Form 3520 (2010) Tax Year Checklist
Form 3520 requires U.S. persons to report transfers to foreign trusts, ownership of foreign trusts, distributions from foreign trusts, and certain foreign gifts or bequests. For 2010, the form introduces revised Part II reporting requirements for U.S. owners of foreign trusts and expands Part IV gift thresholds under post-HEART Act rules applicable to gifts from foreign persons.
Filing Obligations and Transfer Reporting
Determine your filing obligation under Part I if you transferred property directly or indirectly to a foreign trust during 2010. Include exchanges for obligations of related trusts in your reporting.
Attach sale or loan documents if transfers occurred; if documents were filed with Form 3520 within the previous 3 years, attach only updates. This requirement emphasizes qualified obligation documentation for the 2010 tax year.
Complete Part II if you held grantor trust status under Section 671–679 over any portion of a foreign trust in 2010. Obtain and attach a Foreign Grantor Trust Owner Statement from the foreign trust, or prepare a substitute Form 3520-A per 2010 instructions. Failure to attach Form 3520-A or substitute results in penalties under the 2010 rules for nonfiling of required foreign trust documents.
Distribution Reporting and Loan Requirements
List all distributions received in 2010 from foreign trusts on line 22, including cash, fair market value of property, and loans treated as distributions, for qualified obligations meeting IRC 643(i) criteria. Complete line 25 with original loan date, interest rate, and maximum repayment term. The 2010 form requires extension of the assessment period to 3 years after the obligation matures if you agree on line 26.
Confirm on line 21 whether the foreign trust filed Form 3520-A for 2010. If not, complete and attach a substitute. The 2010 instructions require you to provide the trust's country code of creation (line 20a), country code of governing law (line 20b), and creation date (line 20c) to determine whether prior-year undistributed income applies under the throwback rules on Schedule C.
This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
Accumulation Distribution Calculations
Calculate accumulation distributions under 2010 Schedule C rules if you received distributions in 2010, and the trust held undistributed net income from prior years. Complete Schedule C to determine throwback income and applicable tax. Line 37, requiring total distributions from 3 preceding years or since trust creation (whichever is shorter), triggers Schedule C completion. Use the combined interest rate specified in the 2010 Form 4970 instructions.
Foreign Gift and Bequest Disclosure
Report gifts or bequests received from nonresident aliens or foreign estates exceeding $100,000 in aggregate during 2010 on line 54. Report gifts from foreign corporations or partnerships exceeding $14,165 on line 55. Gifts from covered expatriates under Section 877A(g) must be addressed on line 57 if the gift exceeds $13,000; attach Form 708 if applicable per instructions for covered expatriate reporting.
Answer "Yes" on line 57 if, during the current tax year, you received a covered gift or bequest exceeding $13,000 from a covered expatriate as defined under Section 877A(g)(1). Line 57 appears in the 2010 form to capture these gifts or bequests under the HEART Act amendments, effective for expatriations occurring on or after June 17, 2008. Determine whether any foreign donor meets the covered expatriate definition and file Form 708 if required.
Certification and Agent Designation
Sign and verify the form under penalties of perjury, certifying that all information is correct and complete. Provide your identification number and spouse's identification number (line 1c–d), title, and date on the signature line. If you claim a U.S. agent for the foreign trust (line 3), complete the agent's name, address, and identification number; this is mandatory if the trust appointed one and relieves you of certain documentation requirements for lines 15–18.
Year-Specific Compliance Requirements
Enhanced Part II Reporting
- The 2010 form clarifies that U.S. owners of foreign trusts must obtain a Foreign Grantor Trust Owner Statement from the trust or complete a substitute Form 3520-A.
This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
- Penalties apply for non-filing of required documentation.
- This codifies post-HEART Act requirements specific to the 2010 tax year.
Covered Expatriate Gift Disclosure
- Line 57 requires disclosure of gifts or bequests from covered expatriates exceeding $13,000.
- This reflects HEART Act amendments effective for expatriations on or after June 17, 2008.
- Form 708 must be filed concurrently when the threshold is exceeded.
Assessment Period Extension for Qualified Obligations
- Line 26 requires explicit agreement to extend the assessment period for income and transfer tax attributable to qualified obligations to 3 years after maturity.
- This replaces prior-year language and requires affirmative consent from filers.
- The extension applies to both the initial transfer and any consequential income tax changes for each year the obligation remains outstanding.
Schedule C Throwback Calculations
- Lines 37–53 of the 2010 form institute detailed accumulation distribution calculations using Form 4970 tax rate inputs.
- The combined interest rate on line 51 is pulled from Form 4970 current-year instructions and is not a fixed percentage.
- This distinguishes 2010 computations from prior years and requires reference to contemporaneous Form 4970 guidance.
Foreign Grantor Trust Statement Requirements
- Lines 20–21 and the requirement to attach a statement received from the foreign trust or file a substitute represent the 2010s implementation of enhanced reporting for foreign grantor trust owners.
- The Foreign Grantor Trust Owner Statement attachment is mandatory for U.S. owners treated as owning any portion of foreign trust assets under sections 671 through 679.
- This requirement applies even if no transactions involving the trust occurred during the 2010 tax year.
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This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
