Form 3520-A (2014): Foreign Trust Filing Requirements Checklist

Form 3520-A (2014): Annual Information Return of Foreign Trust With a U.S. Owner

Overview and Filing Requirements

Form 3520-A reports annual foreign trust income and distributions for calendar year 2014 under IRC §6048(b). A foreign trust with at least one U.S. owner must file this form to satisfy the U.S. owner's annual information reporting requirements. Each U.S. person treated as an owner of any portion of a foreign trust under sections 671 through 679 remains responsible for ensuring that the foreign trust files Form 3520-A and furnishes the required annual statements to its U.S. owners and U.S. beneficiaries.

Return Classification and Tax Year Specification

You must verify that the trust tax year aligns with calendar year 2014 or identify the alternate fiscal year period. Exact beginning and ending dates must appear in the designated boxes per the 2014 Form 3520-A header. Checking Initial Return, Final Return, or Amended Return selects the appropriate return type box based on filing circumstances.

Trust Identification and General Information

Part I General Information requires the trust name, employer identification number, and full U.S. address. Trusts without an employer identification number must obtain one through the application process. Line 1b(2) receives the Reference ID number previously assigned to the foreign trust for tracking purposes, or filers may create an alphanumeric reference ID number not exceeding 50 characters without special characters or spaces.

U.S. Agent Appointment and Document Requirements

Determine whether the foreign trust appointed a U.S. agent who can provide the IRS with all relevant trust information. Trustees who appointed a U.S. agent skip line 2 document attachment requirements entirely and proceed to complete agent identification on lines 3a through 3g. All required trust documents become attachments when no U.S. agent was appointed, unless these documents were attached to a Form 3520-A filed within the previous three years.

When no U.S. agent exists, you must attach the following documents to Form 3520-A:

• The trustee must attach a summary of all written and oral agreements and understandings relating to the trust.
• The filing requires the complete trust instrument.
• Memoranda or letters of wishes become part of the required documentation.
• Subsequent variances to the original trust documents must accompany the return.
• Any other relevant trust documents apply to the attachment requirements.

Foreign Trust Income Reporting

Part II income lines capture all foreign trust income using trust books and records maintained for the calendar year 2014. Interest, dividends, gross rents and royalties, income from partnerships and fiduciaries, capital gains, ordinary gains, and other income form part of the reported amounts. Part II permits deduction of allowable expenses only if directly connected to income-producing activity under trust expense rules.

Charitable contributions must be verified to qualify for a deduction on line 13. Foreign taxes require a separate statement attachment when reporting on Part II, line 10a. State and local taxes appear on line 10b, and trustees must allocate creditable foreign taxes between grantor-owner portions and beneficiary distributions.

Balance Sheet Preparation and Net Worth Calculation

Part III Foreign Trust Balance Sheet requires completion at both the beginning and end of the tax year 2014. Net worth calculation subtracts total liabilities from total assets using fair market values as of January 1, 2014, and December 31, 2014. Certificates of deposit appear as cash on line 1, and all assets and liabilities of the trust require listing, including those portions not treated as owned by a U.S. person.

Owner and Beneficiary Statement Requirements

1. Each U.S. owner requires a separate 2014 Foreign Grantor Trust Owner Statement that identifies the trust, the owner, and the IRC section establishing grantor trust status.
2. The statement must include the gross value of the trust portion owned by each U.S. owner.
3. An explanation of the facts and law supporting grantor trust treatment for U.S. tax principles accompanies the owner statement.
4. Each U.S. beneficiary who received distributions during the tax year requires a separate 2014 Foreign Grantor Trust Beneficiary Statement.
5. The beneficiary statement describes the property distributed and reports the fair market value for each distribution.
6. Line 17b captures distributions to U.S. owners separately from line 17c, which captures distributions to U.S. beneficiaries.
7. The distribution records list the full name, identification number, date of distribution, and fair market value dollar amount for each U.S. owner and beneficiary receiving a distribution.

Beneficiary Statement Consent Question

The Foreign Grantor Trust Beneficiary Statement on page 4 asks whether the foreign trust appointed a U.S. agent who can provide the IRS with all relevant trust information. If the trustee answers no to the U.S. agent question, line 2 includes a follow-up question asking 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 U.S. tax treatment. You must answer this question by checking yes or no.

Currency Conversion and Documentation Standards

All amounts must appear in U.S. dollars with English-language documentation. The IRS has no official exchange rate and generally accepts any posted exchange rate that you use consistently throughout the filing. Foreign currency amounts require conversion using a consistently applied rate from the Federal Reserve, Treasury Department, or another reliable published source.

Signature and Distribution Requirements

The trustee must sign Form 3520-A under penalties of perjury. If a paid preparer completes the form, the preparer must sign and include the preparer's tax identification number and firm information per the 2014 instructions. All required statements and attachments accompany the main form, copies of owner and beneficiary statements reach respective U.S. persons, and one copy remains in trust records by the applicable 2014 deadline of the 15th day of the 3rd month after the end of the trust's 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.