Form 3520 is a form to be filed annually. It is a return of a foreign trust (with at least one owner in the United States) or to report the receipt of certain foreign gifts or bequests.
Form 3520 is an information return for a U.S. person to report certain transactions with foreign trusts [as defined in Internal Revenue Code (IRC) section 7701(a)(31)] or to report the receipt of certain foreign gifts or bequests.
The rationale for Part IV reporting is not obvious. Outside of a very rare circumstance, there is no tax on the receipt of a true gift or bequest, because gifts and bequests are not income. The IRS may use Part IV reporting to detect disguised income payments. Nonetheless, the penalties in this context are extremely high, particularly because reporting by the recipient of a gift or bequests is not required in almost any other context in US tax law with respect to domestic gifts or bequests.
The IRS has administratively increased the reporting threshold to $100,000 (IRS Notice 97-34). The threshold for reporting gifts from foreign corporations or foreign partnerships, however, is still $10,000–$15,671 or more, taking into account inflation adjustments.
The IRS has administratively increased the reporting threshold to $100,000 (IRS Notice 97-34). The threshold for reporting gifts from foreign corporations or foreign partnerships, however, is still $10,000–$15,671 or more, taking into account inflation adjustments.
Gifts made by a non-citizen, nonresident individual to a U.S. person are not subject to U.S. gift tax if the gifted property has its situs located outside the U.S.
But recipients of the gift may require Form 3520 reporting.
But recipients of the gift may require Form 352
You can receive a foreign gift of as much as US$100,000 worth of assets in any one calendar year before you must report it.
You should file Form 3520 if you have transactions with foreign trusts, ownership of foreign trusts under rules of sections 671-679 or if you have a large gift from a foreign person.
You can make individual $15,000 gifts to as many people as you want under US gift tax law, but this little to do with Form 3520 .
Form 3520 is an information return for a U.S. person to report transactions with foreign trusts or to report the receipt of foreign gifts or bequests. Form 3520 -A is for a foreign grantor trust with a U.S. grantor and is similar to an income tax return of a U.S. trust. The trustee of a foreign grantor trust with a U.S. grantor must complete an annual Form 3520 -A. If the foreign trustee will not complete the return, it is the duty of the U.S. grantor to prepare and file the return.
Also Form 3520 is due on the date that your income tax return is due, including extensions. Form 3520 -A, in contrast, is required to be filed on or before March 15 of each year for the preceding year. The difference in the filing dates is confusing and a trap for the unwary
Also Form 352
Although you’ll pay no income tax, you must file Form 3520 reporting gifts received from overseas. Although no U.S. gift tax exposure exists at the time of the gift, income tax will be assessed on the U.S. donee on gain realized at the time of a subsequent sale of the gifted asset.
There is no limit. You can receive a foreign gift of as much as US$100,000 worth of assets in any one calendar year before you must report it on Form 3520 .
Gifts and inheritances are not included in gross income under US tax law.
Sometimes legal counsel is not necessary to correct Form 3520 errors. In some cases, legal counsel is strongly recommended. Unsure? Contact us.