The proposed regulations provide guidance on information reporting on transactions with foreign trusts and large foreign gifts and transactions with foreign trusts. The proposed regulations also provide guidance on the filing of Form 3520, Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts, and Form 3520-A, Annual Information Return of Foreign Trust with a U.S. Owner. The proposed regulations also provide guidance on the penalties for failure to file these forms or for filing incomplete or incorrect forms.
The U.S. Treasury Department and IRS today released proposed regulations (REG-124850-08) that would provide guidance under sections 643(i), 679, 6039F, 6048, and 6677 regarding information reporting on transactions with foreign trusts and receipt of large foreign gifts and regarding loans from, and uses of property of, foreign trusts, and amend the regulations relating to foreign trusts having one or more U.S. beneficiaries.
The proposed regulations are proposed to apply to transactions with foreign trusts and the receipt of foreign gifts in tax years beginning after the date on which the final regulations are published in the Federal Register. However, a taxpayer may rely on the proposed regulations for any tax year ending after May 8, 2024, and beginning on or before the date that final regulations are published in the Federal Register, provided that the taxpayer and all related persons (within the meaning of sections 267(b) and 707(b)(1)) apply the proposed regulations in their entirety and in a consistent manner for all tax years beginning with the first tax year of reliance until the applicability date of the final regulations.
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