Form 3520
IRS form for US persons reporting transactions with foreign trusts and certain foreign gifts.
Definition
Form 3520 reports US persons transactions with foreign trusts, large foreign gifts, and inheritances. Filed separately from Form 1040.
Context
Relevant for US-person LLC owners receiving foreign-trust distributions or large foreign gifts.
Example
A US-citizen LLC owner receives a $200K gift from a foreign relative. Form 3520 is filed (since gift exceeds $100K threshold).
Common pitfalls
- Penalty for failure to file: 5% per month of unreported gift, up to 25%.
- Streamlined procedures available for non-willful past failures.