Form 3520

[cdiii3]

Resident Alien is beneficiary of a UK foreign trust (non-revocable). The trust will have UK earnings and cash distributions will occur in future years. Instructions for Form 3520 indicate that Part II of the 3520 will be required. Will the US beneficiary's portion of the trust's earnings be taxable in the US? Will the distributions be subject to US tax?

 

[LdiJ]

Resident Alien is beneficiary of a UK foreign trust (non-revocable). The trust will have UK earnings and cash distributions will occur in future years. Instructions for Form 3520 indicate that Part II of the 3520 will be required. Will the US beneficiary's portion of the trust's earnings be taxable in the US? Will the distributions be subject to US tax?

The earnings will be taxable in the US. The distributions generally would not be taxable, but there can be some exceptions to that. Form 3520 is not used to determine tax, it is used to report the asset/distribution. You would include your portion of the income on your 1040.

 

[davew128]

I will disagree somewhat from that answer. If no reporting is given the beneficiary of whether or how much of the distribution is considered income, Form 3520 DOES calculate how much of it is income. Its done on Page 5 and Form 4970 has to get used as well.

 

[LdiJ]

I will disagree somewhat from that answer. If no reporting is given the beneficiary of whether or how much of the distribution is considered income, Form 3520 DOES calculate how much of it is income. Its done on Page 5 and Form 4970 has to get used as well.

You might want to edit that Dave.

 

[davew128]

You might want to edit that Dave.

Nope. Distribution on page 4, calculation on page 5.

 

[LdiJ]

Nope. Distribution on page 4, calculation on page 5.

That isn't what I meant...LOL. Go read what you wrote.