation (whether or not a qualified sections 671 through 679.
obligation) must be reported under section 6048(a). For

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Property • Any portion of a foreign trust was included in the gross
Property means any property, whether tangible or intangible, estate of the decedent.
including cash.
Responsible Party
Qualified Obligation Responsible party means:
A qualified obligation, for purposes of this form, is any • The grantor in the case of the creation of an inter vivos
obligation only if: trust;
• The transferor, in the case of a reportable event (defined
1. The obligation is reduced to writing by an express above) other than a transfer by reason of death; or
written agreement; • The executor of the decedent's estate in any other case
2. The term of the obligation does not exceed 5 years (whether or not the executor is a U.S. person).
(including options to renew and rollovers);
3. All payments on the obligation are denominated in U.S. Agent
U.S. dollars; A U.S. agent is a U.S. person (defined later) that has a
4. The yield to maturity of the obligation is not less than binding contract with a foreign trust that allows the U.S.
100% of the applicable federal rate under section 1274(d) for person to act as the trust's authorized U.S. agent in applying
the day on which the obligation is issued and not greater than sections 7602, 7603, and 7604 with respect to:
130% of the applicable federal rate; • Any request by the IRS to examine records or produce
testimony related to the proper U.S. tax treatment of amounts
5. The U.S. person agrees to extend the period for distributed, or required to be taken into account under the
assessment of any income or transfer tax attributable to the rules of sections 671 through 679, with respect to a foreign
transfer and any consequential income tax changes for each trust; or
year that the obligation is outstanding to a date not earlier • Any summons by the IRS for such records or testimony.
than 3 years after the maturity date of the obligation, unless
the maturity date of the obligation does not extend beyond A U.S. grantor, a U.S. beneficiary, or a domestic
the end of the U.S. person's tax year and is paid within such corporation controlled by the grantor or beneficiary may act
period (this is done on Part I, Schedule A, line 12, and Part III, as a U.S. agent. However, you may not treat the foreign trust
line 26, as applicable); and as having a U.S. agent unless you enter the name, address,
6. The U.S. person reports the status of the obligation, and taxpayer identification number (TIN) of the U.S. agent on
including principal and interest payments, on Part I, lines 3a through 3g on page 1 of the form. See Taxpayer
Schedule C, line 19, and Part III, line 28, as applicable, for identification numbers (TINs), later.
each year that the obligation is outstanding. If a foreign trust with a U.S. owner does not have a U.S.
agent, the IRS may redetermine the amounts required to be
Related Person taken into account with respect to the foreign trust by the
A related person generally includes any person who is U.S. owner. See section 6048(b)(2).
related to you for purposes of sections 267 and 707(b). This
includes, but is not limited to: The agency relationship must be established by the time
• A member of your family—your brothers and sisters, the U.S. person files Form 3520 for the relevant tax year and
half-brothers and half-sisters, spouse, ancestors (parents, must continue as long as the statute of limitations remains
grandparents, etc.), lineal descendants (children, open for the relevant tax year. If the agent's responsibility as
grandchildren, etc.), and the spouses of any of these an agent of the trust is terminated for any reason (for
persons; or example, agent's resignation, agent's liquidation, or agent's
• A corporation in which you, directly or indirectly, own more death), see section IV. B. of Notice 97-34.
than 50% in value of the outstanding stock. In order to authorize a U.S. person to act as an agent for
See section 643(i)(2)(B) and the regulations under purposes of section 6048(b)(2) or for purposes of section
sections 267 and 707(b). 6048(c)(2)(A), the trust and the agent must enter into a
binding agreement substantially in the format reflected under
Person related to a foreign trust. A person is related to a AUTHORIZATION OF AGENT in the Instructions for Form
foreign trust if such person, without regard to the transfer at 3520-A, amended as required. Attach a copy of the
issue, is a grantor of the trust, a beneficiary of the trust, or is authorization to Form 3520.
related to any grantor or beneficiary of the trust. See the
definition of related person above. U.S. Beneficiary
A U.S. beneficiary generally includes any U.S. person that
Reportable Event
could possibly benefit, directly or indirectly, from the trust
A reportable event includes the following. (including an amended trust) at any time, whether or not the
1. The creation of a foreign trust by a U.S. person. person is designated in the trust instrument as a beneficiary
2. The transfer of any money or property, directly or and whether or not the person can receive a distribution from
indirectly, to a foreign trust by a U.S. person, including a the trust in the current year. In addition, a U.S. beneficiary
transfer by reason of death. This includes transfers that are includes:
deemed to have occurred under sections 679(a)(4) and (5). • A foreign corporation that is a controlled foreign
corporation (as defined in section 957(a)),
3. The death of a citizen or resident of the United States A foreign partnership if a U.S. person is a partner of the
•
if: partnership, and
• The decedent was treated as the owner of any portion of a A foreign estate or trust if the estate or trust has a U.S.
•
foreign trust under the rules of sections 671 through 679, or beneficiary. See section II. of Notice 97-34 and the
regulations under section 679 for additional information.

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Foreign trust treated as having a U.S. beneficiary. In • Any estate (other than a foreign estate, within the meaning
general, if a U.S. person, directly or indirectly, transfers of section 7701(a)(31)(A)); and
property to a foreign trust (other than a deferred • Any domestic trust (defined earlier).
compensation or charitable trust described in section 6048(a)
(3)(B)(ii)), the foreign trust will be treated as having a U.S. U.S. Transferor
beneficiary unless the terms of the trust instrument A U.S. transferor is any U.S. person who:
specifically prohibit any distribution of income or corpus to a 1. Creates or settles a foreign trust;
U.S. person at any time, even after the death of the U.S. 2. Directly or indirectly transfers money or property to a
transferor or any event terminating the trust, and the trust foreign trust (this includes deemed transfers under section
cannot be amended or revised to allow such a distribution. 679(a)(4) or section 679(a)(5));
For these purposes, an amount will be treated as
accumulated for the benefit of a U.S. person even if the U.S. 3. Makes a sale to a foreign trust if the sale was at other
person's interest in the trust is contingent on a future event than arm's-length terms or was to a related foreign trust, or
and regardless of whether anything is actually distributed to a makes (or guarantees) a loan to a related foreign trust; or
U.S. person during that tax year. 4. Is the executor of the estate of a U.S. person and:
Special rule in case of discretion to identify a. The decedent made a testamentary transfer (a transfer
beneficiaries. For purposes of the general rule described by reason of death) to a foreign trust;
earlier, if any person has the discretion of making a b. Immediately prior to death, the decedent was treated
distribution from the trust to, or for the benefit of, any person, as the owner of any portion of a foreign trust under the rules
the trust will be treated as having a beneficiary who is a U.S. of sections 671 through 679; or
person unless the terms of the trust specifically identify the
class of persons to whom such distributions may be made, c. Any portion of a foreign trust's assets were included in
and none of those persons are U.S. persons during the tax the estate of the decedent.
year. Generally, the person defined as the transferor is the
Certain agreements and understandings treated as responsible party (defined earlier) who must ensure that
terms of the trust. For purposes of the general rule required information be provided or pay appropriate
described earlier, if any U.S. person who directly or indirectly penalties.
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 Specific Instructions
being paid or accumulated to, or for the benefit of, a U.S.
person, such agreement or understanding will be treated as a Period Covered
term of the trust. File the 2022 return for calendar year 2022 and fiscal years
Certain loans or uncompensated use of trust that begin in 2022 and end in 2023. For a fiscal year, fill in the
property. If a foreign trust is not already treated as having a tax year in the space at the top of the form.
U.S. beneficiary under the rules described earlier, the trust
will be treated as having a U.S. beneficiary if, after March 18, Item A—Initial Return, Final Return,
2010, either:
Amended Return
• The foreign trust loans cash or marketable securities,
directly or indirectly, to a U.S. person, and the U.S. person Initial return. If this is the initial return you are filing
does not repay the loan at a market rate of interest within a concerning the foreign trust identified, check the “Initial
reasonable period of time; or return” box.
• A U.S. person, directly or indirectly, uses property that is
owned by the foreign trust and does not pay FMV of the use Final return. If no further returns for transactions with the
of such property within a reasonable period of time. foreign trust are required, check the “Final return” box.
Example. If you filed Form 3520 concerning transactions
Presumption that foreign trust has U.S. beneficiary. If a with a foreign trust and that trust terminated within the tax
U.S. person, directly or indirectly, transfers property to a year, then the Form 3520 for the year in which the trust
foreign trust (other than a deferred compensation or terminated would be a final return.
charitable trust described in section 6048(a)(3)(B)(ii)), the
IRS may treat such trust as having a U.S. beneficiary for Amended return. If this Form 3520 is filed to amend a Form
purposes of applying section 679(d) to such transfer if the 3520 that you previously filed for the same tax year, check
IRS requests information with respect to the transfer and the the “Amended return” box.
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 Item C—Excepted Specified Foreign
be paid to or accumulated for the benefit of a U.S. person. Financial Assets Reported
U.S. Person Check the box in item C only if the Form 3520 filer also files
Form 8938 for the tax year and includes this form in the total
A U.S. person is: number of Forms 3520 reported on line 15 of Part IV,
• A citizen or resident alien of the United States, including Excepted Specified Foreign Financial Assets, of Form 8938.
dual residents who claim the benefits under an income tax For more information, see the Instructions for Form 8938,
treaty (see Pub. 519, U.S. Tax Guide for Aliens, for guidance generally, and in particular, Duplicative reporting and the
on determining resident alien status); specific instructions for Part IV.
• A domestic partnership;
• A domestic corporation;

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Identifying Information Part I—Transfers by U.S. Persons to a
Taxpayer identification numbers (TINs). Use social Foreign Trust During the Current Tax
security numbers (SSNs) or individual taxpayer identification
numbers (ITINs) to identify individuals. Use employer Year
identification numbers (EINs) to identify estates, trusts, Complete Part I for information on a reportable event (defined
partnerships, and corporations. Don’t use an SSN in place of earlier).
an EIN.
Note. Although the basic reporting requirements for Form
Applying for an EIN. If the foreign trust does not have an 3520 are contained in section 6048 (and are clarified by
EIN, the trustee or the U.S. owner may apply for one online at Notice 97-34), the reporting requirements have been clarified
IRS.gov/EIN. If the principal business was created or by the regulations under sections 679 and 684. Accordingly,
organized outside of the United States or U.S. territories, you the regulations under sections 679 and 684 should be
may also apply for an EIN by calling 267-941-1099 (toll call). referred to for additional clarification for transfers that are
Do not enter a preparer tax identification number required to be reported in Part I of Form 3520.
! (PTIN) in any entry space on Form 3520 other than Line 5a. Enter the name of the trust creator. If you are the
CAUTION the entry space for “PTIN” at the bottom of page 6 of trust creator, enter "Same as line 1a" on line 5a. If you are not
the form. the trust creator, enter the name of the person who created
or originally settled the foreign trust.
Address. Include the room, suite, or other unit number after
the street address. If the post office does not deliver mail to Lines 5b and 5c. Enter the address and TIN, if any, of the
the street address and the U.S. person has a P.O. box, show trust creator. See Identifying Information, earlier, for specific
the box number instead. information regarding the entering of addresses and TINs on
Form 3520. If you are the trust creator, enter "Same as lines
Foreign address. Do not abbreviate the country name. 1c, 1e, 1f, 1g, and 1h" on line 5b, and enter "Same as line 1b"
Lines 1a and 1i. Line 1a identifies the person that is filing on line 5c.
Form 3520. If you and your spouse are filing a joint Form Lines 6a and 6b. Enter the applicable two-letter country
3520, put your names and TINs in the same order as they code from the list at IRS.gov/CountryCodes.
appear on your Form 1040, U.S. Individual Income Tax
Return, or Form 1040-SR, U.S. Tax Return for Seniors, and Lines 7 and 8. If you are reporting multiple transfers to a
check the box on line 1i. single foreign trust and the answers to line 7 or 8 are different
for various transfers, complete a separate line for each
Line 1j. If an automatic 2-month extension applies for your transfer on duplicate copies of the relevant pages of the form.
tax return because you meet one of the following conditions,
check the box and attach a statement to the Form 3520 Lines 7a and 7b. Check “Yes” if you are treated as a U.S.
showing that you are a U.S. citizen or resident who meets owner of any portion of the foreign trust under the grantor
one of these conditions. trust rules (sections 671 through 679) and complete line 7b
• You live outside of the United States and Puerto Rico and and Part II of this form. In addition, if another person is
your place of business or post of duty is outside the United treated as an owner of the transferred assets, you must
States and Puerto Rico. comply with the reporting requirements that would apply to a
• You are in the military or naval service on duty outside the direct transfer to that other person. For example, if that other
United States and Puerto Rico. person is a foreign partnership, you must comply with the
reporting requirements for transfers to foreign partnerships.
Line 1k. If you filed for an extension of time to file your See Form 8865, Return of U.S. Persons With Respect to
income tax return, check the box on line 1k. Also, enter the Certain Foreign Partnerships.
tax form number of the original tax return that will be filed with
the IRS. Line 8. If the transfer was a completed gift (see Regulations
section 25.2511-2), you may have to file Form 709, United
Example. You file Form 4868, Application for Automatic States Gift (and Generation-Skipping Transfer) Tax Return. If
Extension of Time To File U.S. Individual Income Tax Return, the transfer was a bequest, you may have to file Form 706,
to extend the time to file your individual income tax return, U.S. Estate Tax Return.
Form 1040. Enter “1040” on the entry line.
Line 9. See U.S. Beneficiary, earlier.
Line 2b. Enter the EIN of the foreign trust. Do not enter an
SSN or ITIN. Only EINs should be used to identify the foreign Schedule A—Obligations of a Related Trust
trust.
Complete the applicable portions of Schedule A with respect
Line 3. If the foreign trust did not appoint a U.S. agent who to all transfers to a related foreign trust in exchange for an
can provide the IRS with all relevant trust information, check obligation of the trust or a person related to the trust that took
“No” and you are required to complete lines 15 through 18. place during the current tax year.
Lines 4a through 4f. If you are the executor of the estate of Line 11. For additional information, see Obligation Qualified ,
a U.S. citizen or resident, you must provide information about Obligation, and Person related to a foreign trust, earlier.
the decedent on lines 4a through 4e. You must also check
Line 12. If you answered "Yes" to the question on line 11b
the applicable box on line 4f to indicate which of the following
with respect to any obligation, you must generally answer
applies: the U.S. decedent made a transfer to a foreign trust
“Yes” to the question on line 12. By so doing, you agree to
by reason of death, the U.S. decedent was treated as the
extend the period of assessment of any income or transfer
owner of a portion of a foreign trust immediately prior to
tax attributable to the transfer and any consequential income
death, or the estate of the U.S. decedent included assets of a
tax changes for each year that the obligation is outstanding to
foreign trust.

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a date 3 years after the maturity date of the obligation. You beneficiaries. If there is not enough space on the form, attach
have the right to refuse to extend the period of assessment. a statement.
Pub. 1035, Extending the Tax Assessment Period, provides
Line 17. Enter the name; address; and TIN, if any, of any
a more detailed explanation of your rights and the
person, other than those listed on line 16, that has significant
consequences of the choices you may make. When
powers over the trust (for example, “protectors,” “enforcers,”
executed and filed, this form will be deemed to be agreed
any person that must approve trustee decisions or otherwise
upon and executed by the IRS for purposes of Regulations
direct trustees, any person with a power of appointment, any
section 301.6501(c)-1(d).
person with powers to remove or appoint trustees, etc.).
Note. If you answer “No” to the question on line 12, you Include a description of each person's powers. If there is not
generally may not treat an obligation as a qualified obligation enough space, attach a statement.
on line 11b. The one exception to this is if the maturity date of Line 18. Attach a copy of the following documents. If these
the obligation does not extend beyond the end of your tax documents have been previously attached to a Form 3520-A
year for which you are reporting and such obligation is paid or Form 3520 filed within the previous 3 years, attach only
within that tax year. relevant updates.
• A summary of the terms of the trust that includes a
Schedule B—Gratuitous Transfers summary of any oral agreements or understandings you have
Complete the applicable portions of Schedule B with respect with the trustee, whether or not legally enforceable.
to all reportable events (defined earlier) that took place • A copy of all trust documents (and any revisions),
during the current tax year. including the trust instrument, any memoranda of wishes
prepared by the trustees summarizing the settlor's wishes,
Line 13.
any letter of wishes prepared by the settlor summarizing the
• In your column (b) description, indicate whether the
wishes, and any similar documents.
property is tangible or intangible.
• You may aggregate transfers of cash during the year on a • A copy of the trust's financial statements, including a
balance sheet and an income statement similar to those
single line of line 13.
shown on Form 3520-A. These financial statements must
• If there is not enough space on the form, attach a
reasonably reflect the trust's accumulated income under U.S.
statement.
income tax principles. For example, the statements must not
• For transfers reported on statements, you must enter
treat capital gains as additions to trust corpus.
“Statement” on one of the lines in column (b), and enter the
total amount of transfers reported on the statement on • A copy of the trust’s organizational chart, including
ownership structure and percentage of ownership.
line 13, columns (c), (d), (e), (f), (h), and (i).
Note. Penalties may be imposed for failure to report all Schedule C—Qualified Obligations Outstanding
required information. See Penalties, earlier. in the Current Tax Year
Line 13, column (d). Enter the U.S. adjusted basis of the Line 19. Provide information on the status of outstanding
property transferred. obligations of the related foreign trust (or an obligation of a
person related to the foreign trust) that you reported as a
Line 13, column (e). Only include gain that is immediately qualified obligation in the current tax year. This information is
recognized at the time of the transfer. required in order to retain the obligation's status as a
qualified obligation. If relevant, attach a statement describing
Note. Any transfer of appreciated assets by a U.S. person to
any changes in the terms of the qualified obligation.
a foreign nongrantor trust is treated as a sale or exchange
and the transferor must recognize as gain the excess of the If the obligation fails to retain the status of a qualified
FMV of the transferred property over its adjusted basis. This obligation, you will be treated as having made a gratuitous
rule applies to a domestic trust that becomes a foreign trust, transfer to the foreign trust, which must be reported on
provided that the foreign trust is not a grantor trust. The Schedule B of this Part I in the year the obligation fails to
domestic trust is treated as having transferred all of its assets meet the criteria for a qualified obligation. See section III.C.2
to the foreign trust immediately prior to becoming a foreign of Notice 97-34.
trust. Although the gain is not recognized on Form 3520, it
must be reported on the appropriate form or schedule of the Part II—U.S. Owner of a Foreign Trust
transferor's income tax return. See section 684. The transfer Complete Part II if you are considered the owner of any
of assets, however, is reported on Part I of this Form 3520. assets of a foreign trust under the rules of sections 671
through 679 during the tax year. You are required to enter an
Line 13, column (f). Generally, if the reported transaction is EIN for such foreign trust on line 2b on page 1 of the form.
a sale, you should report the gain on the appropriate form or
schedule of your income tax return. Note. Complete Part II even if there have been no
Lines 15 through 18. If you checked “No” on line 3, transactions involving the trust during the tax year. You may
acknowledging that the foreign trust did not appoint a U.S. also need to complete Part III if you receive a distribution
agent who can provide the IRS with all relevant trust from the foreign trust. See the instructions for Part III.
information, complete lines 15 through 18. Line 20. Enter information regarding any person, including
Line 15. Enter the name; address; whether the person is a yourself, who is considered the owner of any portion of the
U.S. beneficiary (defined earlier); and TIN, if any, of all trust under the rules of sections 671 through 679. Also, enter
reportable beneficiaries. Include specified beneficiaries, in column (e) the specific Code section that causes you or
classes of discretionary beneficiaries, and names or classes any other person (as applicable) to be considered an owner
of any beneficiaries that could be named as additional for U.S. income tax purposes. See the grantor trust rules
under sections 671 through 679.

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Lines 21a and 21b. Enter the applicable two-letter code reportable distribution, whether or not taxable. For this
from the list at IRS.gov/CountryCodes. purpose, a loan to you by an unrelated third party that is
guaranteed by a foreign trust is generally treated as a loan
Line 22. If “Yes,” the copy of the Foreign Grantor Trust from the trust.
Owner Statement (pages 3 and 4 of Form 3520-A) should Line 25, column (e). Answer “Yes” if an obligation given
show the amount of the foreign trust's income that is in exchange for the loan is a qualified obligation (defined
attributable to you for U.S. income tax purposes. See earlier).
section IV. of Notice 97-34. Line 25, column (f). The FMV of an obligation is zero
If “No,” to the best of your ability, complete and attach a unless it is a qualified obligation. Therefore, in the case of
substitute Form 3520-A for the foreign trust to your Form obligations that are not qualified obligations, enter “-0-” in
3520 by the due date of your Form 3520 (and not the due column (f).
date for the Form 3520-A). Otherwise, you may be liable for a Uncompensated use of trust property. If you or a U.S.
penalty equal to the greater of $10,000 or 5% of the gross person related to you, directly or indirectly, used any property
value of the portion of trust assets that you are treated as of a foreign trust, the FMV of such use will be treated as a
owning. There are additional penalties for continuing failure reportable distribution whether or not taxable. Report the
to file after notice by the IRS. See section 6677(a) through FMV of the use of trust property in column (a) and the date of
(c). Also see Penalties, earlier. first use in column (b), skip columns (c) through (e), report
Line 23. Enter the FMV of the trust assets that you are the amount paid for such use in column (f), and enter the
treated as owning. Include all assets at FMV as of the end of amount treated as a taxable distribution from the trust in
the tax year. For this purpose, disregard all liabilities. The column (g) by subtracting column (f) from column (a). See
trust should send you this information in connection with its section 643(i) for more information.
Form 3520-A. If you did not receive such information (line 9
of the Foreign Grantor Trust Owner Statement) from the trust, Note. Under the HIRE Act, effective after March 18, 2010, if
complete line 23 to the best of your ability. At a minimum, a foreign trust with a U.S. transferor is not already treated as
include the value of all assets that you have transferred to the a grantor trust under the rules of sections 671 through 679,
trust. Also, use Form 8082 to notify the IRS that you did not the foreign trust will be treated as having acquired a U.S.
receive a Foreign Grantor Trust Owner Statement. However, beneficiary, and will therefore be treated as a grantor trust, if
filing Form 8082 does not relieve you of any penalties that it makes a loan of cash or marketable securities, directly or
may be imposed under section 6677. See Penalties, earlier. 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
Part III—Distributions to a U.S. 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
Person From a Foreign Trust During time. Accordingly, the loan or use of trust property will not be
the Current Tax Year treated as a taxable distribution under section 643(i) but will
remain reportable on Part III of this Form 3520.
If you received an amount from a portion of a foreign trust of
which you are treated as the owner, complete lines 24 and 27 Line 26. See Line 12, earlier, except that “line 25, column
in Part III. If you received an amount from a foreign trust that (e)” should replace “line 11b,” and “line 26” should replace
would require a report under both Parts III and IV (gifts or “line 12.”
bequests) of Form 3520, report the amount only in Part III. Line 27. Penalties may be imposed for failure to accurately
Line 24. Report any cash or the FMV of other property that report all distributions received during the current tax year.
you received (actually or constructively, directly or indirectly) See Penalties, earlier.
from a foreign trust during the current tax year, whether or not Line 28. Provide information on the status of any
taxable, unless the amount is a loan to you from the trust or outstanding obligation to the foreign trust that you reported
constitutes uncompensated use of trust property, both of as a qualified obligation in the current tax year. This
which must be reported on line 25. For example, if you are a information is required in order to retain the obligation's
partner in a partnership that receives a distribution from a status as a qualified obligation. If relevant, attach a statement
foreign trust, you must report your allocable share of such describing any changes to the terms of the qualified
payment as an indirect distribution from the trust. obligation. If the obligation fails to retain the status of a
Line 24, column (c). The filer is permitted to enter the qualified obligation, you will be treated as having received a
basis of the property in the hands of the beneficiary (as taxable distribution under section 643(i) from the foreign
determined under section 643(e)(1)), if lower than the FMV of trust. See section V.A. of Notice 97-34.
the property, but only if the taxpayer is not required to
complete Schedule A (lines 31 through 38) due to lack of Lines 29 and 30. If any of the items required for the Foreign
documentation. For these purposes, lack of documentation Grantor Trust Beneficiary Statement (see Line 29, later) or for
refers to a situation in which the filer checked “No” on line 29 the Foreign Nongrantor Trust Beneficiary Statement (see
or 30 because (a) the beneficiary did not receive a Foreign Line 30, later) is missing, you must check “No” on line 29 or
Grantor Trust Beneficiary Statement or a Foreign Nongrantor line 30, as applicable.
Trust Beneficiary Statement from the trust, or (b) such Also, if you answer “Yes” to line 29 or line 30, and the
statement did not contain all of the items specified under the foreign trust or U.S. agent does not produce records or
instructions for line 29 or 30, later. testimony when requested or summoned by the IRS, the IRS
may redetermine the tax consequences of your transactions
Line 25. If you or a U.S. person related to you received a
with the trust and impose appropriate penalties under section
loan of cash or marketable securities, directly or indirectly,
6677. See section 6048(c)(2)(A).
from a related foreign trust, or the uncompensated use of
trust property (defined later), the amount of such loan or the
FMV of the use of trust property will be treated as a

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Note. If the question on line 29 or 30 is not applicable, check Schedule A—Default Calculation of Trust
the “N/A” box. Distributions
Line 29. If “Yes,” attach the Foreign Grantor Trust If you answered “Yes” to line 30, you may complete either
Beneficiary Statement (page 5 of Form 3520-A) from the Schedule A or Schedule B. Generally, however, if you
foreign trust and do not complete the rest of Part III with complete Schedule A in the current year (or did so in prior
respect to the distribution. If a U.S. beneficiary receives a years), you must continue to complete Schedule A for all
complete Foreign Grantor Trust Beneficiary Statement with future years, even if you are able to answer “Yes” to line 30 in
respect to a distribution during the tax year, the beneficiary that future year. (The only exception to this consistency rule
should treat the distribution for income tax purposes as if it is that you may use Schedule B in the year that a trust
came directly from the owner. For example, if the distribution terminates, but only if you are able to answer “Yes” to line 30
is a gift, the beneficiary should not include the distribution in in the year of termination.)
gross income.
Line 32. To the best of your knowledge, state the number of
In addition to basic identifying information (that is, name, years the trust has been in existence as a foreign trust and
address, TIN, etc.) about the foreign trust and its trustee, this attach an explanation of your basis for this statement.
statement must contain these items. Consider any portion of a year to be a complete year. If this is
1. The first and last day of the tax year of the foreign trust the first year that the trust has been a foreign trust, do not
to which this statement applies. complete the rest of Part III (you do not have an accumulation
2. An explanation of the facts necessary to establish that distribution).
the foreign trust should be treated for U.S. tax purposes as Line 33. Enter the total amount of distributions that you
owned by another person. (The explanation should identify received during the 3 preceding tax years (or the number of
the Code section that treats the trust as owned by another years the trust has been a foreign trust if fewer than 3 years).
person.) For example, if a trust distributed $50 in year 1, $120 in year
3. A statement identifying whether the owner of the trust 2, and $150 in year 3, the amount reported on line 33 would
is an individual, trust, corporation, or partnership. be $320 ($50 + $120 + $150).
4. A description of property (including cash) distributed or Line 35. Divide line 34 by 3.0 (or the number of years the
deemed distributed to the U.S. person during the tax year, trust has been a foreign trust if fewer than 3 years). Consider
and the FMV of the property distributed. any portion of a year to be a complete year. For example, a
5. A statement that the trust will permit either the IRS or foreign trust created on July 1, 2020, would be treated on a
the U.S. beneficiary to inspect and copy the trust's 2022 calendar year return as having 2 preceding years (2020
permanent books of account, records, and such other and 2021). In this case, you would calculate the amount on
documents that are necessary to establish that the trust line 35 by dividing line 34 by 2.0. Do not disregard tax years
should be treated for U.S. tax purposes as owned by another in which no distributions were made. The IRS will consider
person. This statement is not necessary if the trust has your proof of these prior distributions as adequate records to
appointed a U.S. agent. demonstrate that any distribution up to the amount on line 31
6. A statement as to whether the foreign trust has is not an accumulation distribution in the current tax year.
appointed a U.S. agent (defined earlier). If the trust has a Line 36. Enter this amount as ordinary income on your tax
U.S. agent, include the name, address, and TIN of the agent. return. Report this amount on the appropriate schedule of
your tax return (for example, Schedule E (Form 1040), Part
Line 30. If “Yes,” attach the Foreign Nongrantor Trust III).
Beneficiary Statement from the foreign trust. A Foreign
Nongrantor Trust Beneficiary Statement must include the Line 37. If there is an amount on line 37, you must also
following items. complete line 38 and Schedule C—Calculation of Interest
Charge to determine the amount of any interest charge you
1. An explanation of the appropriate U.S. tax treatment of may owe.
any distribution or deemed distribution for U.S. tax purposes,
or sufficient information to enable the U.S. beneficiary to Schedule B—Actual Calculation of Trust
establish the appropriate treatment of any distribution or
deemed distribution for U.S. tax purposes. Distributions
You may only use Schedule B if:
2. A statement identifying whether any grantor of the trust
is a partnership or a foreign corporation. If so, attach an • You answered “Yes” to line 30,
explanation of the relevant facts. • You attach a copy of the Foreign Nongrantor Trust
Beneficiary Statement to this return, and
3. A statement that the trust will permit either the IRS or • You have never before used Schedule A for this foreign
the U.S. beneficiary to inspect and copy the trust's trust or this foreign trust terminated during the tax year.
permanent books of account, records, and such other
documents that are necessary to establish the appropriate Line 40a. Enter on line 40a the amount received by you
treatment of any distribution or deemed distribution for U.S. from the foreign trust that is treated as ordinary income of the
tax purposes. This statement is not necessary if the trust has trust in the current tax year. Ordinary income is all income
appointed a U.S. agent. that is not capital gains. Report this amount on the
appropriate schedule of your tax return (for example,
4. The Foreign Nongrantor Trust Beneficiary Statement Schedule E (Form 1040), Part III).
must also include items (1), (4), and (6), as listed in the
Line 29 instructions, earlier, as well as basic identifying Lines 42a through 42d. Enter on these lines the applicable
information (for example, name, address, TIN, etc.) about the amounts received by you from the foreign trust that are
foreign trust and its trustee. treated as capital gain income of the trust in the current tax

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year. Report these amounts on the appropriate schedule of instructions for lines 45 and 46, the trust's applicable number
your tax return (for example, Schedule D (Form 1040)). of years would be 3.6 (1,260/350) in 2021 and 4.6
(1,150/250) in 2022.
Line 45. Enter the foreign trust's aggregate undistributed net
income (UNI). For example, assume that a trust was created Note. Include as many decimal places as there are digits in
in 2015 and has made no distributions prior to 2021. Assume the UNI on line 45 (for example, using the example in the
the trust's ordinary income was $0 in 2020, $60 in 2019, $124 instructions for line 45, include three decimal places).
in 2018, $87 in 2017, $54 in 2016, and $25 in 2015. Thus, for
2021, the trust's UNI would be $350. If the trust earned $100 Schedule C—Calculation of Interest Charge
and distributed $200 during 2021 (so that $100 was
Complete Schedule C if you entered an amount on line 37 or
distributed from accumulated earnings), the trust's 2022
line 41a.
aggregate UNI would be $250 ($350 + $100 − $200).
Line 49. Include the amount from line 48 of this form on
Line 46. Enter the foreign trust's weighted undistributed net
line 1 of Form 4970, Tax on Accumulation Distribution of
income (weighted UNI). The trust's weighted UNI is its
Trusts. Then, compute the tax on the total accumulation
accumulated income that has not been distributed, weighted
distribution using lines 1 through 28 of Form 4970. Enter on
by the years that it has accumulated income. To calculate
line 49 the tax from line 28 of Form 4970.
weighted UNI, multiply the undistributed income from each of
the trust's years by the number of years since that year, and Note. Use Form 4970 as a worksheet and attach it to
then add each year's result. Using the example from line 45, Form 3520.
the trust's weighted UNI in 2021 would be $1,260, calculated
as follows. Line 51. Interest accumulates on the tax (line 49) for the
period beginning on the date that is the applicable number of
No. of years (as rounded on line 50) prior to the applicable date and
years ending on the applicable date. For purposes of making this
since that UNI from interest calculation, the applicable date is the date that is
Year year each year Weighted UNI mid-year through the tax year for which reporting is made (for
2020 1 $ 0 $ 0 example, in the case of a 2022 calendar-year taxpayer, the
2019 2 60 120 applicable date would be June 30, 2022). Alternatively, if you
2018 3 124 372 received only a single distribution during the tax year that is
2017 4 87 348 treated as an accumulation distribution, you may use the
2016 5 54 270 date of that distribution as the applicable date.
2015 6 25 150 For portions of the interest accumulation period that are
TOTAL $350 $1,260 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
To calculate the trust's weighted UNI for 2022, the trust 1995, interest is compounded daily at the rate imposed on
could update this calculation, or the weighted UNI shown on underpayments of tax under section 6621(a)(2). This
line 46 of the 2021 Form 3520 could simply be updated using compounded interest for periods after 1995 is imposed not
the following steps. only on the tax, but also on the total simple interest
1. Begin with the 2021 weighted UNI. attributable to pre-1996 periods.
2. Add UNI at the beginning of 2021. If you are a 2022 calendar-year taxpayer and you use
June 30, 2022, as the applicable date for calculating interest,
3. Add trust earnings in 2021. use the table found on IRS.gov/CombinedInterestRate to
4. Subtract trust distributions in 2021. determine the combined interest rate and enter it on line 51.
5. Subtract weighted trust accumulation distributions in If you are not a 2022 calendar-year taxpayer or you choose
2021. (Weighted trust accumulation distributions are the trust to use the actual date of the distribution as the applicable
accumulation distributions in 2021 multiplied by the date, calculate the combined interest rate using the above
applicable number of years from 2021.) principles and enter it on line 51.
Using the example above, the trust's 2022 weighted UNI Line 53. Report this amount as additional tax (ADT) on the
would be $1,150, calculated as follows. appropriate line of your income tax return (for example, for
Form 1040 filers, include this amount as part of the total for
line 17z on Schedule 2 (Form 1040)).
2021 weighted UNI. . . . . . . . . . . . . . . . . . . . . $1,260
UNI at beginning of 2021 . . . . . . . . . . . . . . . . . + 350 Part IV—U.S. Recipients of Gifts or
Trust earnings in 2021. . . . . . . . . . . . . . . . . . . + 100 Bequests Received During the
Trust distributions in 2021 . . . . . . . . . . . . . . . . − 200
Current Tax Year From Foreign
Weighted trust accumulation distributions in 2021
($100 X 3.6) . . . . . . . . . . . . . . . . . . . . . . . – 360 Persons
2022 weighted UNI. . . . . . . . . . . . . . . . . . . . . $1,150 Note. If you fail to timely report foreign gifts that should be
reported under section 6039F, the IRS may determine the
income tax consequences of the receipt of such gift and
Line 47. Calculate the trust's applicable number of years by penalties may be imposed. See Penalties, earlier.
dividing line 46 by line 45. This would be the weighted UNI A gift to a U.S. person does not include any amount paid
divided by the annual UNI. Using the examples in the for qualified tuition or medical payments made on behalf of
the U.S. person.

Instructions for Form 3520 (2022) -11-

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

If a foreign trust makes a distribution to a U.S. person, the If the ultimate donor is a foreign trust, treat the amount
U.S. person must report the amount as a distribution in Part received as a distribution from a foreign trust and complete
III, rather than as a gift in Part IV. Part III.

Contributions of property by foreign persons to domestic Privacy Act and Paperwork Reduction Act Notice. We
or foreign trusts that have U.S. beneficiaries are not ask for the information on this form to carry out the Internal
reportable by those beneficiaries in Part IV unless they are Revenue laws of the United States. You are required to give
treated as receiving the contribution in the year of the transfer us the information. We need it to ensure that you are
(for example, if the U.S. beneficiary is treated as an owner of complying with these laws and to allow us to figure and
that portion of the trust under section 678, then the collect the right amount of tax.
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
A domestic trust that is not treated as owned by another return or statement with us for any tax for which you are
person is required to report the receipt of a contribution to the liable. Your response is mandatory under these sections.
trust from a foreign person as a gift in Part IV. Section 6109 requires you to provide your TIN. You must fill
A domestic trust that is treated as owned by a foreign in all parts of the tax form that apply to you.
person is not required to report the receipt of a contribution to You are not required to provide the information requested
the trust from a foreign person. However, a U.S. person on a form that is subject to the Paperwork Reduction Act
should report the receipt of a distribution from a domestic unless the form displays a valid OMB control number. Books
trust that is treated as owned by a foreign person as a gift or records relating to a form or its instructions must be
from a foreign person in Part IV, rather than as a distribution retained as long as their contents may become material in
to a U.S. person in Part III. the administration of any Internal Revenue law. Generally,
Line 54. To calculate the threshold amount ($100,000), you tax returns and return information are confidential, as
must aggregate gifts from different foreign nonresident aliens required by section 6103. However, section 6103 allows or
and foreign estates if you know (or have reason to know) that requires the IRS to disclose or give the information shown on
those persons are related to each other (see Related Person, your tax return to others as described in the Code. For
earlier) or one is acting as a nominee or intermediary for the example, we may disclose your tax information to the
other. For example, if you receive a gift of $75,000 from Department of Justice to enforce the tax laws, both civil and
nonresident alien individual A and a gift of $40,000 from criminal, and to cities, states, the District of Columbia, and
nonresident alien individual B, and you know that A and B are U.S. commonwealths or possessions to carry out their tax
related, you must answer “Yes” and complete columns (a) laws. We may also disclose this information to other
through (c) for each gift. countries under a tax treaty, to federal and state agencies to
enforce federal nontax criminal laws, or to federal law
If you answered “Yes” to the question on line 54 and none enforcement and intelligence agencies to combat terrorism.
of the gifts or bequests received exceeds $5,000, do not Failure to provide this information, or providing false
complete columns (a) through (c) of line 54. Instead, enter in information, may subject you to fines or penalties.
column (b) of the first line, “No gifts or bequests exceed
$5,000.” Keep this notice with your records. It may help you if we
Line 55. Answer “Yes” if you received aggregate amounts in ask you for other information.
excess of the section 6039F threshold amount during the The time needed to complete and file this form and related
current tax year that you treated as gifts from foreign schedules will vary depending on individual circumstances.
corporations or foreign partnerships (or any foreign persons The estimated burden for individual taxpayers filing this form
that you know (or have reason to know) are related to such is approved under OMB control number 1545-0074 and is
foreign corporations or foreign partnerships). The threshold included in the estimates shown in the instructions for their
amount from Rev. Proc. 2021-45 is available at IRS.gov/ individual income tax return. The estimated burden for all
Newsroom/IRS-Provides-Tax-Inflation-Adjustments-for-Tax- other taxpayers who file this form is shown below.
Year-2022.
For example, if you, a calendar-year taxpayer during Recordkeeping. . . . . . . . . . . . . . . . . . . . . . 42 hr., 34 min.
2022, received $8,000 from foreign corporation X that you Learning about the law or the form . . . . . . . . 4 hr., 50 min.
treated as a gift, and $10,000 that you received from
nonresident alien A that you treated as a gift, and you know Preparing the form . . . . . . . . . . . . . . . . . . . 6 hr., 40 min.
that X is wholly owned by A, you must complete columns (a) Sending the form to the IRS . . . . . . . . . . . . . 16 min.
through (g) for each gift.

Note. Gifts from foreign corporations or foreign partnerships If you have comments concerning the accuracy of these
are subject to recharacterization by the IRS under section time estimates or suggestions for making this form simpler,
672(f)(4). we would be happy to hear from you. You can send us
Line 56. If you answered “Yes” to the question on line 56 comments from IRS.gov/FormComments. Or you can send
and the ultimate donor on whose behalf the reporting donor your comments to Internal Revenue Service, Tax Forms and
is acting is a foreign corporation or foreign partnership, attach Publications Division, 1111 Constitution Ave. NW, IR-6526,
an explanation including the ultimate foreign donor's name; Washington, DC 20224. Do not send the tax form to this
address; TIN, if any; and status as a corporation or office. Instead, see When and Where To File, earlier.
partnership.

-12- Instructions for Form 3520 (2022)

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