Form 3520-A (2010) Checklist
Overview
The IRS requires trustees of foreign trusts with U.S. owners to file Form 3520-A annually to disclose trust income, distributions, and allocations to beneficiaries and owners. You must determine whether the trust appointed a U.S. agent under section 6048(b) and attach complete trust documents if no agent was designated, unless those documents were filed within the previous three years.
Filing Requirements and Deadlines
Confirm the trust calendar year or fiscal year span ending in 2010 and enter exact start and end dates on the Form 3520-A header. The 2010 instructions specify format requirements for both calendar and non-calendar year filers. File the complete Form 3520-A with the Internal Revenue Service Center in Ogden, Utah, by the 15th day of the 3rd month after the end of the trust's tax year.
Part I: General Information
Complete the General Information section by entering the trust name, employer identification number, and address in English and U.S. dollars. Identify whether a U.S. agent appointed under section 6048(b) was designated on the form.
The 2010 instructions define "U.S. agent" as a U.S. person with a binding contract that allows them to act as the trust's authorized agent solely for purposes of sections 7602, 7603, and 7604 of the Internal Revenue Code with respect to IRS requests to examine records or produce testimony related to proper tax treatment of amounts under section 6048(b)(1)(A) or summons for such records or testimony.
If you did not appoint a U.S. agent, you must attach the following documents to Form 3520-A:
- A summary of all written and oral agreements and understandings relating to the trust must be included.
- A copy of the trust instrument must be attached to the filing.
- Memoranda or letters of wishes prepared by the trustees or settlor must be attached.
- Subsequent variances to the original trust documents must be included.
- Other relevant trust documents must be attached.
If these documents were attached to a Form 3520-A filed within the previous three years, only relevant updates must be attached to the current filing.
Part II: Foreign Trust Income Statement and Balance Sheet
Complete the Foreign Trust Income Statement using books and records maintained under U.S. income tax principles. Enter interest, dividends, gross rents and royalties, income or losses from partnerships and fiduciaries, capital gains (separately reporting net short-term and net long-term), ordinary gains, and other income.
You must report all income from both U.S. and non-U.S. sources on the appropriate lines of Part II. Calculate total income by adding all income line items together. Subtract total expenses from total income to determine the trust's net income or loss for the tax year.
List all expenses on the designated lines:
- Interest expense must be reported, subject to limitations under applicable regulations.
- Foreign taxes paid or accrued during the tax year must be listed.
- State and local income or real property taxes must be included.
- Amortization, depreciation, and depletion deductions must be entered.
- Trustee and advisor fees paid for administering the trust must be reported.
- Charitable contributions made for purposes specified in section 170(c) must be listed.
- Other expenses not listed on the standard lines must be included.
Complete the Foreign Trust Balance Sheet showing beginning and end-of-tax-year fair market values. List all assets, including cash, accounts receivable, mortgages and notes receivable, inventories, government obligations, marketable and nonmarketable securities, depreciable assets with accumulated depreciation, real property, and other assets.
Report all liabilities, including accounts payable, contributions or gifts payable, mortgages and notes payable, and other liabilities. Calculate net worth as the sum of contributions to the corpus, accumulated income, and other items.
Part III: Distribution Reporting
Report distributions on Part III, line 17, by separately listing all distributions to U.S. owners and U.S. beneficiaries. Include the name, identification number, distribution date, and fair market value for each recipient. This bifurcated reporting requirement distinguishes owner distributions from beneficiary distributions under section 6048.
Owner and Beneficiary Statements
Prepare separate Foreign Grantor Trust Owner Statements (page 3) for each U.S. owner treated as owner of any portion of the trust under grantor trust rules. Include trust income attributable to that owner with separate lines for taxable interest, tax-exempt interest, ordinary dividends, qualified dividends, capital gains, ordinary gains, expenses, and partnership or fiduciary income.
List expenses, including interest expense, foreign taxes, state and local taxes, amortization and depreciation, trustee and advisor fees, charitable contributions, and other expenses on the owner statement. Prepare separate Foreign Grantor Trust Beneficiary Statements (page 4) for each U.S. beneficiary receiving distributions during 2010.
Describe the distributed property with fair market value and explain under what section of the Internal Revenue Code the trust is treated as owned by another person. Identify the owner type (individual, partnership, or corporation) and answer whether you agree that either the IRS or the U.S. beneficiary can inspect and copy the trust's permanent books of account and records necessary to establish proper tax treatment.
Signature and Certification
Sign and date Form 3520-A as trustee and provide your title. If a tax professional prepared the return, include preparer information such as the preparer's tax identification number, employer identification number, address, and phone number. Confirm that all accompanying statements are complete and accurate before filing.
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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.
