Form 3520-A 2021 Checklist
Overview and Filing Obligations
Foreign trusts with at least one U.S. owner must file Form 3520-A to report income, distributions, and asset values for the tax year 2021 under Section 6048(b). Trustees use this annual information return to provide the IRS with comprehensive details about the trust structure, U.S. beneficiaries, and any U.S. person treated as an owner of trust assets under grantor trust rules found in Sections 671 through 679.
Initial Determinations
U.S. Agent Appointment
Determine whether the foreign trust appointed a U.S. agent according to the instructions. Trusts without a U.S. agent must attach comprehensive documentation, including the trust instrument, written agreements, variances, and organizational charts.
Documents previously attached to Form 3520-A filed within the past three years require only updates. Check "Previously Attached" boxes and note years for each document category in Part I, lines 2a through 2e.
Form Identification Checkboxes
Mark the appropriate checkbox at the top of page 1 to identify the filing type:
- Initial return for first-time filers
- Final return when the trust ceases to exist
- Amended return to correct previously filed information
- Extension filed if Form 7004 was timely submitted
- Substitute Form 3520-A when the U.S. owner files because the trustee failed to file
Part I: General Information
You must complete Part I with the foreign trust name, employer identification number if issued, creation date, and complete address. Enter the trustee name and taxpayer identification number on lines 4a through 4g. When the trustee is a non-U.S. person without a TIN, note "N/A" per instructions and attach an explanation. Enter the total count of owner statements on line 5 and the total count of beneficiary statements on line 6.
Part II: Income Statement
Income Reporting (Lines 1–8)
Report all trust income using books and records converted to U.S. dollars:
- Interest income on line 1
- Dividends on line 2
- Gross rents and royalties on line 3
- Income from partnerships and fiduciaries on line 4
- Net short-term capital gains on line 5a
- Net long-term capital gains on line 5b
- Ordinary gains or losses on line 6
- Other income on line 7 with attached statement
- Total income on line 8 is the sum of lines 1 through 7
Expense Deductions (Lines 9–15)
Account for all deductible expenses with supporting documentation:
- Line 9: Interest expense
- Line 10a: Foreign taxes with attached statement
- Line 10b: State and local taxes
- Line 11: Amortization, depreciation, and depletion
- Line 12: Trustee and advisor fees
- Line 13: Charitable contributions paid from gross income per IRC Section 642(c)
- Line 14: Other expenses with attached statement
- Line 15: Total deductions as the sum of lines 9 through 14
- Line 16: Net income or loss as line 8 minus line 15
Distribution Documentation (Line 17)
Enter the fair market value of all distributions to U.S. and foreign persons on line 17a. Complete lines 17b(i–iv) to detail distributions to U.S. owners, showing name, TIN, distribution date, and fair market value determined on the distribution date.
Complete lines 17c(i–iv) to detail distributions to U.S. beneficiaries with identical information. Attach a statement when space proves insufficient.
Part III: Balance Sheet
Complete the balance sheet with beginning-of-year values in column (a) and end-of-year values in column (b) for January 1 and December 31, 2021. The balance sheet must reflect fair market value as specified in the instructions. Include certificates of deposit as cash on line 1.
Assets (Lines 1–11)
- Cash and certificates of deposit
- Accounts receivable
- Mortgages and notes receivable
- Inventories
- Government obligations
- Other marketable securities
- Other nonmarketable securities
- Depreciable assets with accumulated depreciation shown as negative on line 8b
- Real property
- Other assets with attached statement
Liabilities (Lines 12–16)
List all obligations, including accounts payable, contributions payable, mortgages, notes payable, and other liabilities, with attached statement when necessary.
Net Worth (Lines 17–21)
Reconcile contributions to trust corpus, accumulated trust income, and other items. Line 20 total net worth equals the sum of lines 17 through 19. Line 21 total liabilities and net worth must equal line 11 total assets for both columns.
Owner Statements (Pages 3–4)
Prepare a separate Foreign Grantor Trust Owner Statement for each U.S. person treated as owning any portion under IRC Sections 671 through 679. Include trust identification on lines 1a through 1h, U.S. agent information if appointed on lines 3a through 3g, and trustee details on lines 4a through 4g.
Owner name and TIN appear on lines 6a through 6g. Line 7 requires a written explanation establishing grantor trust treatment, line 9 shows gross fair market value, and lines 10(a) through 10(f) document distributions with date, description, and values.
Income Attribution Statement (Page 4)
Allocate 2021 income and expenses across each owner's proportionate share. Segregate taxable interest on line 1a, tax-exempt interest on line 1b, total ordinary dividends on line 2a, and qualified dividends on line 2b. Report rents and royalties on line 3, partnership income on line 4, capital gains on line 5, ordinary gains on line 6, and other income on line 7. Calculate total income on line 8 and total expenses on line 15.
Beneficiary Statements (Page 5)
Create a separate Foreign Grantor Trust Beneficiary Statement for each U.S. beneficiary receiving distributions, loans, or property use during 2021. Include trust identification, agent information if appointed, trustee details, tax year dates, and beneficiary name and TIN.
Line 7 requires a table showing distribution date, property description, fair market value on distribution date, any property transferred back in columns (d) and (e), and the excess in column (f). Line 8 requires a written explanation of facts and law establishing trust ownership. Line 9 identifies the owner type as Individual, Partnership, or Corporation.
Furnishing and Filing Procedures
Send each U.S. owner a copy of the Foreign Grantor Trust Owner Statement and each U.S. beneficiary a copy of the Foreign Grantor Trust Beneficiary Statement by the 15th day of the 3rd month following the trust's tax year-end. The trustee or U.S. owner filing a substitute form must sign under penalties of perjury with title and date.
Paid preparers complete the signature block with PTIN, firm name, EIN, and phone number. File the complete Form 3520-A with all required attachments to the Internal Revenue Service Center, P.O. Box 409101, Ogden, UT 84409, by the 15th day of the 3rd month after the trust's tax year end.
Technical Requirements
All information must appear in English, and all amounts must be shown in U.S. dollars. Convert foreign currency amounts using applicable 2021 exchange rates when distributions, assets, or income are denominated in foreign currencies.
Check the "Excepted Specified Foreign Financial Assets Reported" checkbox only when a U.S. owner treated as owning any trust portion also files Form 8938 for the tax year and includes this form in the total Forms 3520-A reported on line 16 of Part IV of Form 8938.
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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.
