Form 3520

Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts, filed under §6048 and §6039F. It covers three distinct situations: creating or transferring property to a foreign trust, receiving a distribution from one, and receiving large gifts or bequests from foreign persons. Reporting a gift does not make it taxable — gifts are not income — but failing to report one is penalised. The thresholds differ by source: aggregate gifts from a nonresident alien individual or foreign estate are reportable above $100,000, while gifts from foreign corporations or partnerships are reportable above a much lower, annually indexed amount. Penalties are proportional, not fixed: §6677 sets 35% of the gross reportable amount for trust transactions, and §6039F(c) charges 5% of the gift per month up to 25% for unreported gifts. The form is filed separately from the 1040 and sent to a different address.