The 2010 foreign trust statistics reported on Forms 3520 and 3520-A show an increasing interest in foreign investment by U.S. taxpayers.
The number of Form 3520 returns reporting foreign trust transactions and certain foreign gifts rose by 2,041 percent, from 7,956 in 2006 to 16,242 in 2010, while the number of Form 3520-A foreign “grantor” trust returns rose 1,846 percent, from 3,819 to 7,051.
U.S. “persons” transferred nearly $1.5 billion in assets to foreign trusts in 2010.
In addition, some 7,051 foreign grantor trusts reported total assets of $35.3 billion, distributions of $4.0 billion, and net income (loss) of $1.1 billion during this same period. Finally, in transactions generally separate from foreign trust activity, U.S. persons received gifts or bequests of $7.3 billion from nonresident aliens, foreign estates, foreign corporations, and foreign partnerships during 2010.
Definitions:
What is a Trust? A trust agreement is a document that spells out the rules that you want followed for property held in trust for your beneficiaries. .What is a Grantor Trust? It is a trust in which the grantor, the creator of the trust, retains one or more powers over the trust and because of this the trust’s income is taxable to the grantor.
What is a Foreign Grantor Trust? If a Foreign Trust has a U.S. grantor, and one or more U.S. beneficiaries, under IRC §679 the Trust is classified as a foreign grantor trust and all Trust income, deductions and credits must be reported on the U.S. Grantor’s personal tax returns (Federal tax return/Form 1040). See IRS Tax Audit News for definition clarification
See IRS for Foreign Trust Reporting Requirements
