Form 3520 (2015) Checklist
Purpose and Scope
Form 3520 reports 2015 transfers to foreign trusts, distributions from foreign trusts, and gifts or bequests exceeding specified thresholds from foreign persons. The 2015 instructions clarify that U.S. persons holding outstanding qualified obligations must extend the assessment period to 3 years after maturity and establish filing requirements for those without a U.S. agent appointed by the foreign trust.
Filing Requirements and Identification
Verify Tax Year and Return Type
Verify that you are filing only for the 2015 tax year and confirm the calendar year or tax year ending date matches your return period. Note in Box A whether this is an initial, amended, final, or extension-filed return.
Identify Filer Category and Status
Complete Box B by selecting the filer category: Individual, Partnership, Corporation, Trust, or Executor. The 2015 instructions specify that married filers filing jointly must each file separate Forms 3520 if applicable and check line 1i only if both spouses report activity on the same form for administrative purposes.
Identify the U.S. person(s) with full name, identification number (SSN or EIN), complete address, and service center where the 2015 tax return is filed. If an extension was requested for the 2015 return, check that box and enter the specific form number.
Report Foreign Trust Information
Report the foreign trust name, EIN (if assigned), reference ID number, and complete foreign address with country required. Complete one Form 3520 per foreign trust only, as mandated in the 2015 instructions.
Determine U.S. Agent Status
Determine whether the foreign trust appointed a U.S. agent per the 2015 definitions. If the trust did not appoint a U.S. agent, you must attach trust documents per lines 15–18 and complete beneficiary and trustee identification, or a penalty applies under IRC Section 6677 for failure to file or provide required information on Form 3520. If the trust appointed a U.S. agent, complete agent information lines 3a through 3g only.
Part I: Transfers to Foreign Trusts
Report Transfers and Consideration
- For any transfer in 2015 to a foreign trust, document whether you received less than fair market value (FMV) or no consideration on line 13.
- If you received less than FMV or no consideration, report the FMV, adjusted basis, gain recognized, and excess consideration on Schedule B.
- Attach copies of all sale or loan documents, or indicate they were attached in prior years on lines 14a through 14c.
Suppose you exchanged property for a qualified obligation under 2015 rules (line 11a-b). Complete Schedule A with the date of transfer, maximum term, yield to maturity, and FMV of the obligation. You must then agree on line 12 to extend the assessment period to 3 years after the maturity date, which is mandatory for qualified obligations under 2015 IRC Section 679 guidance.
Report Outstanding Qualified Obligations
Report on line 19 any outstanding qualified obligations from prior years still held during 2015. Show the original obligation date, tax year first reported as qualified, and principal and interest payments made during 2015.
Attach Required Trust Documents
If the foreign trust did not appoint a U.S. agent (line 3 equals "No"), attach the trust instrument, summary of all written and oral agreements, memoranda of wishes, and updated trust documents per lines 15 through 18. The 2015 instructions require this documentation to establish the trust's terms and beneficiary structure.
Part II: U.S. Ownership of Foreign Trusts
Report Ownership Interest
If you owned any portion of a foreign trust at any time in 2015, report it in Part II. Determine whether the foreign trust filed Form 3520-A for 2015 on line 22.
If the trust did not file Form 3520-A, you must complete and attach a substitute Form 3520-A as instructed, or a penalty applies for failure to report ownership. Enter the gross value of your ownership portion in the foreign trust at year-end 2015 on line 23, reported in U.S. dollars.
Identify Other Foreign Trust Owners
Identify all other foreign trust owners, their addresses, country of residence, and relevant IRC sections on line 20. This information helps the IRS understand the complete ownership structure of the foreign trust.
Part III: Distributions from Foreign Trusts
Report Cash and Property Distributions
For any cash or property distribution from a foreign trust in 2015 (line 24), report the date, description, FMV on distribution date, and any property transferred in return. Calculate the excess of FMV received over the property given up.
If you received a Foreign Grantor Trust Beneficiary Statement, attach it and do not complete line 29 onward.
Report Loans from Foreign Trusts
If you received a loan (including uncompensated use of trust property per IRC Section 643(i)) from a related foreign trust in 2015 (line 25), report the FMV of proceeds, original loan date, maximum term, and interest rate.
Identify whether it is a qualified obligation, as qualified obligations reduce the distribution amount (column g) by the FMV of the obligation. Agree on line 26 to extend the assessment period if applicable.
Calculate Distribution Categories
Calculate ordinary income distributions (line 36) as the lesser of current-year distributions or 125% of the average of the prior 3 years' distributions. If distributions exceed this threshold, the excess is an accumulation distribution (line 37), triggering Schedule C and Form 4970 calculation of tax on accumulation distributions plus an interest charge based on the combined interest rate for 2015 (lines 49–53).
Complete Required Schedules
For nongrantor foreign trust distributions reported with a Foreign Nongrantor Trust Beneficiary Statement (line 30 equals "Yes"), attach the statement and complete either Schedule A or B per 2015 instructions. If you did not receive such a statement, complete Schedule A for each distribution and calculate capital gain character: short-term, long-term, 28%-rate gain, and unrecaptured Section 1250 gain per lines 42a through 42d.
Part IV: Gifts and Bequests from Foreign Persons
Report Gifts from Nonresident Aliens
Report gifts or bequests exceeding $100,000 in aggregate from nonresident aliens or foreign estates in 2015 on line 54. List each gift over $5,000 separately with date, description, and FMV. Apply related donor aggregation rules per the 2015 instructions to determine the reporting threshold.
Report Gifts from Foreign Entities
Report gifts exceeding $15,102 from foreign corporations or partnerships in 2015 on line 55. Provide donor name, address, identification number, corporation or partnership designation, and FMV for each gift. Apply related donor aggregation rules specific to the 2015 guidance for accurate threshold determination.
Disclose Nominee or Intermediary Arrangements
Disclose on line 56 if you believe any foreign donor acted as a nominee or intermediary. The 2015 instructions require this disclosure to identify potential indirect gift arrangements.
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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.
