Form 3520 (2018) Checklist
Purpose and Reporting Scope
Form 3520 reports 2018 transfers to foreign trusts, U.S. ownership of foreign trusts, distributions received from foreign trusts, and gifts or bequests exceeding thresholds from foreign persons, with the $16,076 threshold for gifts from foreign corporations or partnerships reflecting the annual inflation adjustment. U.S. persons must file separate Forms 3520 for transactions with each foreign trust because the instructions prohibit consolidating multiple trusts on one form.
Filing Status and Return Designation
Check “Initial return,” “Initial return (extension filed),” “Final return,” or “Amended return” for tax year 2018 on line A. Use the correct calendar-year or fiscal-year designation on the form header for 2018 only.
Filer Category Selection
Select your filer category on line B as Individual, Partnership, Corporation, Trust, or Executor because each type triggers distinct reporting obligations under Part I, II, III, or IV. Verify your status matches the role that triggered the Form 3520 requirement for accurate reporting compliance.
FATCA Coordination and Identifying Information
Check the box on line C only if 2018 Form 8938 assets are also reported on Form 3520, and enter full name, identification number, and address of the U.S. person filing on lines 1–3, including spouse’s identification number if filing jointly. Identify the foreign trust by name, employer identification number if assigned, reference identification number, and country, and confirm whether the trust appointed a U.S. agent because this determination directly affects documentation requirements.
U.S. Agent Requirements and Trust Documentation
If the trust appointed a U.S. agent in 2018, complete lines 3a–3g with the agent’s information. If not, you must provide trust documents on lines 15–18 and trustee or beneficiary information as required by the instructions.
U.S. Agent Authorization
The U.S. agent must have a binding contract with the foreign trust that authorizes the agent to act on behalf of the trust for IRS examination purposes. A U.S. grantor, U.S. beneficiary, or domestic corporation controlled by the grantor or beneficiary may serve as the U.S. agent for reporting purposes.
Due Dates and Filing Location
Form 3520 is due on the 15th day of the 4th month following the end of your tax year, or the 6th month if you live or serve in the military outside the United States and Puerto Rico, or the 10th month if you receive an income tax filing extension. Send Form 3520 to the Internal Revenue Service Center, P.O. Box 409101, Ogden, UT 84409, with all required attachments.
Part I Transfer Reporting Requirements
Trust Creator and Jurisdictional Information
Report the trust creator’s name, address, and identification number on line 5, and enter the applicable two-letter country code for the country where the trust was created and the country whose law governs it on lines 6a and 6b. Determine on line 7 whether persons other than you or the trust will own transferred assets after the 2018 transfer by providing their names, addresses, countries of residence, and relevant Code sections.
Gift and Ownership Status
Confirm whether the transfer is a completed gift under IRC § 2511 or a bequest on line 8 because this determination affects gift tax and estate tax implications. Answer on line 9 whether income or corpus can benefit any U.S. beneficiary now or in the future, and if you answer no, confirm whether the trust can be revised to benefit a U.S. beneficiary under the 2018 trust law.
Grantor Trust Determination
State on line 10 whether you continue as the owner of transferred assets under IRC § 671–§ 679 after the 2018 transfer because this affects reporting in Part II. This ownership determination is essential for the proper completion of subsequent reporting sections.
Qualified Obligations Standards
If you transferred property to a related foreign trust in 2018 in exchange for an obligation, indicate on lines 11–12 whether it is a qualified obligation. Qualified obligations must satisfy six requirements specified in the 2018 instructions:
- The obligation is reduced to writing by an express written agreement.
- The term of the obligation does not exceed five years, including options to renew and rollovers.
- All payments on the obligation are denominated in U.S. dollars.
- The yield to maturity falls between 100% and 130% of the applicable federal rate under section 1274(d) for the issuance date.
- You agree to extend the assessment period to three years after the maturity date of the obligation.
- You report the obligation status annually on Part I, Schedule C, line 19, and Part III, line 28.
Attach loan documents and agree to extend the assessment period to three years after the maturity date if the obligation qualifies.
Part II Ownership Reporting
List other foreign trust owners on line 20 with their names, addresses, countries of tax residence, identification numbers, and relevant Code sections, and enter the 2018 country code of trust creation and governing country on line 21. Verify whether the foreign trust filed Form 3520-A for 2018 on line 22, and attach the Grantor Trust Owner Statement if yes, or complete and attach a substitute Form 3520-A if no.
Ownership Value Reporting
Enter the gross value of the 2018 year-end portion of the foreign trust treated as owned by you on line 23 because this value determines the reporting scope for accumulation distributions. This amount represents the fair market value of trust assets attributable to your ownership interest as of the last day of the tax year.
Part III Distribution Reporting
List all distributions received from the foreign trust in 2018 on line 24, including cash amounts and fair market values of property on the distribution date, and complete columns (a) through (f). If you or a related U.S. person received a 2018 loan from the foreign trust, including uncompensated use of trust property under IRC § 643(i), complete columns (a) through (g) for each loan on line 25.
Loan Classification and Total Calculation
Distinguish between qualified obligations and nonqualified obligations on line 25 because only qualified obligations receive favorable treatment, and agree on line 26 to extend the assessment period to three years after maturity or indicate your refusal. Add line 24 column (f) and line 25 column (g) to compute the total 2018 distributions on line 27.
Part IV Foreign Gift Reporting
Report gifts or bequests exceeding $100,000 from nonresident alien individuals or foreign estates, and report gifts or bequests exceeding $16,076 from foreign corporations or partnerships, as the $16,076 threshold represents the 2018 inflation-adjusted amount. Complete Part IV with all required information about the foreign donor, including whether the donor is a corporation or partnership, and attach additional explanations if space is insufficient.
Penalties and Compliance
Section 6677 imposes penalties if Form 3520 is not timely filed or if the information is incomplete or incorrect, with the initial penalty equaling the greater of $10,000 or specified percentages of transferred property, distributions, or owned assets. Additional penalties apply if noncompliance continues for more than 90 days after IRS notice, unless you demonstrate reasonable cause and not willful neglect.
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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.
