Form 3520 (2017) Year-Specific Filing Checklist
Filing Purpose and Scope
Form 3520 reports 2017 transfers to foreign trusts, ownership of foreign trusts, distributions received, and gifts or bequests from foreign persons exceeding statutory thresholds. The 2017 instructions clarify that U.S. transferors must report qualified obligations with extended assessment-period consent, and beneficiaries receiving distributions must distinguish between grantor and nongrantor trust statements. Accumulation distribution calculations are subject to interest charges under the applicable number of trust years methodology.
Filer Categories and Initial Determinations
Confirm you are an individual, partnership, corporation, trust, or executor with a reportable event during 2017. Check Box A to indicate whether you are filing an initial return, extension return, final return, or amended return.
Check Box B to identify your entity type, as this distinction determines which parts of Form 3520 apply to your specific filing situation. Complete the identifying information section with your name, taxpayer identification number, spouse's TIN if filing joint returns, address, and the service center where your income tax return is filed.
U.S. Agent Appointment and Documentation Requirements
Answer line 3 to indicate whether the foreign trust appointed a U.S. agent for the 2017 tax year. If you answer "Yes," complete lines 3a through 3g with the agent's full identification information, including name, address, and taxpayer identification number.
Documentation Requirements Without a U.S. Agent
If you answer "No" on line 3, you must complete lines 15 through 18 with comprehensive beneficiary, trustee, and trust powers information and attach all required trust documents per line 18 specifications.
The 2017 instructions note that the absence of a U.S. agent triggers comprehensive documentation requirements that cannot be waived under any circumstances.
Transfer Reporting Requirements
Complete Part I if you transferred money or property to a foreign trust during 2017, held qualified obligations issued in 2017, or served as executor of a decedent transferor. For qualified obligations, answer line 11b and confirm your consent to the assessment-period extension on line 12.
The extension expands the limitation period to three years after obligation maturity to allow proper IRS examination. Attach all sale or loan documents on line 14 unless you previously filed identical documents within the prior three years for the same transaction.
Gratuitous Transfer Documentation in Schedule B
Answer line 13 regarding whether you transferred property for less than fair market value or no consideration during the 2017 tax year. If you answer "Yes," detail each transaction in Schedule B columns (a) through (i) with the following information:
- Transaction date and complete property description
- Fair market value at time of transfer and adjusted basis
- Recognized gain amount and excess value calculations
- Property received in exchange and its fair market value
- Excess of fair market value over consideration provided
The 2017 instructions specify that gratuitous transfers require attachment of all executed trust documents if no U.S. agent was appointed.
Ownership Reporting Under Part II
Complete Part II if you owned any portion of a foreign trust during the 2017 tax year under sections 671 through 679. Report other owners on line 20 and provide the trust creation country code, governing law country code, and date created on line 21.
Answer line 22 to indicate whether the trust filed a 2017 Form 3520-A and attach the Foreign Grantor Trust Owner Statement if available. Enter the gross value of your owned portion on line 23 using proper valuation methods.
Distribution Reporting and Calculation Methodology
Report all cash and property received from the foreign trust on line 24 of Part III, organized by distribution date, property description, and fair market value. Lines 26 and 27 require careful tracking because qualified obligations trigger the three-year assessment-period extension consent requirement, and total distributions drive the distinction between ordinary income and accumulation distribution treatment.
Ordinary Income Versus Accumulation Distribution
Calculate ordinary income versus accumulation distribution using lines 31 through 37 by entering total distributions on line 31 and computing the average distribution over the preceding three years on line 32. Multiply the average by 1.25 on line 34 and determine whether the current distribution exceeds 125% of the average on line 37.
Accumulation Distribution Tax Computation
Complete lines 38 through 52 if line 37 shows an accumulation distribution exceeding zero for the 2017 tax year. Compute the applicable number of trust years on line 38 by dividing line 32 by two and rounding to the nearest half-year.
Attach completed Form 4970, Tax on Accumulation Distribution of Trusts, to calculate the base tax amount on line 49. Calculate the combined interest rate per 2017 instructions on line 51, applying simple interest at 6% annually for pre-1996 periods and compound daily interest for post-1995 periods.
Interest Charge and Tax Reporting
The interest charge on line 52 equals the Form 4970 tax multiplied by the combined interest rate. Report the total tax on line 53 as additional tax on your 2017 income tax return.
Foreign Gift and Bequest Reporting
Answer line 54 to report whether you received gifts or bequests exceeding $100,000 aggregate from a nonresident alien or foreign estate during 2017. You must itemize each gift exceeding $5,000 in columns (a) through (c) when the aggregate amount surpasses the $100,000 threshold.
Answer line 55 to report whether you received gifts exceeding $15,797 from foreign corporations or foreign partnerships during 2017. Provide donor name, address, identification number, entity type, and detailed property description in columns (a) through (g) for all reportable gifts.
Related Party Aggregation Rules
Aggregate gifts from related foreign persons when determining whether you meet the reporting thresholds for the 2017 tax year. Include gifts from foreign persons related to the nonresident alien individual or foreign estate when calculating the $100,000 threshold, and include gifts from foreign persons related to the foreign corporation or foreign partnership when calculating the $15,797 threshold.
Related persons include family members such as siblings, spouse, ancestors, lineal descendants, spouses of these persons, and corporations in which you own more than 50% of outstanding stock value. The definition of related persons follows sections 267 and 707(b) of the Internal Revenue Code for purposes of Form 3520 reporting requirements.
Document Assembly and Filing Procedures
Attach copies of all sale or loan documents on line 14 unless you filed these documents within the prior three years. If no U.S. agent exists, attach trust documents per the line 18 checklist, including trust summary, trust instrument, letters of wishes, variances, financial statements, and other required materials.
Attach the Foreign Grantor Trust Owner Statement for line 22 or substitute Form 3520-A if the trust failed to file. Attach Foreign Beneficiary Statements for lines 29 through 30 if provided by the trust, or complete Schedules A and B with the required information.
Signature and Submission Requirements
Sign under penalties of perjury with title and date, and ensure paid preparers complete all required information in the designated preparer section. Verify that all schedules and exhibits are assembled in proper order before mailing to the Internal Revenue Service Center, P.O. Box 409101, Ogden, UT 84409.
Need Help With Your Tax Filing?
If you’re missing tax documents or want to ensure the numbers you enter match IRS records, we can help.
We offer:
- Full IRS transcript retrieval (Wage & Income + Account)
- Professional tax form review
- Preparation & filing support
- Tax relief options if you owe the IRS
Call now before filing: (888) 260-9441
Fast transcript pull available
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.
