IRS adopts AICPA’s recommendations for reporting distributions to owners of foreign trusts

March 22, 2018

The Internal Revenue Service (IRS) adopted the recommendations the American Institute of CPAs’ (AICPA) Trust, Estate and Gift Tax Technical Resource Panel made during conversations with IRS officials last fall regarding the 2017 instructions to Form 3520, “Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts.”

The revised instructions clarify how to report distributions from foreign trusts in the section entitled “Reporting by U.S. owners receiving distributions from foreign grantor trusts.”  United States owners are directed to disclose the distributions from foreign trusts on Lines 24 and 27 of Form 3520.  

The instructions also point out that the due date for filing the Form 3520 for all taxpayers is the 15th day of the 4th month following the end of the taxpayer’s tax year and that the due date is automatically extended if the income tax return is extended.  Previously, the Form 3520 for a deceased individual was aligned with the due date of the Form 706, “United States Estate (and Generation-Skipping Transfer) Tax Return.”